A China solar capacity target increase could lead to possible increase in equipment prices

China is planning to increase its 17.3 GW solar capacity target in 2015 by another 5 GW, as many solar plants are facing issues in getting grid connectivity. The country is also planning to increase the annual quote to 20 GW till 2020, with an aim of installing 150 GW of solar by that time. China has become the largest solar market in the world in the last couple of years by dramatically ramping up its demand, as solar energy has become quite cheap; thanks mainly to the cheap solar equipment manufactured by its domestic companies. China is facing huge pressure to reduce pollution and reduce carbon emissions. The country is the biggest emitter of carbon dioxide emissions in the world. It burns prodigious amounts of coal which is not only responsible for carbon emissions, but also has pernicious effects on human health and the environment. As the country becomes richer, citizens are demanding better air quality. With solar energy starting to compete with fossil fuels in costs, it makes eminent sense for China to increase its capacity expansions from solar energy.

China has not been successful in increasing penetration of distributed solar energy and has relied mainly on grid scale solar farms. This is creating issues for the grid as there is not enough capacity. However, rooftop solar generation does not put as much pressure on transmission as grid scale power farms does. China also plans to continue giving feed in tariffs for solar power generation, as it is currently doing now. China has been successful both in solar supply and demand creation, however the country has failed to increase the share of rooftop solar generation falling far short of its targets. The country needs to focus more on rooftop solar to further increase the penetration of solar energy in the country.

Developed countries have a much healthier 50:50 ratio of solar grid to solar rooftop (USA), while China and India have very low ratios of less than 20%. This is because their grids are outdated and they do not have clear regulations and policies to spur faster rooftop solar growth. These countries are also sensitive to cost much more than their western counterparts. Solar energy generated from rooftops is slightly higher priced than grid scale solar energy generation.

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China’s photovoltaic (PV) power capacity will hit 150 gigawatts by 2020, said a senior official on Tuesday.Dong Xiufen, director of the new energy office with National Energy Administration (NEA), said that the country will continue expanding PV power generation in the next five years. According to the NEA’s data, the country’s total PV power capacity stood at 35.8 gigawatts by the end of June this year.Dong stressed that future work will focus on distributing PV in central and east China as well as PV stations in west China, to increase PV capacity by 20 gigawatts annually from 2016 to 2020.

Source – Xinhua