Solar Power

China leads the world in deployment of solar power, with more than one-third of global solar capacity. At the end of 2018, China had roughly 175 GW of solar power.^[26]

In 2018, 45% of the solar power capacity added globally was in China.^[27]

China also leads the world in solar manufacturing, as it has for each of the last 10 years. In 2018, roughly two-thirds of global solar module production was in China. Chinese manufacturers held dominant positions throughout the solar supply chain.^[28]

In 2018, solar power accounted for roughly 3% of China’s electricity generation and 9% of China’s power capacity. In December 2018, a 500 MW solar project in Qinghai became the first in China to sell electricity for less than the benchmark price for electricity from coal.^[29]

Curtailment is a challenge for the Chinese solar power industry, although the situation has improved in the past few years. In 2018, solar power curtailment was roughly 3% nationally, with rates of 16% in Xinjiang and 10% in Gansu.^[30]

Photovoltaic (PV) technologies dominate China’s solar industry, with roughly 99% of China’s solar power capacity. However several concentrating solar power projects are currently operational and at least 20 are in various stages of the development pipeline.^[31]

China has excellent solar resources, especially in the western part of the country. (See map below.) However, air pollution may significantly reduce 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.^[32]

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.^[34]

China has provided feed-in tariffsfor solar power since at least 2011. Those rates have been declining steadily in recent years.^[35]

On May 31, 2018, the Chinese government announced major changes to its solar policies. Allocations of generous feed-in tariffs were reduced and local governments were directed to shift most procurements 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. This announcement has been followed with a series of orders and circulars to move the solar power industry away from feed-in tariffs and towards an auction system. (See discussion at note 6 above.)^[36]

For 2019, feed-in tariff rates for most solar projects rates range from RMB 0.4 to 0.55 (roughly US$0.06 to $0.08) per kWh, depending on location. Feed-in tariffs will be phased out starting in 2021.^[37]

China’s Five-Year Plan for Solar Energy Development contains specific goals for solar panel innovation (including 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).^[38]

The Chinese government has run a solar Top Runner auction program since 2015. The program rewards high-efficiency, low-cost solar panels with subsidies and construction quotas.^[39]

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.^[40]