China has upgraded its target for national solar installations for 2014, raising it to 14GW from 10GW, the target that was previously set by the state energy regulator, in January.
Deutsche Bank reports that China’s National Energy Administration published a statement on its website on Wednesday revealing the new amount of new solar capacity that would be eligible for incentives, 6GW of which would be targeted for utility scale, 8GW for distributed generation.
Quotas have also been set for individual provinces, and projects exceeding a region’s quota will not get a subsidy, according to the announcement.
Eastern provinces of Shandong, Jiangsu and Zhejiang received the highest quota of 1.2GW each, reports Deutsche Bank. And if grids are unable to absorb the power generated, the agency may reduce the quotas.
The new target is consistent with many analyst predictions, after a record year in 2013, when China added 12GW of solar power in 2013, doubling its rate of solar installations. Before this, no country had ever added more than 8GW of solar power in one year.
“The 2013 figures show the astonishing scale of the Chinese market, now the sleeping dragon has awoken,” said Jenny Chase, head of solar analysis at BNEF in a press release in January.
“PV is becoming ever cheaper and simpler to install, and China’s government has been as surprised as European governments by how quickly it can be deployed in response to incentives.”
To keep this in perspective, China added a total of just over 100GW of new power generation capacity in 2013 – an amount larger than the entire electricity capacity of the UK or South Korea, according to BNEF.
And while coal remains China’s main power source, with 39.7GW installed last year, hydro contributed the next largest increase, with 30.5GW added in 2013, while wind saw 14.1GW added.
Deutsche analysts say they are confident China can reach the new 14GW solar target for 2014, but warn that it will result in further upward pressure on pricing in the industry.
“Given several planned poly expansions coming online over the next 1-2 years and rising prices, we believe further long term agreements between poly and module suppliers are likely,” said a Deutsche report.
“We believe the tier 1 module suppliers are well positioned to capitalize on the domestic market and expand their installation business in the process.”