China’s Journey Becoming the World’s Largest Supplier & Market for Solar PV
By Dr Frank Haugwitz, hosted by ESI-NUS
During past two decades, China has become the world’s largest manufacturer and largest market for solar photovoltaic (PV). Effective since 2006, the “Renewable Energy Law” served as the first catalyst for promoting solar PV applications across the country. In subsequent years, national and provincial authorities experimented with competitive project biddings, capacity-subsidy and feed-in-tariff (FIT) based support schemes.
Early 2011, the first year of the 12th Five-Year-Plan, witnessed the introduction of two far-reaching policies. One industrial policy featured the support of seven strategic emerging industries and was designed to stimulate indigenous innovation along the value chain in the upstream sector, subject to the guiding principle of moving from “Made in China” to “Designed in China” to eventually “Global Leadership”. The second policy, based on the results of previously gained experience with various programs featured the rollout of a national FIT system, combined with the setting of a 35 GW installation target by 2015.
During the course of the 13th Five-Year-Plan (2016-2020) China’s National Energy Administration (NEA) continued offering subsidies in the form of FITs. However, due to mounting difficulties, because FITs payments were delayed by up to 2-3 years, from 2019 onwards all new projects were subject to competitive bidding.
Simultaneously, so-called “grid-parity” projects, i.e. subsidy-free, were introduced. At the same time, due to tens of GW capacities being connected to the grid in a relatively short period of time, solar PV was subject to massive grid curtailment. Hence, in an attempt to minimize current and future grid curtailments, parallel to an unprecedented built-out of a network of long-distance UHV AC/DC lines, to date 2/3 of all provinces made it mandatory that new projects have to have a certain electrical energy storage capacity on-site.
At present, China’s solar PV industry is the dominant manufacturer with a global share of 58%, 93%, 75% and 73% of global poly-silicon, wafer, cells and modules respectively. Several companies are considered being fairly competitive by having achieved to repeatedly set new solar-cell efficiency world records. In early 2021, China was home to approximately 253 GW (760 GW globally) of installed solar PV power generation capacities, thus having exceeded the 13th FYP target of 105 GW by a more than 140%.
In September 2020, President Xi Jinping announced that China will aim at a carbon peaking at around 2030 and carbon neutrality by 2060. Against this background, these ambitious targets will ensure that the development of solar PV will continue to thrive in the decades to come.