20 April 2019

New policy to put the shine on distributed PV sector

Rumor has it that there won’t be a second batch of state-level exemplary zones for distributed photo-voltaic (PV) power generation in the mainland. The first batch of such zones, covering 18 sites nationwide, was identified by the National Energy Administration (NEA) this August. The program was widely seen as heralding more policy blessings on the sector. But now the talk of “no second batch” has left some industry players wondering about their prospects.

The worries, however, appear to be misplaced as authorities are rolling out some other goodies.

The PV equipment makers and plant operators who had scrambled for a place on the second batch name list can heave a sigh of relief as new guidelines published on the central government website on Monday showed that all distributed PV projects conforming to the clear-cut threshold are eligible for government sweeteners – mainly a 0.42 yuan (US$7 cents) per kilowatt-hour (kWh) subsidy that was previously a privilege just for a few PV projects selected as exemplary ones.

By design, such a power generation subsidy, 20 percent higher than the 0.35 yuan once proposed, should provide strong incentive for companies and households to build and scale up their solar power production.

The guidelines also show another material change in regulation: the introduction of annual regional quotas for newly installed capacity. Reports have cited NEA as saying that specific quotas for 26 provinces and municipalities have been set, with Jiangsu securing the highest amount of 1.2 million KW and Zhejiang and Shandong being allocated 1 million KW each. Accordingly, each PV plant operator will also be given a maximum cap on a pro rata basis under the new regime.

Analysts are generally positive about the move to a more pertinent and market-oriented approach to foster sustained development of the industry. That said, some hurdles still stand in the way.

Among other things, PV plant operators may not have adequate access to bank loans and other financing channels to fund the initial investments. Under this circumstance, power generation subsidy, which is calculated according to the output of electricity generated, may render little help. Disputes over rooftop ownership, which usually entail a number of homeowners and tenants, may also cast some uncertainties.

– Contact the writer at [email protected]


EJ Insight writer

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