China has been rumored for a long time to mandate a law to provide for a higher electricity rates for renewable energy production (Feed in Tariff) . First Solar the largest solar company in the world had signed an agreement with the Chinese government for setting up a gargantuan 2 GW plant in Mongolia based on the promise that the Chinese govt would set up a FIT for solar energy.However China has been procrastinating on this issue since a long time . First Solar recently hinted that it might not set up a manufacturing plant in China project because delays in deciding the FIT.This could be a pressure tactic by First Solar to push for some sort of FIT .China desperately needs clean technology while US firms need market access to the huge Chinese market.
China has a target of generating 15% of its energy from renewable forms by 2020 from the single digit percentage now.Most of the power in China is generated through the dirtiest form of energy – coal.The environmental norms are very weak resulting in huge pollution problems in China.Besides this the problems of global warming and “peak resources’ makes it essential for China to move faster with regards to Clean Technology.In Wind China has become the 2nd largest market in 2009 leading to an oversupply situation.However in Solar , China is not even in the top 10 countries . In my opinion the reason for the not enacting a FIT could be
1) The high price of solar energy which is more expensive than Coal,Gas,Oil,Wind and Nuclear Energy.
2) The prospect of paying out billions in dollars of subsides like Germany.The massive subsidies has forced the German govt to sharply cut off the FIT rates mid year.This has also led to huge financing problems in Czech and Spain.Perhaps the Chinese govt wants to avoid such problems
3) Waiting for the solar energy prices to go even lower ( there has been a 30-40% decrease in solar costs over the last 2 years)
4) China has awarded a number of large solar projects through the bidding mechanism.Perhaps the authorities there feel it is cheaper and more efficient to boost renewable energy through this approach rather than Feed in Tariffs