China Said to Consider Policies to Raise Solar Installations

Aug 05, 2014 2:46 pm ET

(Updates with comments from analyst in fourth paragraph.)

Aug. 5 (Bloomberg) -- Chinese solar producers surged on news the world’s biggest supplier of panels may announce policies as soon as this month to encourage businesses to install the technology on rooftops.

Trina Solar Ltd. advanced 6.4 percent to $11.38 at 2:28 p.m. in New York. Earlier it rose as much as 9.3 percent, the biggest intraday increase in two months. JinkoSolar Holding Co. rose 5.9 percent to $25.07 and Yingli Green Energy Holding Co. gained 2.5 percent to $3.24. The Bloomberg Intelligence Global Large Solar Index had its biggest intraday climb since June 17.

Under the policies, the National Energy Administration would call for local planners to add more projects in regions where electricity can be distributed to customers living nearby, according to people familiar with the matter who asked not to be identified because they aren’t authorized to speak publicly.

“China’s finding a way to prop up local demand by providing additional incentives for residential and commercial solar -- and the focus is going to be on the distributed side,” Angelo Zino, an analyst at S&P Capital IQ in New York, said today in a telephone interview.

The government will focus on supporting the development of so-called distributed solar power projects in industrial zones and at industrial and commercial companies with large rooftops. Big consumers of electricity will also be encouraged to develop solar projects as a way to reduce power costs.

Distributed Solar

The push may help China edge closer to its target of installing 8 gigawatts of distributed solar, which is eligible this year for subsidies, and may spur orders for solar equipment. Distributed projects have already caught the interest of investors such as Yingli and GCL New Energy Holdings Ltd.

Two phone calls to the National Energy Administration went unanswered today. An official at the National Development and Reform Commission’s news department referred calls to the NEA.

Distributed generation refers to electricity produced at or near where it’s used. In the case of solar, distributed projects typically include rooftops or ground-mounted panels near facilities such as sporting arenas or municipal buildings.

China will encourage local governments to offer extra subsidies for distributed solar power investments and increase support for the projects at schools, hospitals and rural areas, said the people. The country last year introduced a subsidy of 0.42 yuan (7 U.S. cents) a kilowatt-hour for the projects.

Public Infrastructure

Installations of solar panels will be promoted on public infrastructure such as railway stations and airport terminals. Solar projects built on abandoned land and hills, agricultural greenhouses, inter-tidal zones, fishponds and lakes and connected to grids with low voltage will enjoy preferential tariffs, the people said.

The government will encourage financial institutions to offer discounts on loans and longer loan terms for distributed projects and encourage the forming of photovoltaic industry investment funds among insurance companies and trusts.

“China’s got incentives to ensure that local manufacturers continue to get the orders they need,” Zino said. “This partly is in retaliation to the China-Taiwan anti-dumping ruling in the U.S. I don’t think it’s a coincidence that this happened shortly after the announcement in late July.”