China’s largest solar power plant project, boasting 200 MW, began construction in the Golmud Desert of Qinghai

Longyuan Power affiliated to China Guodian Corporation, one of the national power producers, signed the contract with Golmud’s government to cooperatively construct the 200MW solar power project.

The first phase with an annual production capacity of 36 million kwh is expected to enter production in September, 2010. Every year, it will save 12,500 tons of coal and reduce emissions of carbon dioxide and industrial dust by 6,067 tons and 175 tons, respectively.

Golmud, situated in the Qaidam Basin, is rich in solar power resources. It has an annual duration of sunshine of 3,300 hours, which is one of the highest in China, serving as great potential for photovoltaic power generation.

China is preparing to launch a nationwide feed-in tariff for utility-scale solar plants by the end of the year, according to Suntech Power, one of the world’s largest makers of solar panels.

The tariff, which would guarantee solar farm operators above market rates for the energy they produce, is expected to fall between US$0.16 and US$0.22 per kilowatt hour of electricity produced at large-scale photovoltaic arrays, Suntech chairman Zhengrong Shi told Power Engineering Magazine at the weekend.

The range is significantly higher than the average rate of US$0.05 per kilowatt hour paid to coal-fired electricity generators and is expected to bolster the financial case for a raft of proposed solar projects.

China is aiming for an installed solar power capacity of 2 GW by 2011, nearly a 15-fold jump from the 140 MW capacity it had at the end of last year, according to people familiar with the matter.

The National Energy Administration has decided to expand the country’s solar power capacity to 2 GW in the next two years, with a subsidized price for solar power of 1.09 yuan per kWh, the source said.

China is trying to catch up in a global race to find alternatives to fossil fuels. The country, which revised its 2020 target for solar power capacity from 1.8 GW to 20 GW in its new energy stimulus plan, added 40 MW in new capacity last year.

Six regions and provinces in Northwest China are the most suited for installing solar PV stations in terms of sunshine days. These are Inner Mongolia, Xinjiang Uygur autonomous region, Gansu, Ningxia, Qinghai and Shaanxi, said Shen Yanbo, an expert from the National Climate Center.

The government’s new policy would come as a boost for solar energy in the domestic market and create greater opportunities for companies involved in the entire solar supply chain, said Zhang Shuai, a new energy analyst with Sinolink Securities.