The Ministry of Finance (MOF) and the Ministry of Housing and Urban-Rural Development (MOHURD) jointly issued two important documents to develop China’s domestic solar PV market last week. The two documents are numbered 2009-128 and 129.
Through the subsidy Chinese government will establish model buildings with integrated PV systems throughout the nation, hoping to improve the abilities of design and installation for such buildings, production ability for BIPV and solve the problem of lack of application technology standards. Non-building related programs such as PV power plants are not qualified for this subsidy.
The subsidy is RMB20/watt (US $2.94/watt) in principle, adjustable depending on the degree of the integration of solar PV with the building and how advanced the technology is. In addition, the subsidy will be modified annually according to the industry’s situation.
The subsidy of RMB20 will cover 50% of the cost to purchase solar panels and to install them onto the building. According to MOF and MOHURD, the cost for solar panel has dropped below RMB20/watt and installation cost is about the same. With the subsidy the cost for each watt of electricity is expected to drop to RMB20.
70% of the subsidy will be trusted with provincial governments. Provincial MOF and MOHURD will then decide which project to subsidize. After each project passes the test, the outstanding 30% will be paid out by the central government through the local government. The reason behind the two installments is to ensure project quality.
To apply for the subsidy, the applicant shall submit documents to prove that the project applies solar PV technology and has been approved by relevant authorities. The subsidy will go to those under-construction and mature projects. Details of how to apply for the subsidy will be provided by MOF and MOHURD in the near future.
It is a significant step China takes in terms of growing its solar industry and home market, at least signaling a positive attitude towards solar energy industry. With this program China’s domestic solar energy application may see an increase to 1% of the world’s total and to 5% by the end of 2012.
However, given this subsidy focuses on buildings in urban-rural areas the fate of the solar industry is tied to the housing market in China, both commercial and residential. In 2008 China’s residential property sales declined 20.3%. According to a construction material company, there is little construction work going on in cities like Beijing or Shanghai at this moment. With this subsidy the government hopes that some of the construction projects which have been shelved due to lack of funding or the market condition will be reconsidered by the developer. I personally see the subsidy program more of a plan to stimulate the housing market, or at least one stone two birds.
