China, the world’s biggest producer of solar panels, cut subsidies for demonstration sun-power projects approved in 2011 and this year after the cost of components declined.
The government reduced the subsidy for projects approved last year by 11 percent to 8 yuan ($1.3) a watt, the Ministry of Finance said in a statement yesterday. It will offer a subsidy of 7 yuan a watt for those that are eligible for the assistance this year.
The subsidy applies only to projects developed by owners who will consume the power for their own use under the so-called Golden Sun program.
The cost of solar panels fell 47 percent last year as Chinese manufacturers increased production, leading to excess capacity after European governments cut back on subsidies. The price declines has led some some companies including Trina Solar Ltd. (TSL) to predict that solar technology is nearing parity with fossil fuels to supply power to national electric grids at a competitive price.