China will stop subsidizing new solar farm projects, distributed solar projects for commercial users and onshore wind farms as of this year, Reuters reported, citing the country’s central planning authority.

The change will take effect on August 1 and deviate from the price set at the end of last year. The country’s finance ministry had previously pledged to give 57% more subsidies to solar power projects this year, although it has cut subsidies for wind power.

China is an ongoing lesson in using subsidies to support the wider deployment of renewable energy capacity. For years, Beijing has been generous enough with these facilities, spurring a surge in renewable energy that has made it the country with the greatest solar and wind capacity. Then, in 2018, China dropped a bomb on renewable energy investors.

A joint statement released on Friday by the National Development and Reform Commission, the Ministry of Finance and the National Energy Administration said that the allocation of quotas for new projects had been suspended until further notice. , and the tariffs for electricity produced from clean energy will be lowered by 0.05 yuan per kilowatt hour, down from 6.7 to 9% depending on the region, as of June 1, â€the South wrote. China Morning Post in 2018.

The news has rocked solar stocks and industry into a frenzy. The motivation behind the cut was that Beijing wanted to ensure that the local solar industry was sustainable in the original sense over the long term.

Still, the reasons for the cut – and the end of grants this year – weren’t exactly altruistic. China has accumulated huge debt in the form of subsidies owed to wind and solar companies due to its previously generous support for new projects. The stack, according to a Bloomberg report from July of last year, is worth around $ 42 billion.

By Irina Slav for Oil Octobers

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