Share prices in solar power equipment manufacturers surged in New York and Hong Kong Thursday after the Chinese government announced plans to build a new round of pilot wind and solar power projects, Bloomberg reports.
Beijing is essentially offering a new deal to the renewable energy industry as it moves away from a highly costly and inefficient old system, under which the government handed out large subsidies to companies installing new capacity.
The pilot projects will not receive national government payments, but they will sell the power produced to the grids at fixed prices that are the same or lower than those used by coal-fired plants, according to the National Development and Reform Commission. These power purchase agreements will be long-term, offering security to energy firms. Subsidy-free plants will also be able to opt out of taking part in some power market transactions.
“This offers much-needed certainty for investment decisions,” Tony Fei, analyst at BOCI Research, wrote in a note. “The solar PV supply chain could be more direct beneficiary.”