Cold cash not enough to heat up on-site solar

May 12, 2014 10:50
The subsidies are in place but still there's no sign of a boom in rooftop solar generation. Photo: AFP

The push is on, the big subsidies are there but still the much-hoped-for boom in distributed solar generation has not occurred.

Local governments are rolling out subsidy after subsidy to spark interest in schemes like rooftop solar projects. Shanghai, for example, is offering 0.25-0.4 yuan per kilowatt hour for the green energy, well above 0.2 yuan the industry was expecting the city to pay.

Higher subsidies are supposed to generate greater interest in the sector but industry players say several factors could keep distributed generators in the shade this year.

Shandong-based Hangyu Solar executive director Ding Wenlei {丁文磊} said distributed power projects are not good investments for residents because households don't use much power, resulting in unattractive returns.

Ding said it makes more sense for factories to invest in such a project because their power use is much higher, and yields could be more than 8 percent.

Financing is another issue. Banks are generally not enthusiastic about approving loans for such projects given the payback period can stretch for a decade.

Solar equipment quality is also a bottleneck. Jingko Solar told that half of any investment in a distributed project goes on buying parts.

Although the quality of made-in-China solar panels is quite good, most manufacturers choose to ship their best products overseas. reported that the panels at one solar power station in China deteriorated so badly and so quickly that they were unusable less than a year after they were installed.

So subsidies alone are not enough; a boom will take a government push to improve financing and equipment quality too.

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EJ Insight writer