Solar PV in China: Will the domestic market gallop away in the “Year of the Horse”?

By Frank Haugwitz, AECEA (Send E-Mail)

In 2013 approximately 1/3 of the global solar PV installations were realized in China. The nation installed between 13-14 GW (2012: 5.04 GW), i.e. more than any other country in a single year ever before.

Solar Server’s partner Asia Europe Clean Energy (Solar) Advisory Co. Ltd. (AECEA), notes several reasons why the official national target of 10 GW as announced in January 2013 was exceeded by approx. 3-4 GW.

  • Firstly, projects tendered during Q4/2012 were not facing any FIT reduction as Q4/2013 projects, thus these projects were executed in 2013.
  • Secondly, in November 2012 central governmental institutions approved the last batch of so-called Golden Sun projects amounting to 2834 MW. Accordingly, the deadline of these projects was June 30, 2013, but eventually was extended twice until the end of 2013.
  • Thirdly, in August the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) announced the approval of in total 1823 MW so-called “Solar PV Distributed Generation Demonstration Projects” out of which 793 MW of projects were scheduled to be realized by December 31, 2013.
  • Fourthly, in August/September 2013 new FITs effective from January 2014 onwards were announced and triggered a year-end-rally.
  • Fifthly, despite on-going trade negotiations which created an atmosphere of uncertainty in the Chinese market, combined monthly tendered projects did not show any sign of a slowdown throughout the entire year.

 Overall, last year China’s domestic market development is characterized by three main factors, a) in terms of installations, utility-scale ground mounted systems dominate; b) just three provinces (Gansu, Xinjiang, and Qinghai) managed to witness installations constituting a combined market share of approx. 42-45%; and c) the share of distributed generation is growing, however so far confined to eastern provinces and largely the result of the national Golden Sun programme.

 

2014 is China’s Year of the Horse – Will China’s domestic solar PV market gallop away?

The 2014 Year of the Horse is associated with ”wood”, i.e. industries associated with wood like retail, forestry, textiles, and agriculture among others are expected to perform well according to fortune tellers. Since wood fuels flames as well, industries related to the element “fire” are expected to do well as well and this does includes electricity, i.e. solar PV.

Until the middle of January 2014 various Chinese central governmental entities announced different solar PV deployment targets for the year 2014.

The announced installation targets ranged from 8 to 14 GW. The National Energy Administration (NEA) officially announced a 14.05 GW target, divided into 8 GW (distributed generation) and 6.05 GW (utility-scale ground-mounted) to be installed in the course of 2014.

Annual and cumulative PV market development in China
Annual and cumulative PV market development in China

The government’s direction to promote distributed generation (DG) vs. utility-scale projects is obvious; given its 60% share of 14.05 GW. Although project developer support the governments drive towards distributed generation, AECEA is of the opinion to tackle corresponding administrative procedures do pose a challenge at this stage of market development, i.e. to realize a distribution generation type of project requires considerably longer lead time compared to utility-scale projects, where developer benefit from experience gained the last two years.

 

NEA breaks down national annual targets into provincial targets

Interestingly, because for the first time, the NEA released a breakdown of the 14.05 GW national annual target into provincial targets which are divided into both types of project categories (DG and utility-scale). The intentions of this annual target breakdown are obvious, however it remains to be seen how e.g. Gansu province will scale down from approx. 2.6 GW (2013) to just 550 MW in 2014.

In an attempt to ensure a realization of 8 GW distributed generation projects, early February 2014 the NEA released a list of 81 so-called “New Energy Demonstration Cities” and 8 so-called “industrial demonstration zones” spread across 28 and 8 provinces respectively. Accordingly, by the end of 2015 which coincides with the end of the current 12th Five-Year-Plan (2011-215) these cities and zones are required to realize their respective mandatory targets in terms of e.g. XX-MW of solar PV installations and/or share of installed renewable energy power generation capacities.

Today, according to AECEA’s assessments, China is well on the track to realize its national target of 35 GW by 2015 one year ahead of time as stipulated in the 12th Five-Year Plan for Solar Energy Development (2011-2015).

 

Another 14-15 GW of new installations expected in 2015

Equally impressive, AECEA estimates another 14-15 GW of new installations in 2015, i.e. most likely China will have 50+ GW of total installed solar PV power generation capacity by 2015. Hence, today’s China’s official national solar target of 50 GW by 2020 will be reached even 5 years ahead of schedule.

According to AECEA’s information, China is considering a doubling of its 2020 target, i.e. by 2020 a minimum of 100 GW shall be installed. Taking above background into account, not only the 2014 Year of the Horse could indeed make the domestic Chinese solar PV market galloping ahead of all other global markets, but very likely as well in the longer-term.

 

Solar PV significantly supports China’s aim of 100% nationwide power supply by the end of 2015

By the end of 2012, China was home to approx. 2.73 Mio people which had no access to electricity. In order to achieve the national target of 100% electrification by the end of 2015, i.e. each and every Chinese citizen shall have access to energy.

Against this background, in the fall of 2013 the National Energy Administration (NEA) released a three-year plan (2013-2015) indicating in total 583 projects for either grid extension or off-grid solar PV systems requiring an investment amounting to approx. EUR 3.5 bln.

Investing approx. EUR 396 Mio helped to supply power by means of solar PV to approx. 1.02 Mio in 2013 alone.

Programme”, numerous local power utilities implemented solar PV projects within their respective local and regional operations. In the remaining years until the end of the 12th Five-Year Plan (2011-2015), a further 100.000 people shall benefit from single-standing solar PV power plants mainly located throughout Western China.

Solar Server cordially thanks AECEA and for publishing permit.