China Policy to Spur Rooftop Solar in World’s Biggest Market

Sep 04, 2014 6:01 pm ET

Sept. 5 (Bloomberg) -- China is trying to spur rooftop solar installations, a policy that would help the nation making most of the world’s panels to also become its biggest market this year.

The National Energy Administration asked local authorities to identify projects where power can be delivered to nearby customers, provide extra subsidies for public organizations and in rural areas and allow more projects to qualify for subsidies, according to an agency statement dated Sept. 2.

The policy “should encourage the development of distributed generation and alleviate some of the quota concerns,” Patrick Jobin, analyst at Credit Suisse Securities USA in New York, said yesterday in a research note.

China is targeting this year to add 8 gigawatts of solar energy for small users and 6 gigawatts for larger projects, which would make it the biggest market for photovoltaics. The country could install as much as 14 gigawatts, according to a Bloomberg New Energy Finance forecast. Japan is expected to install as much as 11.9 gigawatts this year.

Greater development of distributed generation would boost demand for panel manufacturers led by JinkoSolar Holding Co. and Canadian Solar Inc. and to a lesser extent Yingli Green Energy Holding Co., JA Solar Holdings Co. and Trina Solar Ltd., Jobin said. Investors such as GCL New Energy Holdings Ltd. are working to reap those incentives.

Industrial Users

China last year set a subsidy of 0.42 yuan (7 cents) a kilowatt-hour for the projects. Some projects that have a capacity of less than 20 megawatts and grid voltage of lower than 35 kilovolts in areas without power will get the same subsidy as local ground-mounted plants, NEA said in the statement.

The move is part of a government effort to encourage so- called distributed solar power projects, where smaller PV units are placed near consumers who use the power, the agency said. Those contrast with utility-scale projects designed to feed electricity into a traditional grid.

The smaller projects would be used by industrial and commercial companies with large rooftops it said. The largest consumers of electricity are also being encouraged to develop solar projects as a way to reduce their energy costs.

Installations of solar panels will be promoted on public infrastructure such as railway stations and airport terminals. The government also said financial institutions should offer discounts on loans for distributed projects and encourage local governments on related policies.