China solar can compete without subsidy in 334 cities: study

[SHANGHAI] Solar power plants in hundreds of Chinese cities can now generate electricity at prices lower than those on the grid, which means they are able to compete subsidy-free with other energy sources, according to a new study.

With manufacturing costs falling rapidly, China is trying to wind down the amount of subsidies it offers to its renewable power producers in order to achieve "grid price parity" with conventional power suppliers.

It has already announced that a special surcharge paid to onshore wind power projects for each kilowatt-hour they supply to the grid will be cancelled by 2021.

The new study, conducted by scholars in China and Sweden and published on Monday by the Nature Energy journal, looked at project costs, power output and prices in 344 prefecture-level cities in China.

The study showed all the 344 cities could achieve subsidy-free solar prices that were lower than those supplied by the grid. Solar producers in 22 per cent of the cities surveyed could even compete with benchmark desulphurised coal electricity prices.

China has sought to restrain the number of new solar projects and give priority to plants that can operate without government support, after a surge in new capacity created a subsidy payment backlog of more than 100 billion yuan (S$19.5 billion).

It has also been drawing up more guidelines to ensure renewable energy producers have full access to local markets and encourage grid firms to maximise power purchases from wind and solar plants.

A study published by the China Renewable Energy Engineering Institute last month said China was expected to achieve full "grid price parity" for solar and wind by next year.

It said China's total renewable energy capacity reached 729 gigawatts by the end of last year, up 11.7 per cent on the year and amounting to around 38 per cent of the national total power generation capacity.

REUTERS