Abstract
Feed-In-Tariff (FIT) mechanism is an important measure for government to incentive photovoltaic (PV) industry development. In
order to secure the appropriate implementation of the Feed-In-Tariff (FIT) mechanism, this paper explores in the first place an
optimal bidding contract price by establishing a bidding model between government and photovoltaic power generation
companies. On this basis, the paper adopts the Net Present Value (NPV) method and studies the impacts of the fluctuations of
different preferential loan lending rate, preferential tax rate and technological progress rate on the feed-in-tariff. Then it
calculates the photovoltaic power generation costs in 31 provinces’ in China. Results show that, different levels of solar radiation
across provinces generate significant disparities in PV power generation costs with a maximum of 35.7%. Through sensitivity
analysis, the study further tests the impacts on the feed-in-tariff of initial generating capacity, corporation operation duration and
discount rate. Results indicate that, in order to make the photovoltaic power price in China more reasonable, the government shall
consider the solar radiation level differences in provinces and the influences of public policies. Based on theseanalyses, this paper
finally gives some suggestions on solar photovoltaic industry feed-in-tariff system design.