"China's photovoltaic market is set for a new wave of large-scale development, according to Wang Sicheng, a researcher at the Energy Research Institute under the National Development and Reform Commission. He emphasized that this phase is inevitable. According to his calculations, the average annual national subsidy for photovoltaic power generation over the next 10 years will reach 20 billion yuan before the photovoltaic level price is established.
While new investors are eager to enter the market, seasoned players have become more cautious due to risks such as low returns, unclear roof ownership, and policy changes. These challenges make it difficult for the domestic PV market to grow rapidly in the short term.
The photovoltaic industry, once on the brink of collapse, is now experiencing a period of positive developments. The distributed subsidy policy is expected to be introduced by the end of August, along with other previously discussed measures like subsidized pricing and grid connection policies. This was confirmed by Liang Zhipeng, Deputy Director of the New Energy and Renewable Energy Department of the National Energy Administration, following the International Solar Energy Competition and the International Solar Summit in Datong.
The previously announced price commitment of 0.56 euros per watt and an annual export volume of 7GW have already been implemented, helping to avoid the high tariff of 47.6% on China’s exports to Europe.
At the same time, Tu Wu, Business Development Director of Artes (China) Investment Co., Ltd., mentioned that the list of national distributed photovoltaic demonstration zones has been delayed. A total of 14 demonstration zones—seven provinces and seven cities—were initially reported, but only around ten are expected to be officially announced. These zones will be selected from industrial or economic development parks across the country, with specific size requirements for each project.
What exactly is the distributed subsidy price? The previously reported 0.42 yuan per watt may still be subject to change. Liang Zhipeng humorously described the situation as similar to a vegetable market, where prices fluctuate until the last minute.
According to Wang Sicheng’s projections, the average annual demand for photovoltaic power generation over the next decade will be 20 billion yuan, creating a total of 200 billion yuan in subsidies to attract investors. He also noted that the average annual installed capacity could reach 10-15 GW before 2020. Last year, the market size was between 100 billion and 150 billion yuan.
Looking ahead, the National Energy Administration is planning for the long-term development of the photovoltaic industry over 30 to 50 years. By 2015, cumulative installed capacity is expected to reach 35 GW, and by 2020, it should hit 100 GW. From 2020 to 2050, the annual installed capacity could increase significantly, averaging 30 GW per year. At that point, overcapacity will naturally disappear, and domestic production will meet market demand.
However, Wang Sicheng expressed concerns about a potential rush of investors entering the market again, leading to another bubble. He warned that without proper regulation, the sector might repeat past mistakes.
In Datong, known as a "coal capital," enthusiasm for entering the photovoltaic industry is growing. It is anticipated that by the end of the "Twelfth Five-Year Plan," the output value of the photovoltaic industry will match that of the local coal industry.
Industry officials confirmed that two main issues are currently under discussion: identifying demonstration areas and determining subsidy levels. While the government is allowing companies to participate, it aims to prevent excessive profits.
From large-scale ground-mounted projects to distributed photovoltaics, the focus has shifted. Ground-based projects are mainly located in western regions like Qinghai, but their construction is time-consuming and faces issues with electricity consumption. In contrast, distributed PV can be absorbed locally, solving the problem of terminal market demand.
China has taken a significant step in opening up its domestic market, and the competition for rooftops has already begun. However, despite ideal expectations, the reality of distributed PV remains challenging.
Artes Investment, which started researching the sector last year, found that while the concept is promising, the practical implementation is difficult. Many small businesses face financial constraints and operational risks, making it hard to commit.
One example is Qingdao Haier Group, which has a large rooftop space that could save millions annually through a distributed PV project. However, the initial investment is ten times the annual savings, requiring eight to nine years to recoup. Additionally, risks such as roof renovation or business closure make the project too uncertain.
To address the rooftop issue, companies in the upstream and midstream of the supply chain have tried partnerships, including lease-to-own models and profit-sharing agreements. However, these arrangements face operational challenges.
Tu Wu pointed out that cooperation based on clear roof ownership is ideal, but the mismatch between the 25-year lifespan of PV equipment and the 20-year subsidy period creates uncertainty. If a company renovates the roof or undergoes a transfer, it becomes difficult to manage the agreement. Chinese SMEs, which often have a shorter lifespan than 25 years, are particularly hesitant.
In addition to state subsidies, provinces and cities are allowed to provide additional support based on their financial conditions. However, no province or city has yet introduced concrete policies.
Wang Sicheng also highlighted financing as a major concern. Before the Golden Sun Project, the government provided 50% or even 70% of the funds for power station construction. Now, developers must cover all initial costs, relying on electricity revenue to recover investments. Without proper financing solutions, the market will struggle to grow.
Despite the challenges, industry experts believe that distributed PV is progressing compared to previous projects, with clearer subsidy policies and reduced speculation. This marks a significant step forward for the sector.
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