CHINA SUN GOES DISTRIBUTED

Distributed PV Power Generation to Accelerate China Market Growth

Steven Han, November 26, 2012 (SolarBuzz)

“During September and October 2012, the Chinese government announced intensive Distributed PV Power Generation policies that are likely to expand the market share of the building- mount PV segment in China. An installation target of 5 GW distributed PV power generation yearly is expected to be achieved by the end of 2016…[T]he National Energy Administration has recently issued application requirements for Distributed PV zones…encouraging PV companies to submit projects while offering to change the rebate type to performance-based…[This could greatly increase the capital-utilization-rate of the Renewable Energy Special Fund…because the LCOE for distributed PV in most Chinese regions is below local industrial and commercial electricity prices]…

“To address previous concerns relating…to grid connection procedures within the Golden Sun and Solar Rooftop programs, the State Grid has outlined a ‘Welcome, Support and Service’ approach that would not charge for eligible Distributed PV projects…[This could] reduce system cost by 5%-10%...75% of the Golden Sun and Solar Rooftop programs [PV systems above 50 kW] that had been approved during 2012 had not started construction before October…in part by the continuously decreasing prices for module and balance-of-systems components during 2012… ‘Quality’-related problems have occurred…[as] some project developers [sought] to minimize up-front investment capital.”

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“The growth rate of distributed PV power generation in China during 2013 is projected to exceed 90% and to continue over the next few years. In fact, the pipeline of projects within the Golden Sun program and Solar Rooftop programs will contribute more than 2.5 GW during 2013. Under this forecast scenario, the market share for distributed PV power generation would exceed 35% during 2013…[The market in China could be constrained…if PV power generation cannot be consumed by the project developer directly…{and] the State Grid [purchases] the PV power based on rates that use local coal-fired tariffs as the benchmark...[cutting the] return-on-investment period. The importance of financing cannot be underestimated…because developers will no longer receive initial investment rebates.

“With potential trade restrictions on exporting China-manufactured c-Si products during 2013 and beyond, and considering the oversupply and inventory…it would appear that Chinese based c-Si module suppliers have little choice but to adapt to the domestic distributed PV environment. This may however demand the use of more reliable materials and equipment with increased efficiencies, extended product lifetime and reduced system costs.”

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