Photovoltaic power generation: private enterprises have opportunities but not many

**Abstract** Photovoltaic power generation: Private enterprises have opportunities, but not many. "The good time for PV power plants has arrived," said Meng Xianyu, vice chairman of the China Renewable Energy Society, during his keynote speech at the "Johnson Solar Photovoltaic Power Generation Project Investment Briefing Session" on September 12. He emphasized that distributed photovoltaic power generation is an area with great potential for focused development. Meng pointed out that the reason behind this optimism lies in the strong policy support from the government this year, including clear targets for total photovoltaic capacity, on-grid electricity prices, and pricing mechanisms. With the improvement of these policies, the photovoltaic industry has seen significant changes. However, despite favorable policies, many PV companies still face challenges in financing large-scale projects. While both large-scale solar farms and rooftop systems require substantial investment, the current financial environment remains challenging. Many PV firms are struggling to secure enough capital, even with recent policy incentives. **Opportunities for PV Power Plants:** "Short-lived but limited." In the past two years, China’s PV industry faced a survival crisis, with many companies shutting down or operating at a loss. This was partly due to international trade disputes, but more importantly, it stemmed from overcapacity and a lack of diversification in product lines. To reverse this trend and boost domestic demand, the government has introduced several supportive policies. Starting this year, the National Development and Reform Commission and the Energy Bureau have pushed for large-scale development of distributed photovoltaic systems. The plan aims to build 10 GW annually after the 12th Five-Year Plan and 15 GW per year during the 13th Five-Year Plan period. On August 26, the National Development and Reform Commission issued a new subsidy policy, offering 0.42 yuan per kWh for electricity generated, with a guaranteed 20-year subsidy period. It also set standards for ground-mounted and distributed systems, showing the government's intention to develop both large-scale and small-scale projects simultaneously. However, subsidies for photovoltaic electricity are decreasing annually. According to plans, distributed generation subsidies may last only two or three years. If user-side generation reaches grid parity by 2015, no further subsidies will be provided. Similarly, large-scale ground stations are expected to achieve parity by 2020 and then lose their subsidy benefits. China’s PV application scale is still relatively small, accounting for only 1% of total power generation, compared to 7% in Germany. Meng encouraged enterprises to take full advantage of existing policies and invest in renewable energy projects, saying, “This time won’t be too long, nor too big.” **How to Seize Opportunities for Private Enterprises:** "Shift focus from component manufacturing to engineering construction." New opportunities are emerging, prompting PV companies to transform and seek new growth. On August 22, several major players, including China Merchants New Energy, Guodian Photovoltaic, State Grid Nanrui, and others, formed the "Photovoltaic Green Ecology Cooperation Organization." They signed a framework agreement to build 5 GW of solar capacity over five years, aiming for 400 MW, 600 MW, and 1 GW in 2013, 2014, and 2015 respectively. From the perspective of developers, large-scale ground-based projects are mainly dominated by state-owned enterprises. In the past few years, unclear policies and high risks made it difficult for private companies to enter. However, distributed systems, though smaller and more complex, offer greater opportunities for private players. Sha Xiaolin, chairman of Johnson & Johnson Enterprise Group, expressed his ambition in distributed PV projects. He noted that while the government restricts expansion of raw materials, it provides strong support for PV applications. According to the national subsidy policy, PV projects are considered stable and profitable investments. Johnson & Johnson has already shifted its focus from component production to engineering construction. The company has extensive experience, such as building a 3 MW ground station in Gansu in 2008 and a 1.05 MW building-integrated project in Nantong Rudong. It has also collaborated with foreign partners to construct over 20 ground and rooftop systems globally. In 2014, the company plans to build 150–200 MW of distributed systems in two or three state-level development zones. By 2016, it expects annual power generation from distributed systems to reach 500 million kWh, generating around 500 million yuan in revenue. **Challenges Faced:** "The loan threshold is high, and the term doesn't match." Despite the potential, some industry insiders believe that financing for distributed projects remains unresolved. Jing Jing, global brand director of Jingke Energy, stated that without sufficient capital inflow, the PV market cannot truly take off. Current financing conditions remain difficult. Banks typically charge high interest rates and require strict guarantees. Most commercial banks only offer loans of up to 5 years, which doesn’t align with the 25-year operational life of solar power plants. Qian Jing suggested that the government should allow longer-term loans—over 10 years—for renewable energy projects and reduce interest rates, especially for private enterprises, to lower financing costs. When bank financing proves difficult, Sha Xiaolin said Johnson & Johnson is looking for partnerships with listed companies, central enterprises, and large private firms to jointly develop distributed PV projects.

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