China’s FiT boosts downstream sector

China’s new feed-in tariff has led to a significant increase in downstream activity.

The subsidy scheme, which was launched in July, has already created a non-residential project pipeline of 14GW, with over 1,000 systems either installed or in the development stage.

The majority of this activity is taking place in China’s northwest region, which is blessed with high irradiance levels and vast expanses of fallow land. This region currently accounts for 66% the country’s total pipeline; the top five provinces are Qinghai, Gansu, Ningxia, Inner Mongolia and Sichuan.

Utility-scale projects take up the largest proportion of the market – 1MW systems account for 707 of the projects. Most leading development groups are state-owned enterprises and the top 10 of these companies contribute 9.7GW towards the total pipeline.

Helping entice further investment in the downstream sector has been this year’s collapse in factory-gate module prices. This factor, in unison with the CNY1.15/kWh tariff, has enabled projects to provide reasonable internal rates of return – installed system prices for ground-mounted projects above 10MW are now below CNY15 per W and falling.