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China Gives Development Priorities to New Energy, EVs and Green Building

published: 2015-12-08 18:50

The Chinese government has published its “Suggestion” for the Thirteenth Five-year Plan (the “13th Plan”) in advance to the full version. The 13th Plan recognizes “green” as a keyword for the nation to develop sustainably, and developments related to new energy sector is the core issue to “go green.” China plans to combine the “One Belt, One Road” policy, the anti-poverty policy, financial reformation and “Internet+” strategies for a more comprehensive new energy development from 2016 to 2020.

Solar PV development in China

The 13th Plan will follow certain policies introduced in the Twelfth Five-Year Plan. In terms of solar PV development, China has reached the 35GW solar installation target set in the 12th Five-Year Plan by mid-2015, and the new target for the 13th Plan could be from 100GW to 150GW, meaning that the averagely annual installation between 2016 and 2020 could be up to 22GW – nearly 40% higher than the 17.8GW target for 2015.

However, China’s National Development and Reform Commission plans to cut the national FiT subsidy for solar power generations starting from 2016. The FiT reduction rate in 2016 may be 5.56% at most, while the reduction rate could even reach 15% by 2020. The FiT reduction scheduled is believed to drive another wave of strong demand in 2016 despite the policy is still under negotiation.

In the long run, solar cost is and will be going downwards. According to National Energy Administration’s (NEA’s) research, the solar cost in China was RMB 0.6/kWh in this October. NEA further projects the cost to drop down to 0.45/kWh by 2020. With the consecutive cost reduction, solar installations could retain at a certain amount amidst the FiT cut year by year. The newly added 5.3GW of installation capacity for certain provinces by mid-2016 will also drive the domestic demand to solar products in the first quarter of 2016.

Key summery of the “Suggestion” related to new energy

The Suggestion points out the necessity for China to launch a new phase of energy revolution by bringing low-carbon/carbon-free energy resources such as wind energy, solar power, biofuel/biomass, hydropower, geothermal and nuclear power into its national development roadmaps. It also marks distributed generation, energy storage systems and smart grid infrastructure as development aspects related to the energy revolution.

In addition, the low-carbon strategy involves in “greener” transportations and eco-houses. The former target is expected to drive the demand to electric vehicles, while the latter aspect means to establish more sustainable lifestyles.

Internationally, China will response to the “common but differentiate responsibilities” mentioned in international climate negotiations and will be active in taking part in fighting against the climate change by completing its carbon reduction commitments. The nation’s “One Belt, One Road” policy will be part of its international energy developing strategies, creating China with downstream markets for its renewable industries as well as increasing the world’s clean energy portfolios for carbon reduction.

Domestically, new energy development will be integrated with financial reformation, anti-poverty policies (anti-poverty through solar power included), and “internet+” and become a major infrastructure program. Such program includes diversified financial services to help depressed areas to get rid of poverty. A more fluent and comprehensive message transportation established through “internet+” is also part of China’s solar development.

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