From pv magazine 05/2022
Despite an overall high-price ecosystem and prevailing logistical constraints, China’s module exports grew by 27% year on year in 2021 to 100.5 GW, surpassing the 100 GW mark for the first time ever – according to China’s Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCME). The most important export destinations were Europe with 45.3 GW (+54% year on year), followed by India with 10.9 GW (+94% year on year), and Brazil with 10.4 GW (+129% year on year). Exports of wafer, cells and modules hit $28 billion (+41.8% year on year), with modules taking the lion’s share with $24.95 billion.
Downstream sector developments were no less impressive. Last year, in total 54.9 GW was installed – the best year ever. Residential PV, benefiting from national subsidies, grew by 113% year on year to 21.6 GW, representing a share of 40%. Overall, the share of distributed solar power, including 7.7 GW of C&I, made up more than 50%.
By the end of 2021, cumulative installed PV capacity amounted to 306 GW, with distributed systems accounting for 35%. The share of solar in China’s energy mix amounted to 12.9% (GW capacities) and generated 3.9% of electricity by the end of 2021.
Taking current policy targets, project backlogs, and newly approved projects into account, 2022 could be the year that solar surpasses in each case hydropower and wind in terms of cumulative installed capacity.
Reportedly, during 2021 contracts for 125 PV projects with a combined capacity of 10.2 GW were signed by stakeholders in China. Spread over 47 countries, the earmarked investment totaled $5.7 billion. An almost equal share of projects will be implemented as part of China’s Belt and Road Initiative (BRI) and the Regional Comprehensive Economic Partnership (RCEP). The latter is a free trade agreement among 15 Asia-Pacific nations signed in November 2020.
To date, between 2014 and 2021 Chinese developers signed project contracts in countries mainly across Asia and Africa totaling approximately 44 GW. In an attempt to encourage its domestic players to pursue a “global go out” strategy, in late March 2022, four central governmental entities jointly published an “opinion” outlining the promotion of green development of the BRI prominently featuring solar deployment.
In AECEA’s opinion, 2022 has the potential to top all past annual records. According to the Ministry of Industry and Information Technology (MIIT), in January-February the output of polysilicon, wafer, cells, modules and inverters reached, 110,000 MT, 40 GW, 39 GW, 21.9 GW (export only), and 27 GW, respectively. This significant output is presumably due to a strong demand in India, given that from April 1 onwards basic custom duties are levied on imported cells and modules of 27.5% and 44% respectively.
Additionally, installations in the first quarter of 2022 came in at 13.2 GW, more than the 13 GW installed in the whole first half of 2021. This first quarter figure represents a 130% year on year increase. Of these, 70% are distributed PV projects, and 30% utility scale. During the same timeframe, announced module procurement tenders have already surpassed last year’s 45 GW.
Due to a prevailing environment of high prices, current average module prices remain at around CNY 1.88 ($0.295)/W to CNY 1.92/W and are anticipated to stay on that elevated level in the foreseeable future. Furthermore, if last year the industry’s main concern was about polysilicon, this year, EVA has the potential to receive a similar amount of attention. By all accounts, existing global EVA production capacities could pass the one million ton mark, allowing the manufacture of an estimated 210 GW, suggesting a tight supply situation in light of the 2022 estimated global demand to date.
In the context of procurement tenders, slowly but surely heterojunction (HJT) modules are entering the domestic market. China Resources Power Holdings (CR Power) recently awarded 1.5 GW, thus 50% of its 3 GW module procurement tender, to a HJT module manufacturer at a price of CNY 1.80/W. Delivery is scheduled for the second half of 2022. The very same supplier has set a sales target of up to 3.8 GW in 2022.
In terms of high efficiency manufacturing expansion, one of the leading HJT equipment suppliers just announced that its orders increased by more than 330%, reaching 8.1 GW, in 2021 and could potentially reach 20 GW to 30 GW in 2022. Estimates suggest that by the end of 2022, up to 10 GW to 15 GW of HJT production capacities could become operational. In the longer run, the annual sale of HJT manufacturing equipment could reach CNY 40 billion by 2025.
To date, in almost all provinces across China it is mandatory that newly built PV power plants be equipped with electrical energy storage (EES) devices. On average, battery devices will make up 10% to 20% of the power generation capacity with a storage duration of two to four hours. During 2021, approximately 8 GW/18 GWh was tendered at an average price of CNY 1.48/Wh.
In an attempt to increase financial viability of PV plants combined with storage, provinces including Anhui, Guangdong, Jiangsu, Ningxia, Qinghai, Shandong, Sichuan and others are offering various subsidies. Unfortunately, these schemes lack uniform guidelines and are often unclear. Furthermore, from a business model perspective, only being allowed to offer frequency regulation related services is considered insufficient to generate decent profits. Corresponding auxiliary services are often limited to two to three years only.
Last fall, the National Energy Administration (NEA) announced plans to aim at a tenfold increase of its current 3 GW EES capacities by 2025. In February this year, a designated implementation plan, the 14th Five-Year Plan for New Types of Energy Storage Development, was released.
Accordingly, by 2025 system cost of electrochemical based storage technologies is expected to drop by 30%. By then mature market mechanisms, business models, and a greater degree of standardization should be realized. Following the release of this plan, State Grid Corporation of China, responsible for approximately 80% of China’s grid infrastructure, stipulated a target of 100 GW of ESS by 2030. Overall, China’s EES market has been forecast to be worth approximately CNY 0.45 trillion and CNY 1.8 trillion by 2025 and 2030, respectively.
Carbon neutrality targets
China’s central government is actively identifying industrial sectors that could be transformed towards low-carbon operations in the mid-term or even zero-carbon in the longer-term. After thermal power plants, China’s steel sector is the second single largest source of CO2 emissions – responsible for approximately 15% of the nation’s total emissions. Given this, in February, the National Development and Reform Commission (NDRC) issued “Implementation Guidelines for Energy Conservation and Carbon Reduction within the Steel and Iron Industry” strongly suggesting the deployment of PV on roofs and to consume more green electricity.
In March, China’s Ministry of Housing and Urban-Rural Development (MOHURD) released its 14th Five-Year Plan for Building Energy Efficiency and Green Building Development and has set a target of 50 GW of rooftop solar PV/BIPV and 100 million square meters of solar-thermal applications to be deployed by 2025. On the local level, the city of Ningbo in Zhejiang province, for example – home to 8 million people and the third-largest container port in the world – just released a target that 90% of all new buildings should have a solar rooftop system by 2025.
The latest policy, yet to be implemented on the national level, was announced by the provincial government of Shandong which will implement a time-of-use (TOU) electricity tariff scheme for residential power use from May 1. Residential electricity tariffs were previously set by the government and considered fixed, with the end user enjoying an annual rate regardless of consumption volume. By contrast, the Shangdong TOU tariffs are CNY 0.5769/kWh (peak) and CNY 0.3769/kWh (off-peak). AECEA is of the opinion that precedent set by Shandong will soon be emulated by other provinces, stimulating more solar. In 2021, China’s residential sector consumed 14% of the total electricity generated.
In the context of electricity reforms, since February the provinces of Guangdong and Zhejiang, are both home to a specific “green electricity transaction price,” which in the case of Guangdong is 3.4% higher (CNY 0.51389/kWh) than the fixed thermal power transaction price of CNY 0.49704/kWh.
Traditionally, large numbers of manufacturers across Guangdong have relied on diesel-generators as backup systems. This new green tariff will undoubtedly drive demand for C&I rooftop systems, thus allowing manufacturers to reduce their carbon footprint while consuming self-generated PV power and sell a potential surplus at an attractive price.
14th Five-Year Plan (2021-25)
China’s ambition to enhance its national energy security through massive deployment of renewable energy is fostered by the fact that last year its import dependency for oil and gas reached historic highs of 73% (+2% year on year) and 44% (+3% year on year) respectively. In this context, in late February, the National Development and Reform Commission and the NEA jointly released the second batch of large-scale GW-bases (wind/PV) with a total installed capacity of 455 GW to be realized by 2030.
Traditionally, the first year of any new five-year plan is a period where central, direct-administrated municipalities (Beijing, Chongqing, Shanghai, Tianjin), and provincial governments formulate a host of economic and social five-year plans, usually aiming at an official release just before the end of the first year or in the run-up to the National People’s Congress – the most recent one took place in Beijing early March. The latest example is Inner Mongolia, which at the end of 2020 was home to 12.4 GW and now targets a total of 45 GW of PV – that is, on average 6.5 GW to be added annually through 2025. Similarly, the province of Yunnan announced that it plans to deploy 15 GW/year to 2024. If realized, this would result in more than a ten-fold increase on the 3.9 GW installed as of the end of 2021.
Against this backdrop, approximately 24 out of 31 provinces and autonomous regions have announced their respective 14th Five-Year Plans for Renewable Energy Development. Cumulatively, they are aiming to deploy approximately 375 GW to 420 GW of solar; on average 75 GW to 84 GW annually from 2021 to 2025. The “national” 14th Five-Year-Plan for Renewable Energy Development has yet to be released, but as AECEA has learned, is currently under review.
China’s demand for PV could reach up to 80 GW to 90 GW in 2022, representing an increase of 45% to 63% year on year. The drivers will be projects part of the first batch of “GW-bases,” ground-mounted utility projects subject to guaranteed grid connection, DG-PV, notably residential PV potentially reaching 30 GW to 35 GW, and to a lesser extent, so-called “market-oriented” projects.
By Frank Haugwitz
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: firstname.lastname@example.org.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.