A Surprise Decision in China to End Many Solar Subsidies

In a surprise decision in the world’s largest solar market, the Chinese government has decided to end feed-in tariffs and greatly limit subsidies for new solar photovoltaic electric generating installations.


Many industry experts are going so far as to call this move by the Chinese government a ‘bombshell’ for the world’s  photovoltaic marketplace and overall solar growth. It only adds to the concerns in an unstable industry that has largely been either in a boom or bust state over the last several decades. 

Boom or bust is nothing new when it comes to renewable energy production sources by any means and China is no exception. With that being said, China’s increased installed solar photovoltaic capacity over the last decade has been nothing but that of a boom for sure. In the last decade China has dramatically leaped over Germany as the leading solar energy producing nation in the world and now they have almost double the installed solar photovoltaic capacity as that of the next leading country (USA). 

This move was done as a result of action that was badly needed to cut back on the countries excessive subsidy costs which totaled over 15 billion USD in 2017 alone. If something was not done China’s expected subsidy costs were expected to exceed 38 billion USD by the year 2020. 

What Makes This Decision So Surprising? 

China is not the first country to end subsidies that were once used to spur on solar energy growth. Even some American states have cut back on or ended solar subsidies. So what makes this move by the Chinese government so surprising? Some of it has to do with the fact that China has by far and away been the leader in world solar generated power growth. The figures are not even close compared to the rest of the world. 

Over the last few years China has outpaced the world by a large margin in gigawatts of installed photovoltaic capacity. In 2017 alone China added some 53 gigawatts of installed photovoltaic capacity. China’s current installed solar photovoltaic capacity amounts to almost 30% of the world’s total installed solar photovoltaic capacity. 

Another factor that makes this decision a little hard to fathom is the fact that China is still extremely dependent on coal fired electrical power plants. Over 60% of the countries power needs are still derived from coal. That does not bode well for a country that has some of the most polluted cities on the earth in it. China’s massive coal consumption each year equals the rest of the worlds combined. Clean, renewable energy sources including solar were expected to help greatly cut into a lot of the pollution that’s been created by the countries high number of coal fired power plants.  

So when you factor in the country trying to cut its dependence on coal produced power and trying to cut into its air pollution problem, it really makes no sense for the government to end many of its subsidies that provide the needed catalyst to encourage people and businesses to install more solar generated power capacity. 

How Will this Decision Impact China’s Booming Solar Panel Industry? 

One other fact that makes the move by the Chinese government to end many solar subsidies somewhat puzzling is the fact that between Taiwan and China they account for some 60% of the world’s total photovoltaic solar panel production. That means if the end of solar subsidies also marks the end of China’s solar boom it could hurt many jobs that are associated with the production of solar panels and their subsequent installation. 

This move is thought by experts to dramatically reshape China’s rapid installed solar photovoltaic capacity growth. Industry analysts predict that it could cut into China’s 2018 installed solar photovoltaic capacity by as many as 20 gigawatts. That’s a huge figure for a country the size of China. Many modern countries around the world don’t have nearly that much installed solar photovoltaic capacity in total. 

The Rest of the World Will Be Watching Too 

The move by the Chinese government in Beijing may also affect the world’s supply and pricing of solar panels too. Some analysts predict that for the first time in many years the world’s solar growth will actually decline. That will be a sad sign for renewable energy advocates and others that would like to see this world become a little greener place. 

There will definitely be many solar energy related professionals, renewable energy advocates and green energy supporters around the world that will anxiously be watching to see what the fallout is from this landmark Chinese solar subsidies and tariff decision will be. 







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