China’s solar industry continues to grow with the addition of 9.65 GW of solar PV capacity in the first quarter (Q1) of 2018.

According to the data released by the China’s National Energy Administration (NEA), this marks a significant growth of 22 percent year-over-year (YoY) when compared to Q1 of the preceding year.

Of the 9.65 GW installed in the first quarter of 2018, approximately 7.68 GW consisted of distributed solar capacity. China’s distributed generation (DG) capacity increased by an astounding 217 percent YoY, while utility-scale installed capacity plummeted by nearly 64 percent to only 1.95 GW in Q1 of 2018.

Previously, the Asia Europe Clean Energy (Solar) Advisory (AECEA) had forecasted China’s installations to hover around 7.5 GW in the first quarter of 2018.

Moreover, AECEA also noted that there were improvements in grid curtailment during the first three months of 2018, most significantly in the autonomous region of Xinjiang and the province of Gansu, where curtailment was over 20 percent in 2017.

According to another report released by AECEA, by the end of the year 2020, China may have approximately 250 GW of solar PV installed.

Recently, NEA also distributed a draft version of its solar PV policy, requesting industry comments by April 25, 2018.

Here are the excerpts from AECEA’s policy document –

• Three Types of Operation Mode:
  • Mode 1: 100% self-consumption
  • Mode 2: less than 50% feed-into the grid
  • Mode 3: 100% feed-into the grid
• Three Project Capacities:
  • Less than 6 MW (residential systems below 50 kW – can choose any of the three modes) can only apply for mode 1 + 2; excess power subject to regular local retail tariff – no FIT
  • 6 MW to 20 MW (can only apply for mode 1)
  • Larger than 20 MW (can only apply for mode 3, subject to regular FIT via competition)

• Mode 1: 100% self-consumption
• Mode 2: less than 50% feed-into the grid
• Mode 3: 100% feed-into the grid

• Less than 6 MW (residential systems below 50 kW – can choose any of the three modes) can only apply for mode 1 + 2; excess power subject to regular local retail tariff – no FIT
• 6 MW to 20 MW (can only apply for mode 1)
• Larger than 20 MW (can only apply for mode 3, subject to regular FIT via competition)

• Rooftop systems larger than 20 MW are not considered “distributed generation”, but rather as regular power plants and therefore subject to regular FIT via competitive bidding
•  Projects which have received approval in 2018, but are unable to start construction will be cancelled and not rolled-over to 2019
• Stricter enforcement of annual guiding targets
• Unapproved, non-registered projects that begin construction without prior government consultation will no longer be accepted 
• Strengthen monitoring of project construction and in case rules were violated to levy a fine
• Strengthen market monitoring
• Poverty alleviation projects are subject to corresponding regulations
• DG projects are administered by local provincial governmental – not central government – and are encouraged to award DG projects via competitive bidding
• Project developers will need to make sure that lease contracts for roofs, buildings, and land are at least 10 years

In light of the forthcoming policy changes, AECEA maintains it view that for the full year installations could range between 40-45 GW.

“Drop in installation levels in China would mean a module oversupply scenario which usually leads to drop in module prices. That would be good news for the Indian solar market except that safeguard duty if imposed could negate the drop in Chinese module prices,” said Raj Prabhu, CEO of Mercom Capital Group.

Mercom had previously reported that the year 2017 was an outstanding one for China’s solar industry. The country added a whopping 53.06 GW in solar installations, a 54 percent YoY increase in terms capacity addition by the end of 2017, compared to 34.54 GW installed in 2016.

Though the upcoming year of 2018 seems promising and full of opportunities for the Chinese solar industry, the AECEA report had earlier cautioned that it could be a challenging year in the face of various global events that might influence the Chinese market. For instance, the imposition of an import tariff by the Trump administration in the U.S. and the ongoing case in India regarding safeguard duty will inevitably impact Chinese market dynamics. The external factors put aside, the country will continue to be a world leader in promoting the use of renewable sources.