Although the country's solar power generation surged 26.4 percent from a year ago in the first four months, the pace over the year may not exceed 10 percent.

China will post slower growth in solar industry this year facing problems in financing and construction although outlook remains optimistic, experts said at an ongoing photovoltaic technology exhibition in Shanghai.

Although the country’s solar power generation surged 26.4 percent from a year ago in the first four months, “the pace over the year may not exceed 10 percent,” said Andreas Liebheit, president for photovoltaics business at German silver paste maker Heraeus, at the 12th International Photovoltaic Power Generation and Smart Energy Exhibition.

“Power producers worldwide would be conservative to China’s growth in this industry this year,” said Alex Liu, analyst for energy and public utility at UBS. “Because they have concerns over financing and project development.”

China in fact surpassed the globe last year by growing 51.7 percent annually in solar power generation, above the global average at around 30 percent.

But this year, “conundrums covering a shortage in subsidy and overload in power grids are limiting the performance,” Liu said.

The shortage in subsidy for renewable energy producers have been clouding the industry for long, triggered by overcapacity.

While around a decade ago domestic producers rushed to elbow into the solar power industry driven by high subsidy, “they are now suffering from less and less profit in line with the subsidy cuts,” said Li Gang, general manager of Jiangsu Seraphim Solar System Co, a domestic solar power component maker.

“The pace for the government to raise money has failed to catch up with the country’s solar power installation speed,” he said.

The government didn’t officially unveil the figure for the shortage, but has been cutting subsidies year by year to ease its burden.

The feed-in-tariff for solar power generators in 2015 was around 1 yuan (US cents) per kilowatt-hour, but last year the figure dropped to as low as 0.55 yuan per kWh. Feed-in-tariff is the price set by the government for renewables sellers, normally above the price of traditional coal power to support the renewable energy development.

“That would hinder China’s further solar power generation growth, as producers find it hard to get their money back,” Liebheit said.

Alongside the financing problem, “in China it is harder to connect solar power into the power grid compared with countries abroad, as it takes long distance to convey electricity from west to the east, while grids in the east are too loaded to add electricity,” Liebheit said.

China’s energy resources and consumers are separated, with its unpopulated west land enjoying rich sun and wind to pump renewable energy, while power grids in the east and south, where locate most of the country’s residents, are urged to be upgraded to enhance loading capacity.

Solar power meanwhile is “unstable” compared to traditional energy such as coal power, which would make the grid too loaded in the day time when sun shines and fail to meet the demand at night.

On Zhihu, a Chinese crowd-source Q&A platform, information on why China’s power grids are limiting the installation of solar power attracted 14,000pager views, with users keen to find out ways to boost reliability of renewables such as solar and wind power.

Facing the two problems, “the installation of solar power in China this year may fall 20 percent,” Seraphim’s Li said. “Because many component makers have little profit to make this year, especially those relying heavily on subsidies for living.”

Meanwhile the country should take efforts to upgrade power grids, which helps solar power producers boost installations, Liebheit said.

The country’s producers have already done a lot to withstand the two problems. Last year China overturned the expectation that solar power generation would slow down, “thanks to the fast dropping component costs in this country,” Liu said.

The country’s leading producers can generate solar power at as low as 0.31 yuan per kWh, “even below the price of coal power, which was enabled by efforts to save component costs.”

China, being the world’s largest solar power equipment producer which accounts for over 80 percent of the global production capacity, has pushed the global growth last year to around 30 percent.

But this year, the benefit of component cost drops have been offset by the two conundrum, with domestic demand growth “steady rather than rapid,” said Heraeus’s Liebheit. “And that is also dragging down the global pace.”

He expects the global annual growth will fall to around 10 percent this year, while China “would not exceed the average.”

Liu agrees and said this year the global pace will be bolstered by other emerging markets such as India, south Europe and south America rather than China.

Shu Hua, chairman at GCL System Integration Technology Co, a leading solar equipment producer, said China’s current conundrums would trigger producers’ further efforts in technology upgrading, following the formation of more competitive giants and the phasing out of inefficient companies.

Outlook of solar industry both in China and worldwide “remains optimistic” bolstered by continuous technology improvement, with solar power expected to account for around one third of the world’s total power generation by 2050, DVN GL estimated in a report.

But before that comes true, the country needs to settle the financing and construction problems to help develop drives for the industry in the months to come, Liebheit said.