New applications, surging demand

A 30 MW solar installation in Qinghai province. China installed 48.2 GW of PV last year, defying all expectations for the final year of the 13th five-year plan, which covered the 2016-20 period.

China’s solar PV power generation capacity grew 60% year on year in 2020, adding an impressive 48.2 GWp and beating all estimates for the final year of the nation’s 13th Five-Year-Plan (2016-20).

At a recent press conference, representatives of China’s National Energy Administration (NEA) highlighted China’s six consecutive years as the world’s largest solar PV market, and noted Chinese solar PV companies supply 58%, 93%, 75%, 73% of global polysilicon, wafer, cells and modules, respectively.

That fact didn’t go unnoticed. The Consultive Commission on Industrial Change, affiliated with the European Economic and Social Committee, described China’s present situation as being in “a quasi-monopolistic position in terms of components for photovoltaics.” This statement was made in the context of the EU’s “Critical Raw Materials Resilience: Charting a Path towards greater Security and Sustainability” assessment.

New paradigm

AECEA anticipates that near-future utility-scale project development in China will increasingly feature the combination of different renewable energy technologies. For example, wind/PV/hydro/biomass and other generation technologies are expected to be integrated as, for example, agrivoltaics, fish-farm-PV, floating PV plants, or combined with electrical energy storage devices in an attempt to support grid operations.

Single standing utility-scale PV systems designed to “just” generate power might soon be no longer sufficient to receive official project approval. NEA’s guiding considerations in this context are “integration and local consumption,” to ensure that as much as possible of the locally generated renewable energy power will be locally consumed.

Moreover, NEA’s promotion of gigawatt-scale hybrid renewable energy appears to already be bearing fruit. During January-March 2021, more than 50 such projects, with a combined capacity exceeding 100 GW, were signed between developers and local governmental authorities.

In light of the increasing penetration of renewable energy in the energy mix, the deployment of electrical energy storage (EES) devices is almost inevitable. Against this background, at present approximately two-thirds of all provinces made it mandatory that all future PV installations have a certain share of EES capacity on-site, usually between 10-20% of the power generation capacities and for up to two hours. However, given that an EES device increases the initial investment of a PV power plant by approximately 8-10%, the financial viability of these so-called “grid parity” projects could become a challenge.

Residential market

In terms of distributed generation, the NEA considers offering a subsidy of CNY 0.03/kWh for residential solar PV systems throughout 2021. Additionally, cities like Beijing, Shanghai, Guangzhou and Xian have issued support policies specifically designed for distributed solar. These cities offer a feed-in-tariff (FITs) for between two to five years. In Beijing, a subsidy of between 30-50% of the total investment is also added. Moreover, Xian and the province in which it is located, Shaanxi, offer CNY 1/kWh with a maximum of CNY 500,000 if PV is combined with an EES unit.

Tapping into the nation’s potential of Building Integrated PV (BIPV), Jiangsu’s provincial capital, Nanjing, announced in early April subsidies for BIPV projects accounting to CNY 0.5/W and with a maximum of CNY 200 million per project.

Strong 2021

In early 2019, China’s NEA announced that it will have completed its envisaged transition from a previously subsidy-driven development toward a subsidy-free market by 2021.

During the 2019-20 period, the central government conducted several rounds of competitive project auctions, which either resulted in projects eligible for FITs or to receive approval as grid-parity projects.

Taking the auctions and programs as a whole, strong demand for 2021 is ensured. The demand pipeline includes 55 GW of grid-parity projects approved in 2019/2020, 8 GW of bidding-converted-parity projects subject to a December 2021 deadline, and the 2020 carry-over bidding projects to be installed by June 30. It also includes two integrated GW-bases with 1-2 GW each anticipated to be tendered by the NEA in the coming weeks, plus pure provincial developments like 3 GW in Yunnan province and 1 GW in the Guangxi autonomous region by the end of this year.

In addition to these projects, growing market momentum is reflected by the number of project applications officially submitted to relevant provincial authorities during the first quarter of 2021. Accordingly, 10 provinces across the country have received project applications amounting to approximately 45 GW, the same amount submitted for all of last year.

Due to relatively high local electricity tariffs, the top destinations are the provinces of Guangdong, Hubei and Guangxi, with 24 GW, 11.6 GW and 3.5 GW, respectively. Furthermore, in light of the NEA’s emphasis to ensure that future PV systems are dual-use projects, therefore, it is not entirely surprising that approximately 76% of the 45 GW submitted in Q1 202 are either PV-powered fish farms and/or agri-PV systems.

According to the NEA, during January and February, a total of 3.25 GW of solar PV was installed, against 1.07 GW installed in the same period in 2020. As of today, AECEA estimates full-year demand to be between 60 GW and 75 GW, thus representing an increase of 25-55% year on year.

About the author

Frank Haugwitz is an independent solar energy consultant who has been based in Beijing since 2002. He worked as a seconded long-term expert on photovoltaic and renewable energy projects in China from 2002 to 2009, with the support of Germany and the European Union. In October 2012, he founded his company, Asia Europe Clean Energy (Solar) Advisory Co. Ltd. His services include working with individual clients to apply his extensive China-related PV insights to their specific needs.