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China Releases Large-Scale Solar Project PPA Template

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China’s already aggressive solar initiative is set to get a massive boost with favourable changes and new introductions to government’s regulatory supportive mechanisms.

The Chinese government recently released templates for long-term power purchase agreements for large solar power projects. This template can be used by any project developer looking to sell solar power to state utilities. The government also issued a similar template for wind energy projects.

With these power purchase agreements in hand, project developers would likely be able to secure funding for implementation of the projects more easily. The issuance of template PPAs is latest in a long list of measures to boost China’s solar power capacity.

Last year, the government had announced new preferential tariffs for large-scale solar power projects based on the region in which they are located. Projects in areas with more solar radiation were eligible for CNY0.9/kWh (US$0.147) while those with lower solar radiation were eligible for CNY1.0/kWh (US$0.163). The tariffs are applicable to projects approved after 01 September 2013.

The government has also set highly ambitious solar power capacity addition target which have been upgraded on several occasions over the past few years. China aims to have an installed solar power capacity of 35 GW by end of 2015. By the end of 2013 the country had an installed capacity of 19.4 GW with addition of 13 GW in 2013 itself.

The anti-dumping duties levied by several countries on the Chinese solar panel manufacturers may be one of the factors responsible for the government setting very high domestic capacity addition targets. Now, the domestic demand for solar panels in China is expected to increase so rapidly that it could reverse the trend of declining panel prices.

President of JA Solar, the world’s third-largest solar panel manufacturer, expects that due to the conducive domestic policies, the demand for solar panels would rise significantly, which would spur a price increase. The latest anti-dumping duties announced by the US Department of Commerce have already pushed the prices up by 15%, Bloomberg News claims.

2014 may see the largest ever annual capacity addition in the Chinese solar power sector as the government seems determined to achieve the 2015 target. In January this year, the target to install solar power capacity was increased from 10 GW in 2014 to 14 GW. With a capacity addition of 13 GW in 2013, China represented 37% share in global capacity addition that year. China Electricity Council announced earlier this year that the country aims to have an installed capacity of 2,400 GW of renewable energy capacity by 2050.

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