Deputy Director of China’s National Energy Bureau of Renewable Energy, Mr. Lishan Shi, said that the Gansu Dunhuang 10 MW solar power plant project is accepting tender offer now.  This is the largest solar power plant project in China to date.  Mr. Shi expects the on-grid electricity price to decrease to below RMB2 per kwh due to the declining prices of solar raw materials.   

Mr. Shi claims that the company which offers the lowest rate will win the bid.  Currently, there are around 50 companies competing for the project including local Chinese companies such as the five largest power companies and Suntech as well as a few foreign companies. 

This project is located 13 miles away from the city of Dunhuang and covers an area of 1 million square meter.  Total investment is roughly RMB500 million and annual power generated is expected at roughly 16.4 million kwh.  The government is in charge of the tendor offer because this project has significant meaning to the country.  According to the National Energy Bureau, the winner has to complete the construction of this solar power plant in 18 months and will have 25 years of operating right.   

　　The Chinese government so far has approved three solar power plant projects, including the one in Dunhuang, one in Shanghai Songming Island and another one in Inner Mongolia.

　　The government has to subsidize RMB4 for each unit of electricity generated for the two projects in Shanghai and Inner Mongolia.  Hence, solar power is roughly eight times more expensive than traditional electricity.  The current financial crisis has resulted in a sharp decline in polysilicon price and construction cost.  Declining raw material prices should lead to more development potential for the solar industry.