Unified tariff for solar power

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China has introduced a unified grid feed-in tariff for solar power, a move that may lead to faster development of renewable energy for homes and that powered shares of solar-related stocks.

The government has set the solar power price charged by power plants to grid operators at 1.15 yuan (18 US cents) per kilowatt-hour for projects which were approved before July 1 and begin operations before the end of this year, the National Development and Reform Commission said yesterday.

The tariff was set at 1 yuan per kWh for projects in regions, excluding Tibet, that were approved after July 1 or would start operating next year, the country's top economic planning agency said. The NDRC had previously approved on-grid tariffs on a case-by-case basis. It said it would adjust the tariffs according to investment costs and technology development in the future.

Solar-related stocks rose following the NDRC's announcement. GCL-Poly Energy Holdings Ltd, China's largest maker of polysilicon, the main raw material used to make photovoltaic panels, jumped 4.8 percent in Hong Kong, while Shanghai Chaori Solar Energy Science and Technology Co soared 6.6 percent in Shenzhen trading.

"The unified tariff will be positive to the industry in the long term because you now have a system in place," said Hou Wentao, an analyst at Xiangcai Securities. "But in the near term, I don't see any explosive growth in domestic installations."

Although China makes half of the world's solar panels, only a tiny proportion is installed domestically because solar power is more expensive than coal-fired electricity, the major power source in the country.

The NDRC said it will continue to hold tenders for commercial solar power projects, but any winning bid shouldn't be higher than the benchmark tariff. China has unveiled subsidies to encourage the development of rooftop solar projects and those in remote areas which are not connected to the grids.

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