The stocks of Tianwei Insurance, Sichuan Leshan Electric Energy, Top Ray Solar and other enterprises related to PV industry became the popular investment spot recently. Since the "solar rooftop" plan was published by the Ministry of Finance last week, and further explaination on 31th, the policy  clearly expressed that the "central finance will meet the conditions of the 2009 according to actual installation photoelectric buildings arranged, to ensure the subsidies to demonstrate the application of the photoelectric building work."

This means that the government subsidies used for solar building projects is perhaps more than the market expected. But the subsidy is just for public buildings, compared to the support of foreign policies, it still lacks in scope.

In recent years, China's PV industry grew rapidly. It has become the biggest producer of solar cells in the world. Owing to a lack of domestic market demand, 98% of the domestic production solar cell and module was exported. Because of no support from national policy previously, the ability of our PV industry to resist the risk is very weak.

As we know, financial crisis has less impacted on Japanese PV industry. One of the important reasons is that a more comprehensive policy to support PV industy in Japan can greatly promote the application in the domestic market.

At present, the worldwide PV market demand is still mainly promoted by photovoltaic policies. National subsidy policy can be divided into two kinds: one is to subsidy directly the installation of photovoltaic systems, such as Japan and the United States ITC bill; the other is to set the price of photovoltaic power on grid, such as Germany, and Spain to buy solar power with high prices through grid enterprises. The Japanese government implemented subsidies successfully in 1994-2003, that made the installation of PV accumulative total amount to 1,100 megawatts in 2004 and Japan had the biggest photovoltaic capacity in the world at that time.

It is worth to notice that the key points of subsidies can make PV industry developing rapidly without the limit on what kind of entities to receive subsidy.

While the domestic subsidy policy will give priority to support schools, hospitals and government institutes, and public construction projects, this will be used for photoelectric demonstration; however, it is difficult to drive massive business needs.

At the same time, although the subsidies will reduce the cost of solar power less than 1 yuan/kwh, the scope of allowance does not include the application of photoelectric form without combining construction, such as PV power station. This means that two companies, State Investment Power and Yingli which have successfully won the tender to construct a franchised 10MW on grid photovoltaic power station at bid price of RMB0.69/KWH in Dunhuang, can only rely on their own technology improvement and cost control to achieve the return from the project .

In contrast, the policy of Germany, and Spain, through subsidies high prices for solar power grid, can stimulate photovoltaic industry to develop rapidly.

China Merchants securities analysts think that this year will have the large-scale photovoltaic power plant construction to start. Now there are some PV power plant construction projects in the certification and reporting process. The main point needs to focus  whether the State will launch the "Internet price Subsidy Law for Power on Grid" and other specific laws and regulations.

In addition, the European and American countries in the photovoltaic industry subsidies policy, at the same time, pay attention to foster an independent PV industry, adopting  gradual "weaning” method. For instance, in 2004 German government initiated a regulation on on-grid price. The initial on-grid price is 3 times higher than the retail price or 8 times higher than industrial price. After the installation of PV system, the on-grid would be fixed for 20 years.. But it was postponed for a year, the on-grid was decreased at a certain rate of degree. The person who is familiar with the industry thinks that the financial subsidies standard should be based on industrial technology advancement, and cost reduction, which  will enhance competitiveness and accelerate the effect on the development of commercialization of the industry.

Although the methods of investment subsidies increased fiscal expenditure, after a clear definition on the objects of receiving subsidies, the effect will be very good. According to researchers, in the first few years after the promulgation of subsidy policy to photovoltaic industry by European and American countries, it caused at least 100% annual growth of PV industry. Industry insiders expect that with lower cost and market expanding, the State will gradually enact and promulgate more powerful policy.