Evolution of China's PV subsidy policy

How much do you know about PV subsidies?

1. Origin of subsidy policy

Since 2009, China has launched the photovoltaic building application demonstration project, Golden Sun demonstration project and photovoltaic power station concession bidding, which has opened the curtain of domestic photovoltaic development. In 2012, as the United States and Europe launched a dual anti Japanese campaign against China, China increased its support for photovoltaic applications, issued the Twelfth Five Year Plan for the Development of Solar Power Generation, and launched large-scale application demonstration areas for distributed photovoltaic power generation.

The State Council's Opinions on Promoting the Healthy Development of the Photovoltaic Industry (GF [2013] No. 24) issued by the State Council on July 4, 2013 clearly states that the implementation period of the feed in tariff and subsidies is in principle 20 years. The source of PV subsidy is the renewable energy development fund. In the same year, the NDRC issued FGJG [2013] No. 1638 on August 26, 2013. It is clearly stated in the document that the price subsidy standard is 0.42 yuan per kilowatt hour (tax included), and the photovoltaic power generation project will implement the benchmark grid price or price subsidy standard since it is put into operation, with a period of 20 years in principle.

2. Adjustment of PV subsidy policy

With the development of the photovoltaic industry, the technology has developed rapidly. At the same time, the price of photovoltaic equipment has also dropped significantly, and the benchmark price of photovoltaic power stations has also dropped. The electricity subsidy price has been maintained at 0.42 yuan/KWh for five years.

Until 2018, the electricity subsidy decreased once, from 0.42 yuan/KWh to 0.37 yuan/KWh later (the distributed photovoltaic poverty alleviation project remained unchanged). With the release of the 531 New Policy, the photovoltaic subsidy policy ushered in a new round of adjustment.

On April 30, 2019, the official website of the National Development and Reform Commission released the Notice on Issues Related to Improving the On grid Pricing Mechanism of Photovoltaic Power Generation, the core of which is bidding: except for poverty alleviation and household distributed power stations, all distributed photovoltaic power stations and centralized power stations participate in bidding.

(1) Centralized: benchmark on grid electricity price is changed to guidance price, and bidding subsidy

After the official implementation of the new policy, the benchmark on grid price of centralized power stations has been changed to the guidance price, which is 0.4 yuan/kWh in Class I areas, 0.45 yuan/kWh in Class II areas, and 0.55 yuan/kWh in Class III areas. The year-on-year decrease was more than 20%. On May 31 last year, the benchmark on grid price of new photovoltaic power stations in Class I, II and III resource areas was 0.5 yuan, 0.6 yuan and 0.7 yuan per kilowatt hour, respectively.

Under the guidance price, the feed in price of new centralized photovoltaic power stations shall be determined by market competition in principle and shall not exceed the guidance price. The part of the price determined by the way of market competition that is within the benchmark grid price of local coal-fired units (including desulfurization, denitration and dust removal price) shall be settled by the local provincial power grid; The higher part is subsidized by the Renewable Energy Development Fund.

(2) Distributed: the maximum subsidy for industry and commerce is 0.1 yuan per kilowatt hour, and the subsidy for household use is 0.18 yuan per kilowatt hour

In this new photovoltaic policy, except for poverty alleviation and household distributed power stations, all distributed and centralized photovoltaic power stations participate in bidding.

In terms of industrial and commercial distribution, for industrial and commercial distributed photovoltaic power generation projects that are included in the scale of financial subsidies in 2019 and adopt the mode of "self use and surplus online", the subsidy standard for full power generation is adjusted to 0.1 yuan per kilowatt hour; The industrial and commercial distributed photovoltaic power generation projects adopting the "full online" mode shall be implemented according to the guidance price of the centralized photovoltaic power station in the resource area. For industrial and commercial distributed projects allocated by the competent energy department in a unified way of market competition, the price formed by market competition shall not exceed the guidance price of the resource area where it is located, and the subsidy standard shall not exceed 0.1 yuan per kilowatt hour.

In terms of household distributed photovoltaic power generation, the subsidy standard for household distributed photovoltaic power generation in the mode of "self use, surplus online" and "full online" is adjusted to 0.18 yuan per kilowatt hour, which is included in the financial subsidy scale in 2019.

On May 30, 2019, the Energy Administration officially released the Notice on Matters Related to the Construction and Management of Wind Power and Photovoltaic Power Generation in 2019, as well as the attached Work Plan for the Construction of Photovoltaic Power Generation Projects in 2019. It is the first time in history that the notice configures photovoltaic power generation projects (except for photovoltaic poverty alleviation and household photovoltaic) that need subsidies in a competitive way and participates in the national unified tariff ranking.

(3) Individual household management, 750 million yuan equivalent to 3.5GW, one month buffer period

If the grid connection is completed before the release of the document but is not included in the subsidy scope, it can be reported to the local power grid enterprise according to the regulations, and included in the 2019 financial subsidy scale after the joint review and confirmation of the local filing authority and the power grid enterprise. The subsidy amount is based on the 2019 price policy (0.18 yuan/kWh) full electricity subsidy. (That is, a "bottom line" policy for all household PV projects that have been connected to the grid in the past but have not been included in the subsidy scope for various reasons).

Before the 15th day of each month, the Energy Administration shall publish the installed capacity for household use of the previous month; When the announced cumulative installed capacity of the last month exceeds the total scale of the year, the day after that month is the deadline for the subsidized household PV installation (i.e., a one month buffer period).

(4) Do a good job of connecting the old with the new for existing projects

PV projects listed in the previous construction scale that have been started but not connected to the grid shall be connected to the grid with full capacity by the end of 2019, otherwise they will not be included in the subsidy scope. The projects listed in the previous construction scale and not started shall be connected to the grid with full capacity by the end of 2020. The construction period may be appropriately extended for those who do not meet the construction conditions due to the red early warning and other specified circumstances.

3. PV subsidy policy in 2020

On March 10, 2020, the Energy Administration and the National Development and Reform Commission issued the Notice on Matters Relating to the Construction of Photovoltaic Power Generation Projects in 2020 and the Notice on Matters Relating to the On grid Tariff Policy for Photovoltaic Power Generation in 2020

The Notice specifies that the total subsidy budget for new photovoltaic power generation projects in 2020 is 1.5 billion yuan, of which 500 million yuan is for household photovoltaic and 1 billion yuan is for subsidy bidding projects. It is estimated that the installed capacity of corresponding industrial and commercial distributed and centralized ground power stations is about 20GW and that of household projects is about 6.5GW. The specific electricity price subsidy is 0.08 yuan for household use, 0.1 yuan less than the subsidy in 2019, and 50% less than that in 2019 for industry and commerce. The guiding electricity price for the iii-i resource area of the ground power station is 0.49 yuan, 0.4 yuan and 0.35 yuan respectively. Compared with the total subsidy amount of 3 billion in 2019, the total subsidy amount of photovoltaic projects in 2020 has been reduced by half.

On June 18, the National Development and Reform Commission and the Energy Administration jointly issued the Guiding Opinions on Doing a Good Job in Energy Security in 2020, which mentioned that the installed capacity of photovoltaic power generation will reach about 240 million kilowatts by 2020, that is, 35.7 GW of new photovoltaic installed capacity will be added in 2020.