Chinese ministry poised to alter land administration rights for agri-PV

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China’s State Ministry of Land and Resources has issued a written confirmation that "all agricultural lands used by new PV installations, including those used by PV arrays, should be administrated as construction land.”

The correspondence went on to add that all related planning, scheduling, usage conversion, acquisition, and supply procedures need to be carried out in accordance with the law, and that the category of agricultural land will be determined based on the land survey results.

Area used by PV arrays will be verified according to China’s "Land Use Control Quota of PV Power Station Projects".

The Tianjin Land & Resources Bureau has recently suspended the preliminary approval of land use for agricultural PV and fishpond PV projects. Hence, with the issuance of the land ministry’s correspondence, preliminary approval for such solar installations may only be granted after the land’s category has been changed to construction.

Although this is not yet a publicly available policy document, it indicates that the Ministry of Land and Resources highlighted the statement set forth in its "No. 5 Circulation"; that is, the land used by Agri-PV projects must be treated as construction land.

In 2015, China’s Ministry of Land and Resources, National Development and Reform Commission, Ministry of Science and Technology, Ministry of Industry & Telecommunication, Ministry of Housing & Construction and Ministry of Commerce jointly issued the "Opinion on supporting the development of new industries & new business formats, promoting mass entrepreneurship & land use innovation”, which is referred to by industry insiders as "No. 5 Circulation".

Under this circulation there are a couple of points concerning the development of solar PV.

If PV and wind projects using Gobi, desert, grassland or unused land, etc, do not occupy the land or change the land surface pattern, that land can be recognized as in its original category; the land usage will not be changed, and shall be marked in the annual land usage change inspection. The land can be acquired through lease and other methods, and a compensation agreement shall be entered into between the two parties.

For land that will be used to build a permanent construction, relevant procedures need to be carried out as construction land according to the law.

Whereas The No. 5 Circulation only states that if the PV power stations occupy agricultural land all used land need to be administrated as construction land, the latest missive from the ministry further emphasizes carrying out the planning, scheduling, usage conversion, acquisition and supply procedures in accordance with the law.

It also stipulates that the land used by PV arrays shall be administrated as construction land. Currently there are a number of agricultural PV projects that did not strictly convert their inner floor land into construction land. As a result, the development of Agri-PV could well suffer. In Tianjin, a number of Agri-PV projects have been completed, while others remain stalled.

As Tianjin does not have a PV project quota limitation , a large number of enterprises have been drawn to the city. Companies like Qingdao New Energy Solutions Inc. (NESI), GCL New Energy, State Power Investment Corp. (SPIC), xinyi Solar, Huadian, Tianjin Yudian Solar and Tongwei Group are all developing Agri-PV power stations in Tianjin. An industrial insider who is familiar with the Tianjin PV power station development situation revealed that recently his company was forced to cease construction after the risk assessment. Another PV power station, on the other hand, has already begun module installation.

There were many PV power plants that began operation before the June 30 FIT reduction. According to sources, "those finished projects might be able to escape this administration, but the new ones that are currently under construction will be restricted." Another source says that Tianjin government had sent cease notices to a power station owner several times, but the project was secretly completed. "Many power stations do occupy common agricultural land, but most are simply elevating the equipment. It is rare to build the PV power station on top of the agricultural greenhouse."

In principal, the integrated building, booster station and pavement hardening of a PV power station are generally operated as construction land, and such land was usually transferred from another land category and purchased through auction.

"Generally speaking, each station occupies a dozen acres of land," A power plant project manager said. "If the Agri-PV lands are all treated as construction lands, the increased land cost alone will exceed 20 million Yuan for a 20 MW power plant. The cost will even higher in areas where construction land has high cost." It is not only a matter of cost increase. "The approval is also unlikely to be granted. As the construction land adopts the Total Amount Administration method, considering the large space PV projects will take, the possibility for obtaining approval is very slim."

In the eastern region of China, PV power stations usually use common farmland or fish pools through leasing, whereas in western region like Inner Mongolia, some projects use common pasture. So far, how these projects will be affected in the future remains unclear. However, Ministry’s correspondence was also sent to each local land and resource bureau at provincial level as well as the State Land Supervision Bureau’s dispatched offices in each location.

Agri-PV in China may well soon be facing stricter preliminary inspection on land, or even the risk of unconditional ceasing of construction in the future. This will be a crushing blow to several GW of Agri-PV projects already at the planning stage.