Reduction of National Subsidy Towards Photovoltaic Industries

Spotlight Activity: Reduction of National Subsidy Towards Photovoltaic Industries

The National Development and Reform Commission, along with Ministry of Finance and Chinese National Energy Department put an immediate notice on reducing the subsidies towards the Photovoltaic Industries across China on May 31st. There’s no further notice on recall the notice since then. Starts from September 2018, the cutting of subsidies are officially in place in all the provinces in China. According to the notice, Development and Reform of Energy (2018-823), the motives of the change are to reduce the financial deficit pressure of subsidizing the renewable energy industries, to increase the international competitiveness of Chinese photovoltaic business from technological aspect and to promote a healthier photovoltaic business through selecting the photovoltaic companies with least costs and highest efficiency.

Reduction of 5 cents of subsidy per kilowatt hour electricity helps mitigate the pressure of financial deficit on the renewable energy development sector for Chinese Ministry of Finance. According to Renmin News on June 12th, it’s said that the total amount of financial deficit amounted 455 billion dollars for subsidising photovoltaic business only. This accounted for 40% of the total government spending on renewable energy development of that year. With the rapid expansion of photovoltaic businesses in the beginning of 2018, this financial deficit gap was widening further.

Selection of photovoltaic products with high efficiency and quality and lower price is needed in China. With the decision of subsidising photovoltaic industries made by Chinese National Energy Department in 2013, photovoltaic industries began expanding rapidly. The quality of some of the photovoltaic products became concerning. Also, with the excess production capacity of the photovoltaics, many cases of unethical use of the subsidising policy were reported. For example, some companies would abandon the photovoltaic site after installing the products.

The possible outcomes for this subsidy reduction are still unpredictable. It’s possible that it will discourage the development of the photovoltaics in China due to the lessened money. However, it could also be a policy that selects out the high quality photovoltaic providers, and lead to an era of highly efficient renewable energy production that gradually replaces conventional coal-based electricity.

Status: Standing Still

Electricity generated by photovoltaics can be an important sources of energy in China. Currently, the majority of electricity generated in China are from coal burning. Electricity generated by renewable sources helps reduce carbon emissions in China, replacing some carbon-based electricity.

The reduction of government subsidy on photovoltaic electricity has the potential to strengthen the photovoltaic industry. However, more support towards the renewable energy sector needs be given to further mitigate carbon emission. Also, a way needs to be found to meet the needs of villages that used the subsidy to afford installing photovoltaic products.

Take Action

You can encourage governments support for renewable energy sector through sending the following action alert message to National Energy Department:

We’re glad that government has the intention to promote technological innovation in the photovoltaic sector. However, that a way can be found to enable; villages harmed by the removal of the subsidy to still have access to photovoltaic products. What’s more, we suggest the National Development and Reform council take into account environmental cost of using coal to generate electricity when deciding whether or not to continue with the removal of photovoltaic subsidies.

Send Action Alert Message to:
Mail Box:
National Development and Reform Commission

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