Intelligent Energy

China cuts solar subsidies

Posting in Energy

Is the global playing field leveling out?

Solar power plants like GCL Poly's 20-megawatt installation (above) in Xuzhou will receive smaller government subsidies.

This should please those in the West who complain that enormous Communist Party subsidies enable Chinese solar manufacturers to export to the U.S. and Europe at below market rates: Beijing has slashed its financial support for solar.

Well, at least for a portion of the industry.

Bloomberg is reporting a 21 percent reduction in the so-called Golden Sun program, which funds solar power generation projects. The government has cut subsidies to 5.5 yuan (87 cents) per watt from 7 yuan, Bloomberg states.

The reason given: Prices of solar components have plunged, so the subsidies are not as necessary as they used to be to encourage project developers like GCL-Poly Energy Holdings and Yingli Green Energy Holding Co. to build solar power plants.

That's exactly how some people would say subsidies should work:  Government assistance helps a fledgling technology take flight, and starts to back out once the technology is airborne. It's what's been happening in Germany, for instance, where the government has been paring back a decade old Feed-in-Tariff scheme as solar power grows.

But there's a disingenuosness at play here too. The article does not report that China is cutting its multi-handed forms of assistance to solar panel manufacturers, which has helped feed the price decline in the first place! Those include land give-aways  and, effectively, lax environmental controls, among other handouts. They continue, as far as I can tell.

And let's not forget that a rotten global economy has helped feed a glut of solar gear that has also pushed prices down.

Still, it all points in the direction that solar power is increasingly standing on its own economic feet, even in China. It has many big steps remaining.

Photo from GCL Poly website.

More sun from China on SmartPlanet:

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Mark Halper

Contributing Editor

Mark Halper has written for TIME, Fortune, Financial Times, the UK's Independent on Sunday, Forbes, New York Times, Wired, Variety and The Guardian. He is based in Bristol, U.K. Follow him on Twitter. Disclosure