China offers carrot for solar power development

BEIJING, March 27 (Reuters) - China will provide 20 yuan ($2.93) per watt peak (Wp) of subsidy for solar power projects attached to buildings that have capacity of more than 50 kilowatt peak (KWp), the Ministry of Finance said, as the government makes a push for clean energy development.

Analysts said the support was unprecedented and would help expand the use of solar power much faster than before, when installation was hampered by high costs and limited subsidies.

China, the world's third-largest major economy, is heavily reliant on burning coal to fuel its economic growth.

Solar power programmes based on monocrystalline silicon panels should transform more than 16 percent of solar heat that panels receive into power, while those using polysilicon panels, more than 14 percent of solar heat, said the document posted on the ministry's website (www.mof.gov.cn).

Solar power panels made by non-silicon materials are required to transform more than 6 percent of solar heat.

The government said it will give preferential support to projects that can integrate parts of solar power equipment into buildings and those having connection to grid networks.

It will also give priority to schools, hospitals and government buildings aiming to develop solar power systems.

"The threshold is pretty low," said Wang Jing, chief power analyst with Hongyuan Securities. "Monocrystalline silicon panel projects over 313 square metres would qualify for the subsidy of some 1 million yuan, so will polysilicon panel projects over 833 square metres."

"Installers almost get free modules and will only be paying installation costs and other small fees," she said.

Solar panel installers are looking at at least breaking even with the help of the subsidy, as power generation costs from solar panels could be lowered to as low as $0.04-0.06 per kilowatt hour, largely in line with current power prices, a research note by Merrill Lynch and Banc of America Securities said.

Hongyuan's Wang said she expects China's new solar power generating capacity could soar to 500 megawatts (MW) and even more by the end of this year from less than 100 MW currently. ($1=6.832 Yuan)

(Reporting by Jim Bai, Editing by Jacqueline Wong)