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The "Several Opinions of the State Council on Promoting the Healthy Development of the Photovoltaic Industry" (referred to as the "Opinions") has recently been highlighted on the official Chinese government website. According to the document, from 2013 to 2015, the annual average installed capacity of photovoltaic power generation is expected to increase by approximately 10 million kilowatts. By 2015, the total installed capacity is projected to exceed 35 million kilowatts.
Industry insiders believe that if these targets are met, they could drive an annual market demand of around 100 billion yuan. This would allow one-third of the domestic PV industry’s production capacity to be consumed internally, creating new opportunities for both upstream and downstream sectors.
However, some experts have raised concerns about the clarity of subsidy funding and grid-connected electricity prices in the "Opinions." They argue that without clear implementation mechanisms, the actual impact remains uncertain.
The 35 million kilowatts target marks a 67% increase compared to the 21 million kilowatts outlined in the earlier "12th Five-Year Plan for Solar Power Development." If achieved, this would position China as the world's largest photovoltaic market by 2015, surpassing Germany.
Shen Fuxin, secretary general of the Zhejiang Solar Energy Industry Association, noted that achieving the goal would significantly boost internal consumption of domestic PV production. According to Xinhua News Agency, the average investment in photovoltaic power plants is about 10,000 yuan per kilowatt, while distributed systems cost around 15,000 yuan per kilowatt. Thus, 10 million kilowatts of new installations would stimulate a 100 billion yuan market annually.
Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University, believes the success of these goals depends on execution. If realized, it would help absorb excess PV capacity.
One major concern among industry players is the lack of specificity regarding subsidy funds and grid-connected electricity prices. In March, the National Development and Reform Commission proposed a subsidy of 0.35 yuan per kWh for distributed solar power, but many companies criticized it as too low. Later, the first batch of PV industrial park projects received a subsidy of 0.42 yuan per kWh.
Ren Haoning, a researcher with China Investment Consulting, pointed out that the current gap in subsidy funding is significant, and the source of capital remains unclear. He emphasized the need for transparency in fund allocation, responsibility, and supervision.
Despite these challenges, the "Opinions" mention a 20-year subsidy period, which has given a boost to PV companies. The document also states that renewable energy tariff adjustments will expand the scale of the renewable energy development fund.
To address short-term subsidy issues, the "Opinions" require grids to purchase all PV power generated. Subsidies are allocated quarterly to grid companies, who then settle monthly with power stations.
Another key issue is the on-grid electricity price. The "Opinions" suggest setting regional standards based on resource conditions and construction costs, with prices and subsidies determined through competitive bidding. However, Ren Haoning noted that implementing such policies is challenging, especially for smaller projects.
Industry observers also highlight that the requirements for photovoltaic cell conversion rates may accelerate the reshuffling of the sector. While the regulations apply mainly to new projects, they could eventually lead to the elimination of outdated production capacities and encourage mergers and acquisitions.
Experts like Shen Fuxin and analysts from Guotai Junan believe the "Opinions" will speed up industry consolidation, improve technical capabilities, and reduce the time needed for capacity elimination.
On the other hand, Ren Haoning argues that the efficiency thresholds set in the "Opinions" are too high and may not effectively drive meaningful changes in the industry.
Upstream equipment manufacturers have faced difficulties due to the downturn in the downstream market. Several companies reported declining profits or losses in the first half of the year, citing weak demand and lower margins. Lin Boqiang suggested that if the targets are met, this could benefit upstream enterprises.
In the long run, the "Opinions" are seen as a positive step for the entire PV industry, encouraging growth, innovation, and sustainable development.