China’s Major Solar Farm Push

Solar power equipment is already quite cheap in China as the country is home to some of the world’s largest solar panel manufacturers including Suntech and Solarfun, but the Chinese government last week launched an ambitious program that will see new solar farms dotting the landscape at an even more frenetic rate.
 
Last Friday, the Chinese government announced a new subsidy that would pay 20 yuan (around AUD $4.30) per watt for solar farms with a capacity greater than 50 kilowatts. This level of subsidisation for grid connect solar power is considered one of the highest in the world and would pay for around half the cost of a large solar array.
 
The announcement was extremely good news for solar stocks, with Suntech being one of the companies experiencing the highest gains over the ensuing 24 hour period.
 
While the new scheme has financial analysts debating whether it’s such a great thing or not, what it means for the entire industry is a major stimulus to encourage further research and development and moving the world closer to the holy grail of $1 per watt. 
 
As was the case in the 1970’s where goods from Japan were labelled by many as "Japanese junk", only to see this change dramatically and Japan be equated with quality, so too is China experiencing the same shift as people start to realise their solar products are among some of the best in the world.
 
The program is also a demonstration of a commitment to environmental stewardship on China’s part. The nation is often criticised on environmental issues, but many forget that China is basically the factory of the world – other countries just outsource their pollution to China in order to produce goods for domestic consumption. However, while China continues to grab increased market share of global solar cell production, increasing to 44% in 2008; all that production is by no means just exported to the rest of the world – the country is a global leader in domestic renewable energy generation and installed capacity.