According to a recent report from the Ministry of Industry and Information Technology, the newly installed photovoltaic capacity in China reached 2.8 GW during the first half of this year. However, the share of distributed photovoltaic generation remained zero, raising concerns about its slow progress. Analysts suggest that distributed solar power may continue to face challenges in the short term, caught between strong policy support and limited market demand.
The report highlights that out of the 2.8 GW installed, 1.5 GW came from the second batch of Golden Sun projects and other large-scale photovoltaic initiatives from the previous year. The remaining 1.3 GW was from large-scale ground-mounted solar farms. This means that, despite the government's push for distributed generation, it has not yet gained traction in the current phase.
Under the "12th Five-Year Plan for Solar Power Generation," the target is for distributed PV installations to make up half of the total 35 GW by 2015. To support this, the National Energy Administration and the National Development and Reform Commission issued several policies, including grid connection guidelines and financial incentives. However, key implementation details—such as electricity price subsidies and tax relief—remain unclear, which has left many companies hesitant to invest in distributed projects.
Industry insiders point out that without clear subsidy rules and favorable taxation policies, the development of distributed solar will struggle to take off. A representative from a major solar company told the China Securities Journal that while the policy environment is supportive, uncertainty around subsidies and land use regulations continues to deter investment in distributed PV projects.
The China Photovoltaic Industry Association estimates that only 1 GW of the 8 GW of new solar capacity added this year will come from distributed generation. This underscores the dominance of large-scale solar farms, which still account for the majority of installations.
Market analysts believe that large-scale ground-mounted projects will remain the mainstream for some time due to better access to subsidies and grid connection support. Many listed solar companies have shifted their focus to developing these projects, with some recently securing EPC contracts for large-scale solar farms. These projects offer an internal rate of return of around 10% over a 20-year period, making them an attractive investment.
To truly boost the distributed solar market, experts emphasize the need for two key policy measures: clear electricity price subsidy guidelines and a detailed plan for distribution network upgrades. Until these are in place, the full potential of distributed photovoltaics in China will remain untapped.
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