The Chinese government plans to eliminate FITs (Feed-In-Tariff) and subsidies for solar energy from 2021. The announcement was made by Ru Jialin, researcher at the Public Affairs Department of CPIA (China Photovoltaic Industry Association), during launch of Solar Power Europe Global Market Outlook 2020-2024 report.
Photovoltaic market specialist Márcio Takata, director of Greener, points out that the elimination of FIT incentives in China could have repercussions on the solar sector in Brazil when it comes to solar modules. According to Takata, if the Chinese government's plan actually comes to fruition, the country could have a lower demand for purchasing modules, which would contribute to maintaining or reducing their global prices.
“This reduction in FITs changes the energy compensation model in China. As the Chinese market is very important, this could have an impact on the price of photovoltaic modules in Brazil and other countries”, explained Takata.
Fernando Castro, sales director at Risen, stated that the scenario is uncertain."The end of subsidies in the Chinese domestic market could increase the quality requirements of mono PERC cells and modules. The sector in 2021 will undergo major changes, which we will soon be able to say more clearly.”
Daniel Pansarella, sales manager at Trina Solar in Brazil, points out that the Chinese government always considers eliminating FITs, “but then they launch other models of subsidy packages”.
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CPIA data shows that China this year allocated 1,5 billion RMB (about US$211 million) for incentives in the solar market, of which 500 million RMB (about US$71 million) is allocated to solar energy in residential roofs and 1 billion RMB (about US$142 million) for photovoltaic projects in other types. Compared to 2019, the subsidy budget was reduced by 50% from 3 billion RMB (about US$427 million).
The body also released its growth expectations for the solar sector in 2020 and for the next five years. For 2021 and 2022, the Chinese solar market is expected to see more volumes with 40 and 50 GW respectively. But only in 2023 will solar demand be expected to exceed levels achieved in its record year of 2017, in which 53 GW was deployed. Thus, the forecast is around 60 GW in 2024 and 65 GW in 2025.
What is FIT?
FIT are tariffs, subsidized by the government, established with long-term contracts, generally longer than 15 years, for generation from renewable energy sources, regardless of their use (self-consumption or for export).
The tariff value (in monetary units per kWh) is established by the government based on the generation cost, depending on the source and type of installation, for example. The incentive to produce energy comes from the fact that the amount paid for energy injected into the grid is greater than that purchased from the distributor.
