China sets 13GW solar target for 2014, focus on distributed generation

Image Credit: China Solar Cells via Wikimedia Commons

China has flagged a new solar installation target of 13GW or more for 2014, according to an announcement on the National Energy Bureau’s website published on Tuesday.

The head of the NEA, Wu Xinxiong, said the target – which is higher than the 10GW discussed in mid-2014, but lower than the 14GW target set in early 2014 – would be achieved largely through supporting the development of distributed PV generation; in stark contrast with the ‘ultra-mega’ solar plans floated by India yesterday.

As Deutsche Bank’s Vishal Shah reports, China’s newly announced distributed generation plans were thin on detail – short of calling on local governments to promote commercial development of rooftop solar projects – but a Bloomberg report also published today says policies could be announced as soon as this month.solar-pv-industry-China

Citing unnamed sources, Bloomberg said the National Energy Administration would call for local planners to add more projects in regions where electricity can be distributed to customers living nearby.

The article also indicated that China would encourage local governments to offer extra subsidies for distributed solar investments; increase support for installations at schools, hospitals and in rural areas; promote installations on public infrastructure; and encourage financial institutions to offer discounts on loans for distributed projects.

“Installations of solar panels will be promoted on public infrastructure such as railway stations and airport terminals,” the Bloomberg report said. “Solar projects built on abandoned land and hills, agricultural greenhouses, inter-tidal zones, fishponds and lakes and connected to grids with low voltage will enjoy preferential tariffs, the (unnamed sources) said.”

According to Deutsche Bank analysts Michael Tong and Eric Cheng – citing a previous consultation document from late June – the fine-tuning policy would likely include key measures like feed-in tariffs for projects with a low self-consumption ratio, unstable power load, or unable to implement energy management contracts.

For the global solar market, the news is being seen as a positive.

“Any potential policy announcement (from China) would be a significant positive catalyst for stocks, in our view,” said Deutsche’s Shah in an analyst note on Wednesday, noting that this is the first time we are seeing incremental details about the proposed changes.

“Stronger 2H solar demand in China would likely result in upward revisions of module price expectations and likely create a supply shortage, driving poly prices higher. It would also mean modest upside to our 12GW China demand estimate. More importantly, this event would be a positive for long term sustainable growth of the China market.”

But for some, the whether this target is actually implemented remains a key uncertainty.

“We believe the market should view this as a near-term positive, as this seems likely to be followed by an actual release of the fine-tuning policy on
distributed solar generation by NEA in the next couple weeks,” wrote Tong and Cheng in a note on Wednesday. “Actual implementation remains key to determining whether such target can be achieved.”

The Deutsche analsysts said they expected the policy would further address major hurdles for solar development in China, such as locating suitable roof-tops, securing finance, getting grid-connection, and collecting electricity tariffs.

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