(Yicai Global) Oct. 19 -- China is planning to lower the feed-in tariff for renewable energy suppliers more than expected as subsidies become unsustainable, widening the funding gap for projects that help to curb greenhouse gas emissions.
The National Development and Reform Commission, the country's top economic planner, heard suggestions about adjusting the new-energy benchmark price on Oct. 17 and plans to cut subsidies for wind and solar power projects, an industry source told Yicai Global.
The existing subsidy model is unsustainable as the gap in renewable energy subsidies reached CNY55 billion (USD8.16 billion) in the first half of this year. Cuts in the tariff would give companies in renewable energy less incentive to invest.
Benchmark tariffs for solar farms in class three solar energy regions will fall by between 23.5 percent and 31.2 percent, while subsidies for distributed power generation projects will drop by almost 40 percent -- much deeper cuts than previously expected -- industry sources told Yicai Global.
The renewable energy industry faces an increase in local enterprises abandoning wind and solar power plants and a significant gap in government funding for subsidies, according to Mr. Li Yangzhe, administrator of the National Energy Administration.
The government categorizes solar resource areas into three classes: class one has over 1,600 hours of equivalent capacity utilization a year; class two has 1,400 to 1,600 hours a year; and class three, 1,200 to 1,400 hours a year. Different feed-in tariffs are applied to the regions -- CNY0.9 per kilowatt for class one; CNY0.95 for class two; and CNY1 for class three.