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China to Break Through Challenges of Distributed Generation System Installation

published: 2014-03-14 18:19

China’s National Energy Administration (NEA) officially announced its PV installation target of 14GW in this year’s energy scheme. It points out that the country plans to install 8GW of distributed generation (DG) system this year. However, none of DG system has been started until now. There are still serious problems for China to solve in regard to DG system installation, and NEA therefore is trying to find solutions and may establish a comprehensive fund for DG system.

Last year, the Chinese government introduced a series of policies to encourage PV system installations and hence the capacity of new installation reached up to 18GW at the end of 2013. Although only 33% of new PV installations were DG system, the government announced an ambitious target of installing 8GW of DG system this year. However, a NEA’s investigating team found that there is no DG project on constructing, including 18 demonstration projects.

Problems and Challanges

The main problem for DG systems is financing. An insider of DG industry expressed that it usually requires 80% of financial supports for a DG project. However, most Chinese banks are holding a wait-and-see attitude toward DG projects because of risks like unclear profit, small scales and failed grid-connecting. Without enough financial supports, it’s difficult for a DG system to start constructing.

The closed Golden Sun demonstration project (金太陽示範工程) is another cause of this situation. On one hand, the Golden Sun project occupied lots of ideal rooftops for DG system; on the other hand, this project was stopped because of scandals and related criticism. The initial aim of this project was to subsidize PV manufacturers and encourage them to build DG systems. However, many companies were subsidized while built nothing or no grid connected. This failure not only made Chinese banks being hesitant when it comes to DG projects financing, but also led rooftop owners to be reluctant to install DG systems on their houses.

Besides, difficulty in connecting grids and lack of supporting measures are factors that lead China’s DG installation project into the predicament. Barrier like discrepancy between central and local policies is also an issue that makes DG systems hard to be commercialized now. Consequently, the DG demonstration projects are unable to demonstrate any positive features of DG systems because there is no one completed.


“Strictly speaking, none of the 18 demonstration projects has been started constructing,” said a member of NEA’s investigating team. “The demonstration project can be defined as a failed project if 1/3 of these projects haven’t been started at the end of March. Meanwhile, it will show that DG projects are difficult to prompt as long as there are more than two projects uncompleted at the end of June.” Both of the results are unacceptable to NEA, the investigator noted.

In order to solve the problems mentioned above, and to achieve China’s DG installation goal of 8GW, NEA is now trying to figure out methods like providing more thorough DG policies, establishing insurances and setting certifications. Establishing a fund to push the DG installation is another approach. The fund, if established, will be consisted by a central fund in Beijing and some local funds. Local funds will become bridges between regional and central governments, managing equities and subsidies.


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