China solar panel subsidies cut in face of declining costs

In response to falling prices in the production cost of solar panels, China has reduced subsidies for projects approved last year by 11 percent, according to Bloomberg.

The Ministry of Finance said in a statement yesterday that it will cut subsidies to 8 yuan (USD1.3) a watt for those already approved and that it will offer a subsidy of 7 yuan a watt for those eligible in 2012.

The subsidy applies only to projects developed by owners who will consume the power for their own use under the so-called Golden Sun program.

The cost of solar panels fell 47 percent last year as Chinese manufacturers increased production, leading to excess capacity after European governments cut back on subsidies. The price declines has led some companies including Trina Solar to predict that solar technology is nearing parity with fossil fuels to supply power to national electric grids at a competitive price.

China has been subsidizing projects under the program since 2009 to bolster the use of renewable energy and cut reliance on fossil fuels. Yingli Green Energy Holding, China Guodian, JinkoSolar Holding and LDK Solar have won subsidies under the program.