Analysis on the Declining Subsidy of Chinese Distributed Photovoltaic

Abstract

China’s distributed PV subsidy policy has been constantly adjusted, and it is expected to be reduced to zero by 2020. This paper measures the different unit electricity subsidies needed of PV under five solar resource regions in the next three years based on the average yield rate of distributed PV and the declining photovoltaic equipment cost due to constant R&D input and increasingly increased installed capacity. Studies show that the better the solar resource is, the lower the subsidy for unit electricity will be, and subsidies will constantly decline as equipment cost declines. It is expected that zero-subsidy policy will be realized for Zone I, Zone II and Zone III after 2020, but government subsidies are still needed in Zones IV and V. This paper continues to study the V area and calculates that when the equipment cost drops by an average rate of 11% per year, the unit electricity subsidy decreases by an average of 26% per year. Finally, it is proposed that in order to continue to promote the development of China’s distributed photovoltaic and enhance investors’ confidence, government should gradually and carefully implement the zero-subsidy policy according to the changes in equipment cost and local resource endowments.