This March, investigative journalist Yuan Ying won the ‘most influential’ category at the China Environment Press Awards with an article on the failure of China’s photovoltaic (PV) subsidy program ‘Golden Sun’. The award was organized by UK newspaper the Guardian, www.chinadialogue.net, a bilingual website on environmental issues in China, and Sina, a leading Chinese web portal.

In her article, Ying analyses the shortcomings of the Chinese government’s “strongest ever show of support for the solar PV industry” and argues that it has in fact ended up threatening to destroy many of the businesses it initially aimed to support.

The program was originally launched in 2009 as a response to the evolving financial crisis, with the aim of preventing the closure of 10,000 domestic solar PV plants. It offered to pay 50% of the investment costs for qualifying plants and 70% for projects in remote regions not connected to the grid. According to Ying, many enterprises declared their material costs to be artificially high in order to receive higher subsidies. At the same time, it appears that parts of the solar PV supply chain also competed to win contracts by offering prices lower than production cost, with the result that some are struggling to remain viable and others are supplying second-class components and defective stock, including discarded returns from overseas.

Although the program appears to have had the desired impact for large-scale solar firms – providing a welcome boost for demonstration plants and buoying up share prices – Ying found that small- and medium-sized companies, representing just under half of the 200 entreprises with qualifying projects under Golden Sun, have not been so well served. Many have commenced ambitious construction projects with little capital on hand and are still waiting on the government to transfer the promised funds. Moreover, it is far from clear that their solar PV plants will be viable once constructed, with one business chairman stating “I do not know who we should sell the electricity to, I do not know who will pay for it or what the price of electricity will be”. The industry is hoping that China will announce a feed-in tariff for solar PV but this is thought to be several years away.

Ying reports that the Chinese Finance Ministry has promised to conduct inspections to ensure that no fraud is taking place, but mentions no official statements regarding the uncertainty facing small- and medium-sized enterprises.

Although the original version of the article has not been published in English, Ying’s findings are described in the article ‘Burned by the sun’, first published in weekly newspaper Southern Weekend, and available at the chinadialogue.net website.