Subsidy delays in China pose bankruptcy risks to solar projects - report

China has accumulated a solar subsidy backlog of CNY 120 billion (USD 17.3bn/EUR 15bn), thus putting the threat of bankruptcy to projects in the sector, Reuters reports, citing a new government report.

Many projects in the northwestern region of Ningxia, for example, are having difficulties staying afloat or even are exposed to bankruptcy due to the delayed subsidy allocations by the government, an investigation by the Chinese regulators has revealed. Meanwhile, some project developers in that specific region have been forced to take high-interest loans to keep their plants operational.

The report calls for local authorities in Ningxia to exercise stricter supervision on capacity deployment and the subsidy distribution to prevent bankruptcy. Although grid-price parity has been achieved in some Chinese region, wind and solar power generation, as well as transmission, in Ningxia is very expensive and thus cannot compete with coal, the regulator has pointed out.

The disbursement of subsidies for government-backed projects was caused by the rapid increase in photovoltaic (PV) capacity deployment in China. Earlier this year, China put a 10-GW cap on distributed generation projects and introduced new policies to cut feed-in tariffs (FiT) for the second half of 2018 following the record 2017, when a whopping 53.06 GW of PV capacity was commissioned.

(CNY 1.0 = USD 0.144/EUR 0.125)

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