Cost effectiveness

Echoing Li's views, some industry insiders mentioned cost effectiveness as one problem in the industry.

China started public bidding for its second batch of solar power plants in August. This round of bidding includes 13 photovoltaic (PV) projects, with a total capacity of 280 megawatts (mW).

A total of 50 enterprises joined in the bid by submitting 135 project proposals. Winning bids ranged from 0.7288 yuan per kilowatt-hour (kWh) to 0.9907 yuan per kWh, less than the 1.1 yuan expected by some industry participants before the bidding process.

This year, more than 70 percent of the winning bids were won by large State-owned enterprises. China Power Investment Corp dominated with a total of seven successful bids.

"Such low bidding prices will hardly make any return for investors. A reasonable electricity tariff should be around 1 yuan," said Meng Xiangan, director of China Renewable Energy Society.

In 2009 China initiated the bidding for its first batch of solar power projects, a 10-mW project in Dunhuang in Gansu province. It was awarded to a bid with the second lowest tender price of 1.09 yuan per kWh.

A low price will squeeze many private solar companies out of the business because their pockets are not as deep as those of State-owned enterprises, industry experts cautioned.

Astronergy, the solar module-making unit of privately owned Chint Group, has bid to develop five solar projects of the 13 in total.

The Zhejiang-based solar company, which garners 85 percent of its business from overseas markets, said it won't win the projects by pursuing low tender prices, which may weaken the development of the industry.

"China's stand on the subsidy plan is uncertain now, hindering the industry's development," Hu Wanshu, marketing manager of Astronergy told China Daily.

Shi Jingli, a researcher with the ERI under the NDRC, said she did not hold the view that a low price would lead to a monopoly in the industry.