A CHINA F-I-T

China to Introduce Solar FIT: Reports
Eric Rosenbaum, July 29, 2011 (The Street)

"A surge in Chinese solar market demand could give a jolt to inert solar stocks…Two new reports suggests that a national feed-in tariff, long delayed in China, is finally set to debut in the second half of 2011.

"If the reports are true, and China finally steps up and stimulates domestic solar demand, it will be a welcome change. The emerging giant's primary role in the solar sector has been to dole out capital to Chinese solar companies through state-owned banks, and that's only served to stimulate industry overcapacity."

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"Yet.. details about the Chinese national feed-in tariff system [are] lacking…Reuters reported that China would soon introduce a national feed-in tariff, though its source was a Chinese state news agency. Goldman Sachs…[reported] that a "temporary" FIT would be introduced only for 2011, and only for projects that had been endorsed by the government prior to July 1, and these projects had to be grid-connected by the end of the year. The FIT rate in China would also be much lower than FITs in Europe…

"If it's only a temporary FIT, then the Chinese plans are no panacea for the solar sector…Chinese policymakers made negative comments earlier this year about the European FIT model, so a temporary FIT would make sense..."