Whilst China’s National Energy Administration (NEA) lowered its 2014 installation target from 14 GW to 13 GW and matched IHS’ forecast from earlier in the year, it vowed to continue support for the PV industry and upcoming policy will help to remove barriers for distributed solar (DPV) and accelerate the build-out of new projects.
We see improving conditions for DPV and forecast nearly 5 GW of DPV systems to be completed in China in 2014. NEA is suggesting the following changes to its DPV policies, which will become key drivers once ratified by the NDRC in H2’14:
- Expanding the ‘definition’ of eligible DPV projects is a possibility. This may change to include all systems up to 20 MW in size (not necessarily roof-mounted) that connect to a low-voltage grid.
- In addition to the likely above change, the grid voltage limit of eligible DPV systems may be increased from 10 kV to 35 kV. This somewhat artificial change in definition of what the NEA considers a DPV project opens up incentives to huge proportion of ground-mount PV projects.
- DPV subsidies may more than double to be close to FiT rates, up from CNY0.42/W to CNY0.9-1.0/W, depending on areas of installation.
- NEA is trying to establish a communication platform between government, banks, and companies. It encourages the establishment of a one-stop financial solution for DPV companies. Fund, insurance, trusts and industry capitals are welcome to join PV industry investment fund.
Whilst we confirm our earlier prediction that ground-mount PV systems will remain the majority of the China market in 2014, we do expect installations of DPV to accelerate rapidly. New installation of 8 GW of ground-mount systems are forecast in 2014. We also expect that ground-mount PV systems in China may see tougher examination procedures, as quality issues have emerged in the northwestern PV systems since Q1'14.
Along with the shift from utility-scale solar to DPV, IHS has identified a sharp increase in shipment of small string inverters in H1'14, marking a trend away from large central inverters. In H1'14, Huawei's string inverter shipment recorded over 500 MW in China, marking important milestone for the transition of inverters from central to string in commercial (small, medium and large) PV systems. Despite this, IHS predicts that central inverter suppliers like Sungrow and TBEA will continue to dominate the overall market as ground-mount system remain the majority.