"China's photovoltaic market is undergoing a new phase of large-scale expansion, which is undeniable," said Wang Sicheng, a researcher at the Energy Research Institute of the National Development and Reform Commission. According to his analysis, before the photovoltaic price level stabilizes, the average annual national subsidy for photovoltaic power generation will reach 20 billion yuan over the next decade. This substantial financial incentive has sparked interest among new investors, but those who entered the industry earlier are more cautious due to various risks such as low returns, roof ownership disputes, and policy changes. As a result, it remains challenging to drive rapid growth in the domestic PV market in the short term.
The photovoltaic industry, once on the brink of collapse, is now seeing positive developments. "The distributed subsidy policy will be introduced before the end of August this year, along with other previously discussed policies regarding subsidized prices and grid connection," said Liang Zhipeng, Deputy Director of the New Energy and Renewable Energy Department at the National Energy Administration, following the International Solar Energy Competition and the International Solar Summit in Datong on August 2nd.
The previously announced price commitment of 0.56 euros per watt and an annual export volume of 7 GW have been fulfilled, helping China avoid a 47.6% tariff on solar exports to Europe. However, the list of national distributed photovoltaic demonstration zones has faced delays. The initial announcement included 14 zones across seven provinces and cities, but only about ten are expected to be officially confirmed. These zones will be selected from industrial or economic development zones, with specific project size requirements.
The distributed subsidy rate, initially reported as 0.42 yuan per watt, still has some uncertainties. Liang Zhipeng humorously compared the situation to a vegetable market, where prices fluctuate until the last minute. According to Wang Sicheng’s projection, the total subsidy available over the next 10 years could amount to 200 billion yuan, attracting significant investment into the domestic PV market.
In Wang Sicheng’s view, the average annual installed capacity of 10-15 GW is achievable before 2020. Last year, the market size was between 100 billion and 150 billion yuan. The National Energy Administration is also planning for long-term development, aiming to reach 35 GW of cumulative installed capacity by 2015 and 100 GW by 2020. Over the period from 2020 to 2050, the annual installed capacity is expected to rise to 30 GW, eventually eliminating overcapacity and matching domestic production with demand.
However, the growing interest in the PV sector raises concerns. Wang Sicheng warned that a flood of investors could lead to another bubble, similar to previous cycles. In Datong, known as a coal capital, the city is now showing enthusiasm for entering the photovoltaic industry, with the goal of making its PV output value equal to that of the local coal industry by the end of the "Twelfth Five-Year Plan."
Industry officials emphasized that while the government is working on defining the demonstration areas and setting subsidy rates, it is unlikely to allow companies to make excessive profits. Instead, they aim to ensure a modest return. The shift from large-scale ground-mounted projects to distributed photovoltaics offers a more sustainable solution, as these systems can be integrated directly into local consumption, reducing transmission issues.
Despite these opportunities, challenges remain. The competition for rooftops has already begun, and while ideal conditions exist, practical implementation is difficult. Artes Investment noted that although some companies like Qingdao Haier have large rooftops that could save millions annually, their hesitation stems from high upfront costs and long payback periods. Additionally, uncertainties around roof ownership, corporate restructuring, and equipment lifespan add to the risks.
To address these issues, some companies have tried partnerships, such as leasing arrangements with guaranteed returns, but these models face operational challenges. Tu Wuyi pointed out that cooperation based on roof ownership is ideal, but long-term commitments are hard to guarantee, especially given the limited lifespan of many Chinese enterprises.
While the central government allows provincial governments to provide additional subsidies, no region has yet implemented specific policies. This lack of clarity adds to the uncertainty for PV companies. Moreover, financing remains a critical challenge. Unlike the Golden Sun Project, which provided significant state funding, developers now bear the full cost, relying on electricity sales for recovery. Without proper financing solutions, the market may struggle to attract serious investment.
Despite these hurdles, industry experts believe that distributed PV is making progress compared to earlier initiatives. While the path is still unclear, the shift away from speculative investments toward more structured support marks a positive step forward.
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