China, already the biggest manufacturer and the biggest installer of solar PV in the world, is tipped to double the annual installation of solar capacity to 85 gigawatts as it ramps up efforts to meet its newly declared zero net emissions target for 2060.
Analysts and close China industry watchers at HSBC say in a new report that solar installations in China could be 75GW to 85GW a year during the 14th Five Year Plan, which will cover the period from 2021 to 2025, and which forms the basis of the Chinese government’s central planning.
This is significantly higher than previous run rate of 30GW to 50GW per year over the last five years, and will result in a significantly scaling down of new coal fired power, as new capacity focuses on solar and wind.
“The 14th Five Year Plan (FYP) is being revised at the moment because President Xi has set a new strategy for carbon neutrality by 2060,” the HSBC analysts write in a new report. “All departments are revisiting their estimates. Wind and solar are core to this.”
It is, of course, a deeply significant move. It equates to more than two thirds of annual solar installation across the globe in 2019 – 115GW – and nearly twice the capacity of Australia’s entire grid – and will result in a considerable ramp up of manufacturing capacity.
It will likely take two to three years for China to ramp up to that level of installs, but it will in turn deliver a further fall in solar costs. HSBC expects the cost of solar to fall by 40-50 per cent by 2025, enabling grid parity in China to become the norm sooner without destroying margins across the solar supply chain. Its estimates are based on conversations with the China Photovoltaic Industry Association.
“China is expected to reintroduce green certificates and/or carbon trading, but this time with different requirements to ensure enforcement,” they write. “Subsidies and tariffs for existing renewables have been made clear without much changes in the future, so commitment to renewable energy generation is a matter of meeting quotas, not about pricing or availability of subsidies.”