Page 246 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
out of poverty. Statistics show that China’s installed solar solar farms was devolved to the local level in 2013, which
power capacity was nearly 30 million KW by 2017, and is made it harder for central energy authorities to control
expected to exceed 160 million KW by 2020, accounting the scale or rate of solar PV installations. That loss of
for nearly 10 percent of the country’s total installed control is why the subsidy funding gap has steadily
electricity capacity (Xinhua, China Fuels Clean). widened (Liu, Solar Power).
Yet, it was almost a foregone conclusion that China’s China isn’t the first country to slash subsidies for
solar PV market would see its first year of negative renewable energy, but they are in a different position
growth in new installed capacity in 2018. Shares in than developed countries like Germany and Spain, where
Sungrow Power Supply and GCL-Poly Energy Holdings power demand was relatively stable and renewables
led Chinese solar power stocks lower in mainland China were helping to replace power derived from fossil fuels
and Hong Kong in late May, after the government moved and nuclear power. China’s energy consumption, on the
to rein in the expansion of the industry by suspending other hand, is growing rapidly. As a result, the country
the allocation of more quotas for new farms and cutting has had an aggressive “all of the above” energy strategy.
subsidies in a surprising decision. Sungrow Power, the China has added solar PV capacity faster than any other
country’s biggest maker of inverters for solar and wind energy source and has done so at a rate faster than any
power, shrank as well, as did GCL-Poly, the world’s largest other major country. A primary motivation for its solar
producer of solar wafers used to make solar panels. PV investments is China’s need to rein in pollution. But
A joint statement by the National Development and China also knows it faces a future in which oil supplies
Reform Commission, Ministry of Finance and NEA said are depleting while electric vehicles are proliferating.
the allocation of quotas for new projects had been halted Thus, China sees renewables – and solar PV in particular
until further notice, and tariffs on electricity generated – as a critical area of focus. The decision was a response
from clean energy will be lowered by 0.05 yuan per KW to a couple of US solar companies charging that China’s
hour, a cut of 6.7 to 9 percent depending on the region solar subsidies were allowing Chinese solar companies to
(Zhang and Ng). undercut US solar manufacturers. In the long run, solar
PV is still certain to outgrow every other energy category,
By July 2018, the Chinese solar industry leaders but in the short term this decision is going to create a lot
decided to chill out, cut costs, and get better. Wang of uncertainty around the industry (Rapier).
Bohua, the secretary general of the China Photovoltaic
Industry Association, said China solar needed to move Hydroelectric Power
away from rapid capacity expansions and suppliers
should not expect the sector to grow every year. Even China is now the global leader in solar, wind, and
with installations slowing by possibly 34 percent in hydro energy capacity, investing more in renewable
2018 to 35 gigawatts, China’s solar market is still big, he energy each year than the US and EU combined. In 2017,
said. “We should keep full confidence in the domestic China increased this commitment by pledging to invest
market,” Wang said (Shen). At this point, many investors an additional US$360 billion in renewable energy prior
and project owners are waiting to see how the new to 2020. This model of renewables replacing coal is now
policy plays out, and the market dropped significantly. being replicated throughout Asia (HSBC).
Wang predicted China would see 30-35 gigawatts of
new capacity in 2018, a drop of 43 percent from 2017. Hydropower remained a prime renewable energy
That drop in new installations in China means there is a source in China in 2017 given its efficiency, economy
risk of overcapacity in the supply chain, which has been and comprehensive utilization rate. China’s hydropower
expanding rapidly. The silicon subcommittee of the China output reached 1,194.5 terawatt hours (TWh) in 2017, up
Nonferrous Industry Association calculates that China’s 1.7 percent from the previous year’s level and accounting
production capacity of polycrystalline silicon– a raw for 70 percent of total renewable energy power output.
material for the solar industry – will reach 433,000 tons The volume was also four times as high as wind power
a year in 2018, growth of 57 percent year-on-year. Most output and ten times the amount of PV power generation
of that new capacity came on stream in the third quarter. during the same period. The installed capacity of
One of the reasons for this runaway growth is because hydropower units was 341 GW that year, much higher
plans for the solar sector differ between central and local than capacity of wind and solar power at 164 GW and
governments – particularly since the power to approve 130 GW (Yang). As China pivots to renewable energy to
246
out of poverty. Statistics show that China’s installed solar solar farms was devolved to the local level in 2013, which
power capacity was nearly 30 million KW by 2017, and is made it harder for central energy authorities to control
expected to exceed 160 million KW by 2020, accounting the scale or rate of solar PV installations. That loss of
for nearly 10 percent of the country’s total installed control is why the subsidy funding gap has steadily
electricity capacity (Xinhua, China Fuels Clean). widened (Liu, Solar Power).
Yet, it was almost a foregone conclusion that China’s China isn’t the first country to slash subsidies for
solar PV market would see its first year of negative renewable energy, but they are in a different position
growth in new installed capacity in 2018. Shares in than developed countries like Germany and Spain, where
Sungrow Power Supply and GCL-Poly Energy Holdings power demand was relatively stable and renewables
led Chinese solar power stocks lower in mainland China were helping to replace power derived from fossil fuels
and Hong Kong in late May, after the government moved and nuclear power. China’s energy consumption, on the
to rein in the expansion of the industry by suspending other hand, is growing rapidly. As a result, the country
the allocation of more quotas for new farms and cutting has had an aggressive “all of the above” energy strategy.
subsidies in a surprising decision. Sungrow Power, the China has added solar PV capacity faster than any other
country’s biggest maker of inverters for solar and wind energy source and has done so at a rate faster than any
power, shrank as well, as did GCL-Poly, the world’s largest other major country. A primary motivation for its solar
producer of solar wafers used to make solar panels. PV investments is China’s need to rein in pollution. But
A joint statement by the National Development and China also knows it faces a future in which oil supplies
Reform Commission, Ministry of Finance and NEA said are depleting while electric vehicles are proliferating.
the allocation of quotas for new projects had been halted Thus, China sees renewables – and solar PV in particular
until further notice, and tariffs on electricity generated – as a critical area of focus. The decision was a response
from clean energy will be lowered by 0.05 yuan per KW to a couple of US solar companies charging that China’s
hour, a cut of 6.7 to 9 percent depending on the region solar subsidies were allowing Chinese solar companies to
(Zhang and Ng). undercut US solar manufacturers. In the long run, solar
PV is still certain to outgrow every other energy category,
By July 2018, the Chinese solar industry leaders but in the short term this decision is going to create a lot
decided to chill out, cut costs, and get better. Wang of uncertainty around the industry (Rapier).
Bohua, the secretary general of the China Photovoltaic
Industry Association, said China solar needed to move Hydroelectric Power
away from rapid capacity expansions and suppliers
should not expect the sector to grow every year. Even China is now the global leader in solar, wind, and
with installations slowing by possibly 34 percent in hydro energy capacity, investing more in renewable
2018 to 35 gigawatts, China’s solar market is still big, he energy each year than the US and EU combined. In 2017,
said. “We should keep full confidence in the domestic China increased this commitment by pledging to invest
market,” Wang said (Shen). At this point, many investors an additional US$360 billion in renewable energy prior
and project owners are waiting to see how the new to 2020. This model of renewables replacing coal is now
policy plays out, and the market dropped significantly. being replicated throughout Asia (HSBC).
Wang predicted China would see 30-35 gigawatts of
new capacity in 2018, a drop of 43 percent from 2017. Hydropower remained a prime renewable energy
That drop in new installations in China means there is a source in China in 2017 given its efficiency, economy
risk of overcapacity in the supply chain, which has been and comprehensive utilization rate. China’s hydropower
expanding rapidly. The silicon subcommittee of the China output reached 1,194.5 terawatt hours (TWh) in 2017, up
Nonferrous Industry Association calculates that China’s 1.7 percent from the previous year’s level and accounting
production capacity of polycrystalline silicon– a raw for 70 percent of total renewable energy power output.
material for the solar industry – will reach 433,000 tons The volume was also four times as high as wind power
a year in 2018, growth of 57 percent year-on-year. Most output and ten times the amount of PV power generation
of that new capacity came on stream in the third quarter. during the same period. The installed capacity of
One of the reasons for this runaway growth is because hydropower units was 341 GW that year, much higher
plans for the solar sector differ between central and local than capacity of wind and solar power at 164 GW and
governments – particularly since the power to approve 130 GW (Yang). As China pivots to renewable energy to
246
