Despite the rollout of the “531 New Policy,” China's new grid-connected PV capacities still topped 10.2 GW in Q3, beating expectations. During a seminar on PV power development on November 2nd, an official of the National Energy Administration (NEA) assured that PV subsidies will be extended to 2022. EnergyTrend forecasts that under the premise of no change in the existing situation, the accumulated PV capacity will exceed 250 GW by the end of the 13th Five-Year Plan.
According to data released by the NEA on October 30th, China’s new grid-connected PV capacities reached 10.21 GW in Q3, including 4,890 MW of distributed generation systems and 5,320 MW of large-scale ground-mounted plants, boosting the new grid-connected installation in the first three quarters to 34.54 GW, including 17.14 GW of distributed generation systems and 17.4 GW of large-scale ground-mounted plants.
In Q3, only projects under the 2017 "Top Runner Program" (of which 5 GW are for the “Application Top Runner Program”) and the first-batch poverty-alleviation PV projects under the 13th Five-Year Plan (around 4.2 GW) had been covered by subsidy schemes. As some projects under the "Top Runner Program" had completed grid connection in September and some of the distributed generation systems are related to the poverty-alleviation program, EnergyTrend estimates that the scale of the subsidized capacities is less than 4 GW, with at least 6 GW of capacities having been installed without any subsidy scheme, whose arrangement remains to be seen.
While the 2017-year-phase "Top Runner Program" projects and poverty-alleviation PV projects will remain major sources of demands in Q4, there may be some projects with municipal government subsidies or no subsidies that breaks ground in the quarter. Given the strong demands from Japan, India, Europe, Australia, and Vietnam which may strain supply, demands on the Chinese market are forecast at around 10GW, with the whole-year’s demands estimated to reach around 44.5GW.
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Based on the conclusions of the aforementioned seminar on November 2nd, EnergyTrend believes that there are a few points and trends that are worth noting:
1. The PV power subsidies in China will still be available until 2022, but at a smaller extent, in both subsidy level and overall subsidy quota. However, PV power systems with special value (such as the poverty-alleviation or "Top Runner Program" projects or systems with energy storage systems) will have an even greater chance for subsidies.
2. The plan for the common ground-mounted PV projects under the 13th Five-Year Plan which was unveiled in 2017 has been unofficially aborted. EnergyTrend suspects that the government retains the option of releasing the quota flexibly in line with the government's financial state and actual market situation. The development of the large-scale ground-mounted plants will be majorly based on the "Top Runner Program."
3. China’s residential and commercial distributed generation systems are expected to develop in the direction of self-use and market transactions.
4. In order to keep the rate of PV power curtailment at below 5%, the development of non-subsidy projects, which can be implemented without any subsidy scheme, will focus on areas with higher electricity consumption and higher power fees. Given the close relationship between power consumption capacities and grid regulating capability, the development of non-subsidy systems will hinge on the progress of China’s nationwide power infrastructure reformation.
5. As there are no new subsidy quotas released, developers should be very cautious with the execution of new projects.
Under the existing framework, EnergyTrend predicts that the accumulated grid-connected PV capacities by the end of the 13th Five-Year Plan will surpass 250 GW, with the new grid-connected capacities expected to exceed 35 GW in both 2019 and 2020. The new installations will be headed by projects related to the "Top Runner Program," followed by the poverty-alleviation and non-residential distributed generation systems.
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