On December 19th, 2012, China's Premier Wen Jiabao chaired the executive meeting of the State Council to determine government policies for promoting the development of the nation's solar photovoltaic (PV) industry.

The meeting indicated that China's PV industry is facing a serious excess of production capacity, heavily dependence on foreign demand, and PV companies across the board competing to maintaining operations.

Government identifies significant challenges for Chinese PV industry

The State Council emphasized that solar PV is a new strategic industry. Developing the PV industry is crucial to adjusting the country's energy structure, promoting a revolution in energy production and methods of consumption, and advancing ecological construction.

While the headwinds faced by China's PV industry are a significant challenge for the development of the industry, they also present an opportunity to improve that industry, most notably because drastically lower PV energy costs have provided the right circumstances to expand the domestic market, reads the press release.

Policy focuses on industry restructuring, advancements in technology

The meeting confirmed several policy measures. First, China aims at accelerating the industry's restructuring as well as advancements in technology. The meeting emphasized the necessity to encourage PV businesses to merge and restructure in order to eliminate outdated production capacity while raising the level of technology and facilities in use.

Planning of PV generation to consider for power grid integration

Second, China is up to standardizing the industry development track, strengthening planning of PV generation with consideration for power grid integration, and creating a fast and efficient system to handle that integration. A basic goal is to establish a robust system of technological standards, strengthening market oversight, and implementing a system of mandatory inspections and certification for key facilities.

Domestic PV market to be expanded

The meeting accentuated that China will actively expand the domestic market for PV energy, and introduce supporting policies with regional benchmarks for on-grid prices. At the same time, the government intends to implement subsidization policies for distributed PV generation based on capacity, making reasonable adjustments to lower both on-grid prices and subsidies.

Preferential policies for central government's PV financing

Mechanisms for utilizing central government financing to support development of the PV industry will be refined, with PV plant projects receiving the same preferential policies for value-added tax as wind power.

Market mechanisms to minimize government interference

The meeting proposed to fully utilize market mechanisms to minimize government interference and prohibit regional protectionism. Also perfect energy price setting mechanisms and mechanisms for the review of subsidy results shall increase policy efficiency.

The meeting required that relevant government agencies promptly formulate the associated policies and oversee their execution.

2012-12-21 | Courtesy: Chinese State Council | solarserver.com © Heindl Server GmbH

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