China considers axing some solar subsidies

China may change its energy policy and end one-time subsidies to large-scale solar power projects.

China may tweak its energy subsidy policy to give preference to smaller projects in a bid to promote the construction of new plants in areas that currently suffer from power shortages.

It's possible the new policy would end one-time subsidies, Meng Xiangan, vice chairman of the China Renewable Energy Society in Beijing told Bloomberg News. A separate subsidy based on power production would be extended to low-voltage plants, reported Bloomberg.

If the move is confirmed, the government will reduce incentives under its Golden Sun program, which provides subsidies for demonstration sun-power projects. This isn't the first time the Chinese government has scaled back the Golden Sun incentive program, which was established in 2009. Last year, subsidies were reduced 21 percent to reflect a drop in solar component prices.

Chinese solar manufacturers, already suffering along with their counterparts in Europe and the U.S. from an industry consolidation, can't be happy with the prospect. The global consolidation and a cut in subsidies across Europe has forced Chinese companies to rely more on domestic growth. Even with subsidies from the Chinese government companies are struggling.

Suntech Power Holdings, once the world's biggest solar panel maker, is now unprofitable and last week defaulted on a $541 million bond payment.

Photo: Suntech

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