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China cooling has mixed solar power impact

China cooling has mixed solar power impact
Issue Time:2018-08-10

While a Chinese decision to limit subsidies on new solar project curbs global growth, some sectors will benefit from the subsequent oversupply, analysis finds.

The National Energy Administration in China in June scrapped new subsidies for utility-scale solar power stations. Analysis compiled by consultant group Wood Mackenzie found that Chinese demand for solar power this year declines 40 percent as a result.

China's decision to cut tariffs was designed to slow the accelerated growth in the country's solar power capacity. The country last year accounted for about 60 percent of new solar installations and the new measure imposed strict quotes on new capacity, eliminating generous subsidies for projects outside that quota.

Nevertheless, Wood Mackenzie found that three countries - China, India and Japan - will account for the bulk of the new installations over the next two years.

"Despite the slowdown in the Chinese market, as well as China's and Japan's declines year-over-year, Asia will continue to account for at least 50 percent of the global annual install through 2020," the consultant group's emailed report read.

Because Chinese installation of new solar power capacity declines 30 percent from initial expectations through 2022, global demand cools off as well. Global demand for solar projects in 2018 declined 17 percent compared with Wood Mackenzie's forecast before the Chinese subsidy announcement.

In June, the International Energy Agency found total global energy investments declined 2 percent from 2016 to reach $1.8 trillion last year. Financial support for renewable energy, which accounted for about 60 percent of the total spending for power generation, declined 7 percent.

IEA Executive Director Fatih Birol said the decline threatens the expansion of low-carbon alternatives as well as climate goals set by nations and blocs.

Wood Mackenzie found, however, that the price for solar modules drops because of market saturation resulting from the slowdown in the Chinese market.

"Some markets will see increased installation, particularly Europe, though the benefits will not be realized until 2019 and beyond," the report read.

China, the second-largest economy in the world behind the United States, saw record spending in solar power, accounting for about 45 percent of the total last year. For all energy investments, China took in about 20 percent of the world total.

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