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New Policies Strengthen Year-End Demand from China PV Market

At the end of August 2013, the National Development and Reform Commission (NDRC) in China released details of the new national FIT and Distributed PV Generation FIT programs.

Based upon different solar radiation levels, the national FIT has been revised to three steps (excluding Tibet), as in the following table:

Source: NPD Solarbuzz Asia Pacific Major PV Markets Quarterly

Only those projects approved before September 2013, and grid-connected before 2014, can receive the previous FIT level of CNY 1/kWh. As a result, developer groups may start installations at the previously higher FIT levels faster than expected. This could raise demand from the Chinese PV market as high as 3.5 GW during Q4’13.

In the past, financing and grid accessibility were major barriers for PV market growth in China. Therefore, the NDRC decided to increase the level of the Renewable Energy Tariff Addition Fund from CNY 0.008/kWh to CNY 0.015/kWh. This increase will support greater deployment of renewable energies, including wind and solar.

As described in our Asia Pacific Major PV Markets Quarterly, the NDRC may release FITs for distributed PV generation at CNY 0.42/kWh, in addition to the desulfurization tariff. The project internal rate of return (IRR) of distributed PV generation can vary based upon differences in the regional FITs and solar radiation levels (see figure). In addition, there are also indications that a second batch of distributed PV generation application demonstration projects could be released before the end of 2013.

The continued positive actions within China to develop and grow its domestic industry during 2013 offer further confidence in China becoming the leading country for solar PV deployment in 2013.

Project IRR of Roof Mount c- Si System

Source: NPD Solarbuzz Asia Pacific Major PV Markets Quarterly