Breaking: China reduces solar installation target to 110 GW by 2020


China’s bullish adoption of solar PV over the last couple of years was always likely to relax at some point, and today’s announcement from the NEA seems to represent exactly that, as the country’s PV installation is cut by 20%. It is not a disaster, as 110 GW is still a commendable target, while industry onlookers are quick to point out that this is just a minimum target and could be exceeded.

The previous target of 150 GW of installed solar by 2020 was announced at the end of 2015, and now, a year later, that figure has been cut to 110 GW. Out of this 110 GW, 60 GW is reserved for distributed solar, 45 GW for ground-mounted utility-scale solar, and 5 GW for concentrated solar, according to Asia Europe Clean Energy Advisory (AECEA).

Considering that 43 GW of PV had already been installed by the end of 2015, and that somewhere between 73 GW to 78 GW may have been installed by the end of 2016, that doesn’t leave much room for significant growth in the next three years. It also represents an incredible turnaround from the huge amount of PV installed this year, to what would now be under 9 GW a year of PV installed in China up until 2020.

However, AECEA left a little room optimism, stating that the 110 GW target is merely a minimum target, which could be exceeded, as was the case with previous Chinese solar targets. In fact, AECEA predicts that between 135 GW to 147 GW could be installed by 2020.

2016: Bigger than anybody predicted

The extent of the solar gold rush in China during this year has only just began to become clear. In the first half of the year there was a great rush to finalize installations due to a feed-in tariff (FIT) cut on 30 June 2016, forcing some developers to push through projects as they were unsure whether they would still receive previously agreed FITs if the projects were completed after that date.

“What was more important than the actual drop was if there was a project approved under the previous quota and it was not completed by 1 July, then it was unclear whether the project would be awarded a FIT at all,” Head of Solar Analysis at BNEF Jenny Chase told pv magazine. “So the percentage drop was actually not so important, it was more the impact of the quota.”

There was more disappointing news for the industry in September, as a document from China’s National Development and Reform Commission confirmed rumors that China will dramatically cut its FITs for renewable energy projects again starting from 2017, while also cutting its subsidy scheme for distributed PV. The cuts to FITs for PV installations will range between 23% to 31% depending on the area, and the subsidy will be cut by 30% to 53%, and the news seems to have inspired a new rush for installations to be completed before 30 June 2017.

It is now estimated from market analysts that at least 30 GW will have been installed in China in 2016, which is double that of 2015, and is 60% higher than the original yearly target for 2016 of 18.1 GW. With this in mind, there is a good case to be made that the new 110 GW target will be significantly exceeded.