Solar thermal power generation is becoming a popular area for investment in the energy sector in China.

The National Development and Reform Commission (NDRC) has listed solar thermal power generation as one of the energy industries to be encouraged in the Guidance Catalogue for Industrial Structural Adjustment in 2011 implemented as from June 1.

With the trial operation of China's independent 10KW dish solar-power generating facility in Ningxia, China's domestic solar companies have seized the initiative in the solar thermal generation market and are likely to trigger vast investment in this sector, industry sources say.

China has stated in the national development plan for the power industry for 2011-2015 it is to establish demonstration solar thermal-power generation projects in Gansu, Ningxia, Xinjiang, and Inner Mongolia.

In the past year, large power companies in China have started mulling over solar thermal-power generation projects in the range 100MW to 500MW generating capacity, including Datang's project in Inner Mongolia, Guodian's project in Xinjiang, Huadian's project in Qinghai, and Huaneng's project in Tibet.

If these projects proceed smoothly, China's solar thermal-power generation capacity is expected to reach 3GW before 2015 with a total market value of 45 billion yuan, according to Wang Haisheng, chief analyst of Huatai United Securities.

To date, China has mastered some core technology in solar thermal-power generation and is proceeding with the commercial running of demonstration projects. Since cost of solar thermal generation is higher than that of traditional power plants, the development of solar thermal-power generation will have to rely on government support, said in a research report by China International Engineering Consulting Corp.