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The Chinese government recently placed a significant policy document titled "Several Opinions of the State Council on Promoting the Healthy Development of the Photovoltaic Industry" (referred to as the "Opinions") in a prominent position on its official website. According to the document, from 2013 to 2015, the annual average installed capacity of photovoltaic power generation is expected to increase by about 10 million kilowatts, with a total capacity reaching over 35 million kilowatts by 2015.
Industry insiders believe that if this target is met, it could stimulate approximately 100 billion yuan in annual market demand. 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 analysts have raised concerns that the "Opinions" lack clarity on key aspects such as subsidy funds and grid-connected electricity prices, leaving the final impact uncertain.
The 35 million kilowatt target represents a 67% increase compared to the 21 million kilowatts outlined in the previous "12th Five-Year Plan for Solar Power Development." If achieved, China could surpass Germany in 2015 to become the world’s largest photovoltaic market.
Shen Fuxin, secretary general of the Zhejiang Solar Energy Industry Association, stated that meeting these targets would enable the domestic PV industry to consume a significant portion of its own production capacity. According to Xinhua News Agency, the average investment in photovoltaic power plants is around 10,000 yuan per kilowatt, while distributed systems cost about 15,000 yuan per kilowatt. Thus, an annual increase of 10 million kilowatts could drive 100 billion yuan in market demand.
Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University, noted that while the goals are promising, their realization remains to be seen. If achieved, they would significantly boost domestic PV companies' capacity utilization.
One of the main challenges highlighted by experts is the need for clear policies on subsidies and grid-connected electricity prices. In March, the National Development and Reform Commission proposed a draft regulation offering a 0.35 yuan/kWh subsidy for distributed solar power, but many PV companies criticized it as insufficient. Later, in July, the first batch of 7 provinces and 7 cities received approval for PV industrial park projects with a subsidy rate of 0.42 yuan/kWh.
Ren Haoning, an energy researcher at China Investment Consulting, pointed out that the current subsidy funding gap is still significant, and the sources of funding remain unclear. Questions about who will manage the funds, how they will be allocated, and who will oversee the process remain unresolved.
Despite the lack of detailed rules, the "Opinions" mention a 20-year subsidy period, which has been seen as a positive signal for the industry. The policy also aims to adjust renewable energy tariffs to 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.
In addition to subsidies, concerns about grid connection prices persist. The "Opinions" suggest setting electricity prices based on regional resources and construction costs, using competitive methods like bidding. However, experts like Ren Haoning argue that implementation is challenging, particularly for large-scale projects.
Industry reshuffling under the new policy is expected to accelerate. The "Opinions" set efficiency requirements for photovoltaic cells, which may lead to mergers and acquisitions. While some believe the standards apply only to new projects, others see it as a step toward eliminating outdated production capacity.
Upstream equipment manufacturers, which have faced declining orders due to the downturn in the downstream market, are hopeful that the policy will bring relief. Several companies reported lower profits or losses in the first half of the year, citing weak market demand and reduced sales margins.
Experts like Lin Boqiang suggest that achieving the targets in the "Opinions" could greatly benefit upstream enterprises. Meanwhile, Ren Haoning believes the policy will encourage more investment in photovoltaic power plants, potentially boosting the entire industry.