China considers raising PV target to over 25 GW20. July 2012 | Applications & Installations, Global PV markets, Markets & Trends | By: Becky Beetz
According to industry analyst, Jefferies, China is mulling the possibility of again raising its 2015 photovoltaic target to over 25 GW. Meanwhile, it says feed-in tariff troubles have arisen, which may affect internal rates of return (IRRs), and that a state owned enterprise merger could be on the cards for LDK Solar.
Following the China PV Summit 2012, held in Beijing this July 12, Jefferies analyst, Jesse Pichel says he is more confident of the solar demand situation in China. Despite this, "true capacity rationalization still has a long way to go".
He adds that, according to Junfeng Li, President of the Chinese Renewable Energy Industries Association (CREIA) and Director General of National Center of Climate Change Strategy Research (NCCS), the government is considering raising the country’s photovoltaic target to "more than" 25 GW by 2015. It has already recently raised the target from 15 GW to 21 GW. This, says Pichel, could allow for up to 10 GW of installations annually.
Underpinning what many have predicted, Pichel believes newly installed capacity will total around four GW in 2012, although "there could be an upside to our number".
At the conference, Lishan Shi, Deputy General of New and Renewable Energy Department under the National Energy Administration (NEA) also reportedly said that the Chinese government, like those in Germany and Italy, is leaning towards small, distributed photovoltaic systems, as opposed to large-scale ground-mounted plants. "Officials believe smaller projects located near grid points will alleviate transmission bottlenecks," writes Pichel.
As pv magazine reported in March, grid connection in China is a big problem. This was also recently highlighted by the International Energy Agency. In his presentation at Solarpraxis' first "Project implementation conference - China 2012", held in Shanghai IBC Solar (China)'s Sebastian Trimpl pointed out that grid structure is poor. Consequently, how to use the electricity produced needs to be considered, and not simply how to generate as much energy as possible. At the time, pv magazine also learned from anonymous sources that while 2.89 GW worth of photovoltaic projects were installed in the country in 2011, under half have actually been grid connected. Furthermore, it could be likely that many will never be connected.
More subsidy support
Jefferies analyst, Jesse Pichel goes on to say that the Chinese government has plans in the pipeline to introduce "several" new subsidy programs, in addition to the FIT and Golden Sun program. "These programs include New Energy Cities, Micro-grid Demo Projects, ZiJiXin Distributed Solar Project. These projects may contribute an incremental 2-3GW per year to demand," he says.
However, a number of state-owned utility companies, including China Power Investment Corp (CPIC), China Energy Conservation and Environmental Protection Group (CECEP), and China Guangdong Nuclear Power Corp (CGNPC) reportedly indicated at the conference that they had not received a photovoltaic FIT for as long as two years.
"In addition to the funding issue, they also had problems handling miscellaneous fees related to local land and grid connection which could impact the project IRR," continues Pichel, adding, "There has [sic] been rumors that 2013 FIT could be 0.80 rmb/kWh [around €0.10, or US$0.12], which utility companies believe would be too low to encourage profitable projects with quality panels and quality installation."
Regarding LDK which, according to Bloomberg, is said to be receiving help for its loan repayments from the city of Xinyu in eastern China’s Jiangxi province, Pichel says that he also believes the company is working with the local government and could be considering a merger with a State Owned Enterprise (SOE). "The outcome is high unpredictable, because it is policy driven," he adds.
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