China leads the world in the deployment of solar power. Roughly a third of global solar power capacity is in China. In 2017, more solar power capacity was added in China than in the rest of world combined.22
China also leads the world in solar manufacturing, as it has for each of the last nine years. In 2017, two-thirds of global solar module production was in China. Chinese manufacturers held dominant positions throughout the solar supply chain.23
As of year-end 2017, China has more than 130 GW of installed solar capacity. In 2017, solar accounted for roughly 7% of China’s power capacity and 2% of China’s electricity generation.24
China has excellent solar resources, especially in the western part of the country. (See map below.) However, air pollution may be significantly reducing output from solar panels in some parts of China. One recent study estimated losses of 17%–35% in parts of eastern China, depending on how often PV panels are cleaned.25
Curtailment is a significant challenge for the Chinese solar industry, although the situation is improving. In 2017, solar curtailment was roughly 6% nationwide, down from 10.3% in 2016. The problem is especially acute in Xinjiang (22% curtailment in 2017) and Gansu Province (20% curtailment in 2017).27
The 13th Five-Year Plan establishes a goal of 153.6 GW of solar capacity in China by 2020. The plan sets targets for individual provinces, including targets of 12 GW for Hebei, Shanxi and Inner Mongolia.28
China has provided feed-in tariffs29 for solar power since 2011. Those rates have declined steadily since they were first established. For 2017, they ranged from RMB 0.65 to 0.85 (roughly US$0.10 to $0.13) per kWh, depending on the location. The 2017 rate for distributed PV systems was RMB 0.42 (US$0.06) per kWh.30
In May 2018, the Chinese government announced major changes to its solar policies. Central government subsidies for the construction of utility-scale and distributed solar projects were withdrawn. Feed-in tariffs were reduced. Local governments were directed to shift procurement to competitive auctions. The changes were seen as an effort to control the cost of solar subsidies (over $15 billion in 2017) and address overcapacity in power markets. Solar deployment in China in 2018 will likely be much lower than in 2017 as a result of these changes.31
China’s Five-Year Plan for Solar Energy Development contains specific goals for solar panel innovation (such as commercialized monocrystalline silicon cells with an efficiency of at least 23% and commercialized multicrystalline silicon cells with an efficiency of at least 20%). The Chinese government spends heavily on research and development for solar power to help meet these and other goals. Much of this funding comes through the Ministry of Science and Technology (MOST).32
China Development Bank and other Chinese policy banks have played an important role in providing debt capital to Chinese solar manufacturers and developers. This was especially important in helping the Chinese solar manufacturing industry grow in the years following the financial crisis of 2008 when many solar manufacturers in other countries were unable to secure access to capital.33
22. REN21, “Renewables 2018” at table R2; IRENA, “Renewable Capacity Highlights” (March 31, 2018),http://irena.org//media/Files/IRENA/Agency/Publication/2018/Mar/RE_capacity_highlights_2018. pdf?la=en&hash=21795787DA9BB41A32D2FF3A9C0702C43857B39C.
23. REN21, “Renewables 2018” at p.97; South China Morning Post, “China’s solar panel industry faces a year of reckoning amid global protectionism, slowing demand at home” (March 16, 2018), http://www.scmp.com/ business/companies/article/2137539/chinas-solar-panel-industry-faces-year-reckoning-amid-global.
24. China Energy Portal, “2017 Electricity & Other Energy Statistics” (February 6, 2018); “China O cially Installed 52.83 Gigawatts Worth Of Solar In 2017,” CleanTechnica (January 22, 2018), https://cleantechnica. com/2018/01/22/china-o cially-installed-52-83-gw-worth-solar-2017-nea/.
25. Ken Kingery, “Air Pollution Casts Shadow over Solar Energy Production” (June 26, 2017), http://pratt.duke.edu/ news/solar-pollution.
27. National Energy Administration, “2017年光伏发电新增装机5306万千瓦 居可再生能源之首” (January 24, 2018), http://www.nea.gov.cn/2018-01/24/c_136920159.htm.
28. NEA, “国家能源局关于可再生能源发展“十三五”规划实施的指导意见” [Guiding opinions on the implementation of the “13th FYP” for renewable energy development] (July 29, 2017); NEA, “风电发展“十三五”规划” [13th FYP development plan for wind power] (November 2016); NDRC, “可再生能源发展“十三五”规划” [Renewable Energy 13rd Five-Year- Plan] (December 2016), http://www.ndrc.gov.cn/zcfb/zcfbtz/201612/W020161216659579206185.pdf.
29. A “feed-in tari ” is a guaranteed price.
30. NDRC, “关于完善陆上风电光伏发电上网标杆电价政策的通知” [Notice on Improving the Pricing Policy for Onshore Wind Power and On-Grid Solar Photovoltaic Power Prices] (December 2016); NDRC, “国家发展改革委关于发挥价格 杠杆作用促进光伏产业健康发展的通知” [Notice on Improving the Pricing Policy for Solar Photovoltaic Power Prices] (December 2015); NDRC, “国家发展改革委关于发挥价格杠杆作用促进光伏产业健康发展的通知” [Notice on Promoting the Healthy Development of the Solar PV Industry through the Price Leverage E ect] (August 2013), http://www.ndrc.gov.cn/zcfb/zcfbtz/201308/t20130830_556000.html; NEA, “国家发展改革委员会关于完善太阳能光伏发电上网电 价政策的通知” [Notice on Improving the Pricing Policy for On-Grid Solar Photovoltaic Power Prices] (August 2011), http://www.nea.gov.cn/2011-08/01/c_131097437.htm.
31. NDRC, Ministry of Finance and NEA, “Notice on matters relevant to PV power generation in 2018” (May 31, 2018), https://chinaenergyportal.org/en/notice-on-matters-relevant-to-pv-power-generation-in-2018/; Emma Merchant, “China Bombshell Solar Policy,” Greentech Media (June 6, 2018), https://www.greentechmedia.com/articles/read/ chinas-bombshell-solar-policy-could-cut-capacity-20-gigawatts#gs.SxYUqhI.
32. Jeffrey Ball, Dan Reicher, Xiaojing Sun and Caitlin Pollock, “The New Solar System” (March 2017), pp.96–99, https://www-cdn.law.stanford.edu/wp-content/uploads/2017/03/2017-03-20-Stanford-China-Report.pdf.
33. Ibid. at p.55.