SHANGHAI (Reuters) - China’s decision to curb solar power capacity growth and cut subsidies will help the sector focus on quality rather than quantity and ease the financial burden on the government, an energy official said in an interview with state news agency Xinhua.
The country’s planning agency said at the beginning of the month that it would cut subsidies and approve no more than 30 gigawatts (GW) of new capacity this year as it tried to ensure that grid transmission capabilities could keep up with the vast number of new projects being commissioned.
But China’s solar panel manufacturers last week urged authorities to rethink the plan, saying it would damage the sector at a critical time in its development.
Some manufacturers were already facing closure as a result of overcapacity, Wang Bohua, vice-chairman of the China Photovoltaic Industry Association, said in April.
However, the unnamed energy official told Xinhua that while the new measures might hurt, they were a price worth paying.
“The costs of solving the difficulties facing the photovoltaic industry are now much lower than the costs would have been after the recent bubble,” the official was quoted as saying.
The policies would help relieve a massive subsidy backlog now estimated at around 120 billion yuan ($18.75 billion), with the finance ministry struggling to find the funds to support the vast number of new projects.
“If this abnormal increase (in capacity) continued, the subsidy gap would widen further and have an even more unfavorable impact,” he said.
China’s solar capacity rose by a record 53 GW in 2017, bringing the total to 130 GW by the end of the year. Solar makes up about 7 percent of China’s total generation capacity.
(The story corrects percentage from 0.7 percent to 7 percent in final paragraph)
Reporting by David Stanway; editing by Richard Pullin