The Chinese government on Thursday announced what some industry analysts called the most aggressive and generous solar power subsidy in the world, giving Chinese solar companies a big market boost amid a generally gloomy outlook for short-term growth.
China's solar subsidy plan would offer 20 yuan (about $2.94) per watt for solar photovoltaic installations greater than 50 kilowatts. That would essentially cover half the cost of entire installations at today's low solar panel prices, according to an RBC Capital Markets analyst note.
Likewise, RBC Capital Markets analysts Stuart Bush and Sandeep Ayyappan noted Friday that the Chinese subsidy plan, while "an unexpected boost to global demand," didn't provide many details on when it would be implemented and how it would be structured.
Still, the Chinese subsidy announcement – combined with European nations' existing feed-in tariffs and other supports for solar power, as well as new and more generous U.S. solar incentives (see Obama Signs Stimulus Package) – gave the analysts hope that prices would stabilize from their downward march, helping to stem the build-up of inventory throughout the silicon solar panel supply chain.
Of course, China – along with much of Asia – holds the advantage of lower labor costs compared to production facilities in the U.S. and Europe. Asia could produce 82 percent of the world's crystalline silicon solar cells by 2012, up from 71 percent in 2008, according to a new GTM Research report, "PV Technology, Production and Cost, 2009 Forecast: The Anatomy of a Shakeout." (see Go East, Solar Companies).