SHANGHAI (Reuters) - China’s newly added solar power capacity fell nearly 20 percent year on year for the January to September period, official data showed on Tuesday, hit by government efforts to reduce its spiraling subsidy bill by slashing new project approvals.

The National Energy Administration (NEA) said at a briefing on Tuesday that newly installed solar generation capacity amounted to 34.54 gigawatts (GW) in the first three quarters of this year, down from 43 gigawatts a year earlier.

After adding a record 53 GW in new photovoltaic capacity over all of last year, China capped total new capacity eligible for subsidies at 40 GW this year as it struggled to pay off a payment backlog of around 120 billion yuan ($17.2 billion).

Renewable energy projects are entitled to a subsidy for each kilowatt-hour of power they sell to the grid, but China is trying to encourage developers to cut costs and achieve price parity with coal-fired power.

Liang Zhipeng, the NEA’s vice-director, told the briefing that China constructed 17.4 gigawatts of new solar power stations in the first three quarters of this year, down 37 percent compared to a year earlier.

The decline in solar plant construction was partially offset by an increase in distributed solar projects built on rooftops or buildings, with added capacity in that subsector rising 12 percent to 17.14 GW over the nine months, he said.

Liang said additional renewable power capacity - including wind, hydro and biomass as well as solar - amounted to 55.96 GW in the first three quarters of the year, 69 percent of all power additions over the period.

Total accumulated renewable power reached 706 GW by the end of September, up 12 percent from a year earlier. Total solar power hit 164.7 GW, up 37 percent on the year.

China’s renewable power amounted to 40 percent of its total generating capacity and was more than the entire power capacity of Japan and India combined.