Solar power on-grid price likely to come out before yearend at 1.1-1.2 yuan/kWh
ZZFNV | Quote | Chart | News | PowerRating -- The plan of setting an on-grid price
for solar power has been finalized, and now is waiting for the
approval of China's authorities, according to a report in China
Business News on Friday.
An official with the China's top planning body, the National
Development and Reform Commission (NDRC), disclosed that the on-grid
price for solar power is likely to come out before the end of this
year, and is expected to be 1.1 to 1.2 yuan/kWh, slightly higher than
the standard on-grid price of 1.09 yuan/kWh set by the Chinese
government for the 10-MW solar PV power plant in northwest China's
Dunhuang city in Gansu province.
The official said that the on-grid price would be the unified
price applying to solar power all over the country.
Though this new clean-energy is being encouraged by the
government, expensive production costs are forming a bottleneck for
the solar power industry. Therefore, the on-grid price will directly
decide the future of China's solar power industry.
In fact, this May, the National Energy Administration (NEA) has
started drafting detailed rules and regulations for the on-grid price
of solar power. The NDRC has also made an evaluation of production
costs by interviewing major solar power companies in China.
An official with the NEA noted that the plan is waiting for
approval of top officials in the NDRC, but he did not disclosed a
specific price, only indicating that it will be slightly higher than
the standard price of 1.09 yuan/kWh.
Fan Peng, president with Jiangsu's Best Solar Co., early said that
1.09 yuan/kWh so far has been the lowest price that could be accepted
by solar power producers, ensuring them an 8 percent internal rate of
return.
That is to say, if the on-grid price was set at 1.1 to 1.2
yuan/kWh, solar power companies would receive an internal rate of
return more than 8 percent.
However, a number of companies still regard a price set at 1.1 to
1.2 yuan/kWh too low to accept, and when talking to the NDRC they
argued that an on-grid solar power price 1.5 yuan/kWh would be
reasonable.
Nevertheless, the setting of an on-grid price is a significant
step forward for the solar power industry, and it will be the second
approved on-grid price in new-energy industry, following the on-grid
wind power price.
A top manager with LDK Solar (LDK.NYSE) disclosed that quite a few
solar power companies have been busy building PV plants. Once the
on-grid price for solar power comes out, the rate of return on
investment will be clear. Furthermore, a large number of PV plant
projects are expected to begin operation soon, which will also help
the oversupplied polycrystalline silicon industry to find a way
forward.
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