OREANDA-NEWS. April 13, 2012. China, the world's largest solar panel producer, is likely to become the largest market for solar devices in 2012 as Europe, the largest importer of Chinese panels, sees its market for the products contract.

China's capacity to generate solar power is expected to double to about 5 gigawatts this year, according to Solarbuzz, a US-based solar industry consulting firm.

Solarbuzz said there was "upside potential" that could mean the addition of more than 6 gW. The firm said there was a 25 gW photovoltaic project pipeline in China as of the end of February.

China's installed solar capacity reached 2.75 gW in 2011, according to Solarbuzz.

Europe accounts for more than half of China's module market. Major solar markets including Germany, Italy, Britain and France have cut subsidies over the past year.

Meanwhile, the United States has imposed duties on Chinese panels, denting the competitiveness of Chinese companies.

As a result of the shrinking overseas market, China is pursuing domestic demand through targeted policies.

The national feed-in tariff stands at 1 yuan (16 US cents) per kWh this year, with several areas such as Liaoning and Shandong provinces providing higher rates.

The Ministry of Finance has issued standards for subsidies for on-grid electricity from renewable sources, including solar power.

The standards specify subsidies of 0.01 yuan per kWh for on-grid electricity transmitted up to 50 kilometers, rising to 0.02 yuan for 50-100 km and 0.03 yuan for more than 100 km.

Under the government's Five-Year Plan for the Solar Industry (2011-15), the nation aims to reduce the cost of solar power to 0.8 yuan per kWh by 2015 and 0.6 yuan per kWh by 2020.

Domestic PV companies are expanding into the downstream sector through cooperation with local governments.

LDK and JA Solar, leading module makers, signed agreements with the Jiuquan government in Gansu province to develop solar farms.

LDK will invest 3.5 billion yuan to develop 200 megawatts of module production lines and 200 mW of solar projects.

JA Solar will invest 1.8 billion yuan to build 100 mW of solar cell production lines, 100 mW in module lines and 100 mW of solar projects.

Yingli also signed an agreement with China Power Investment to cooperate in solar project development. It has said it expects to sell 2,500 to 2,600 mW of modules in 2012, including 900 mW domestically.

That sales goal, if achieved, would make China the largest market for Yingli for the first time.