It had slashed the subsidy in 2020 from the previous year by around 30% as it aimed to stop funding large producers of electricity from renewable sources to make them compete with coal-fired utilities and achieve grid-price parity.
However, a surge in new capacity - amid a sharp fall in the manufacturing costs for renewable energy components - has left the finance ministry with a subsidy backlog that was expected to reach as much as 300 billion yuan by the end of this year.
Wind farm operators and biomass generators did see their overall subsidy for 2021 drop by 24.3% and 18.5% year-on-year, respectively, to 2.31 billion yuan and 59.78 million yuan.
But total subsidies for solar projects have been set at 3.38 billion yuan, up 56.8% from this year, with the lion's share being allocated to Inner Mongolia.
Peng Peng, director of policy research at the Chinese Renewable Energy Industries Association, said the solar projects receiving the subsidy next year were all pre-approved and no new ones would be entitled to it.
China is also sharply scaling down subsidies for onshore wind projects, she added.
"Because of the coronavirus outbreak China's power demand hasn't increased much" so the annual renewables subsidy was similar to the 2020 level, Peng said. ($1 = 6.5694 Chinese yuan renminbi)
(Reporting by Tom Daly and Muyu Xu; Editing by John Stonestreet and Alex Richardson) (([email protected]; +86 10 5669 2119;))