49 replies to this topic

[explo]

The distributed FiT has different mechanics. I'm referring to the PV plants.

[greensolar]

Now on Yahoo and Reuters,

Big Day tomorrow ..........

China to offer tax breaks to solar power manufacturers

http://finance.yahoo...-162915398.html

[odyd]

Now on Yahoo and Reuters,

Big Day tomorrow ..........

China to offer tax breaks to solar power manufacturers

http://finance.yahoo...-162915398.html

Looks like Reuters cannot put enough negative spin on it, unbiased journalism

[joshchang]

In the distributed format you do not sell anything, and you get the FiT. Josh, help understand this.  

As long as you are getting paid by FiT amount (0.9-1 RMB), you need to pay VAT. For distributed power plant, there is a subsidy for 0.42 RMB per kwh. 

[greensolar]

Looks like Reuters cannot put enough negative spin on it, unbiased journalism

Completely agree always using LDK and STP to put negativity back in the news.

[odyd]

As long as you are getting paid by FiT amount (0.9-1 RMB), you need to pay VAT. For distributed power plant, there is a subsidy for 0.42 RMB per kwh.

I am not sure where did I get this subsidy condition. Thanks for clarification, very good still.

[joshchang]

Completely agree always using LDK and STP to put negativity back in the news.

WTH, they are using 90% of the article to spin the negativity although this news itself is a big positive for all CN solars.

[explo]

Wow that Reuters article is really misleading. They make it sound like manufacturing get tax breaks (i.e. panel supply side support), when it is the panel demand side that's supported with this tax break.

[pg6solar]

Let's keep euphoria in check for now. With the looming US gov. shutdown (however short it will last, if any), then debt ceiling crisis(much more serious), market is poised to be taken down (of course as always, they'll take solars down more than others). However, with seemingly good solar news coming almost daily, it will present an other buying opportunity since, if nothing else, China seems to be serious now. 

[explo]

I am not sure where did I get this subsidy condition. Thanks for clarification, very good still.

I think the confusion was that I talked about the transmission based generation FiT of 0.9-1 rmb and you about the distributed generation FiT of 0.42 rmb. I think the mechanics of the former is as I described, while the latter is as you described.

[sunnysky]

Lets try to have a clearer understanding of the FiT and VAT policies.  First of all, the FiT takes different forms for power plants and distributed generation. For power plants, FiT is embedded in the standard price you get paid when sending the electricity to the grid. The standard price varies from 0.90 to 1.00 RMB per kwh based on the region of the plant location. For simplicity, lets use 1.00 RMB through out. I think this 1.00 RMB standard price does not include VAT. Therefore, you have to pay a VAT of 0.17 originally but just need to pay 0.085 now. Your after tax revenue is then 0.915 instead of 0.83 per kwh. The reason to have a standard grid price is that because the electricity cost varies greatly in China based on geographic location, the category of the electricity usage, and other factors, the same standard grid price ensures the same level of investment return in the region with the same level of natural solar resources. (The FiT for central power generation is thus not fixed.)

 

For distributed generation, you receive a fixed FiT directly, which is pegged at 0.42 per kwh. I'm not quite sure how VAT works here. If you use the electricity yourself, you receive the FiT but I don't think you pay VAT since you are not selling anything. If you sell to the utility for the portion you don't use, it's not clear to me whether you pay VAT or not.  But in case you do pay, it looks like the 50% rebate should apply here as well simply based on the policy. 

 

Let me know if any of my understanding is incorrect.

[odyd]

Sunny, I think everyone was making sense but me. Thanks

[sunnysky]

The 50% VAT refund was first reported in Chinese press back in the beginning of Aug. Now the official announcement has hit all news wires. No matter how some of news sources like Reuters likes to spin it, I believe this is going to be taken by the street as a huge positive and in turn help to drive up CN solar stock prices.

[odyd]

With the looming US gov. shutdown (however short it will last, if any), then debt ceiling crisis(much more serious), market is poised to be taken down (of course as always, they'll take solars down more than others).

If this happens, like for any stock and particularly solar, particularly nonsense reason. 

I think by now here we know to ignore thing like that. 

[explo]

Thanks for all the explanations sunnysky.

 

pg6, I think this VAT rebate is of great significance for the demand in China. It's effect is of persistent nature. If you will you could say that it added hundreds of millions in future profits for China's PV plants and thus their CN11 owners or panel suppliers, but the question is how much the market already priced in this policy.

 

A temporary U.S. government shut down doesn't really change the risk profile of my Chinese company share assets that much, but market might have an irrational day were they think it is end of the world and only sold gold, guns and gasoline has any value, but it will pass quickly. Equity representing hard assets in other parts of the world (like a Russian oil field or an Australian mining company) might all be treat as U.S. companies depending on government contracts, i.e. simply sell all equity since there's some uncertainty. It might be one of those days were the market focus on the wrong things thus creating a short-term buying oppotunity into the really interesting stories in select sectors or companies.

[pg6solar]

However, with seemingly good solar news coming almost daily, it will present an other buying opportunity since, if nothing else, China seems to be serious now. 

[explo]

Yes, i realized i was just repeating your insight, but i think the VAT rebate is good reason for excitement due to its persistent impact on cn11 profits. Now the government is not just taking from consumers and traitional producers to fund FiT driven installs of this new energy source, now they are also taking from state revenue. It shows an extra level of support.

[Pop2mollys]

This is amazing news. More fuel for the fire. Let see how Chinese solars react when they open up overseas In 2 hours

[sunnysky]

Looks like Chinese market will stay closed until Tuesday 10/08 due to the National Day holiday.

[odyd]

Markets are open and the index is up 3%

https://solarpvinvestor.com/china-index

thing is loading poorly but if you have a minute you should see it.