Solar Can Go Subsidy Free in China, Says Study

Researchers from Stockholm’s KTH Royal Institute of Technology released this week a study that is among the first sweeping reviews to date on the grid parity of Chinese solar.

In a study that puts the incredible drop in solar prices in context, a study by researchers in China and Sweden has concluded that 344 prefecture-level Chinese cities can afford to buy solar-powered electricity at a price lower than the existing grid.  The paper was published in Nature Energy, a British peer-reviewed journal.

What’s more, in nearly a quarter of these cities, solar power is actually competitive with coal-fired electricity too. The study could be a real marker on the shift in direction of the solar market, where big markets like China and India have started a move away from subsidies or Feed-in tariffs to an auction led regime.  In fact, in India, the sharp drop has probably created more problems than ease of business, what with state governments itching for an opportunity to renegotiate or force down previously signed tariff deals.

The study’s findings continue to prove that famous quote from Bill Gates, that while we tend to overestimate change and possibilities in the short term, we tend to underestimate the long term.  Back in 2014, most industry players would have laughed off anyone who predicted today’s solar rates, until the Chinese stepped in, and changed the whole renewables story for good.

In China itself, the solar industry has been consolidating since June last year, when the government pulled the plug on its generous subsidies program in a bid to curb excess capacity and wasted investment. While that has led to some tempering of growth, China continues to pile on solar installations, comfortably on top of the world’s solar stakes, both in installed capacity, manufacturing capacity and projected growth.

News of record-low rates in Portugal this week, besides dropping rates even in niche areas like floating solar only demonstrate the fallacy of predicting any breaks for solar, as figures even from 2018 might no longer be valid when comparing its performance and returns vis a vis fossil fuel powered electricity.

As of now, it seems safe to predict that if one factor in the probable higher cost of emissions compliance on solar competitors that are non-renewable, solar and to an extent Wind, will be the renewable option of choice for almost every sun-drenched country on earth.

Published with permission from Saur Energy

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