China Datang Corp is poised to win China's first solar photo-thermal power plant project because the company offered a lower-than-expected price in its bid for the project, China Business News reported on Tuesday, citing an unnamed source.

Datang offered an electricity price (tax included) of 0.9399 yuan (14 cents) per kilowatt-hour (kWh) for the 50-megawatt plant in the Inner Mongolian autonomous region, lower than that of China Guangdong Nuclear Power Group (0.98 yuan per kWh) and China Guodian Group (2.2543 yuan per kWh), the source told the paper.

"Such a low price was not my expectation," said an executive at Himin Solar Co Ltd, which joined Datang in a consortium for the bid. "It would be hardly profitable based on this price," he said.

"We originally expected the lowest bidding price to be between 1.05 to 1.1 yuan per kWh, with costs above 1.15 yuan per kWh," the executive said. "It would take 10 years to make money even with a price set at 1.15 yuan per kWh."

The total cost of the Inner Mongolian project was expected to reach 1.8 billion yuan, with an annual capacity of 120 million kWh, the newspaper said, citing an assessment report in 2008.

The on-grid price after tax should come to 2.26 yuan per kWh to ensure that the internal return on capital will reach 8 percent during 25 years of operation, the newspaper said.

In Europe, where solar photo-thermal power has been put into commercial use, it still costs 0.27 euro (35 cents) per kWh, Meng Xian'gan, vice-chairman of the China Renewable Energy Association, told the newspaper.

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"Datang and CGNP's offers are not realistic in an industry in China that has no solid foundation and that relies on imports for key equipment," he said.

However, in contrast to heavier interest by companies in photovoltaic projects, only eight companies listed their intent to bid for this project, the paper said.

"The cold welcome and low bidding prices are no surprises," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

Some State-owned enterprises offer low prices for projects in many industries, including the solar photo-thermal power arena. They are setting prices out of "strategic concern" instead of focusing on profits, he said.

China's photo-thermal industry is still being developed, Meng said, and added that the government should invest in research to create locally made key components. Otherwise, premature delivery of commercial utilization could hurt long-term development of the industry, he said.