China is planning to slash its solar and wind power subsidies to account for fall in project costs. The government pays these generators for electricity produced by them. However, due to fall in the overall costs related to these projects, the government announced on Monday that it has decided to take the new step.

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The tariffs payable to solar farms are likely to be curtailed by as much as 19 percent in the coming year. For windmills, the level of decline is expected to be as high as 15 percent by 2018. The cuts will help the government saving nearly $863 million a year in subsidies. The details about the new regulations are available at the National Development and Reform Commission's (NDRC) website. 

The level of reduction will vary from region to region. The places with calmer winds and weaker radiation are likely to see smaller cuts in subsidies. The NDRC stated that these areas also tend to use more electricity.

The commission said that the subsidies have been rationalize to reflect lower cost of producing the energy. It also said that the new rates will help ease the burden on state investment. According to Bloomberg, the average price for a solar panel declined 30 percent this year. Similarly, price for wind turbines also fell.

China also plans to encourage local governments to carry on their auction initiative for selecting renewable energy suppliers. The NDRC said that the move will help to further lower the power tariff. The subsidiary cuts, however, will not affect energy prices for community-based solar power projects and offshore wind turbines.

Tagssolar power, Wind energy, National Development and Reform Commission