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China is working on policies, including subsidies and easier access to the grid, to help its ailing solar power producers expand in the domestic market, the China Daily reported on Saturday, citing industry officials and government sources.

The State Grid Corp, China's largest state-owned utility, is considering giving its subsidiaries at city level the authority to approve solar power plants with less than 10,000 kilowatts of installed capacity to be connected to the grid, said deputy director Meng Xiangan.

At a meeting earlier this week, the State Grid also agreed in principle to waive charges associated with connecting to the grid, which usually costs millions of yuan, Meng said, adding that a plan to develop the country's solar industry has been handed to the central government and is awaiting approval.

"The obstacles companies face in order to be connected to the national grid are the biggest problem for the solar power industry," Meng was quoted as saying.

The National Energy Administration is also working on a plan to offer subsidies ranging from about 0.40 yuan ($0.06) to 0.60 yuan for each kilowatt-hour of distributed solar power.

The amount includes subsidies from both the central and local governments, the China Daily said, citing a senior official from the administration.

China's export-focused solar panel industry has been hit hard by excess manufacturing capacity and waning foreign demand as European nations cut back subsidies for green power. Companies have slashed prices 30 percent this year as stockpiles grow, virtually erasing the industry's profits.

Chinese producers, including Suntech Power Holdings and Trina Solar, are increasingly turning to their home market, which has become one of the world's biggest, for solar energy development.

Overseas, they battle not only a weak market environment but also anti-dumping tariffs in the United States. Europe also could impose import duties.