China’s 200% DG solar growth rooted in agriculture sector, finds AECEA

The latest National Energy Administration (NEA) data on China’s solar market shows that distributed solar (DG) accounted for 4.23 GW of the 34.54 GW of new installation capacity in 2016, a share of 12%.

That figure is, according to Asia Europe Clean Energy Advisory’s (AECEA) analysis of the data, 200% higher than in 2015 and takes into account – under the NEA’s definition of what constitutes DG – some ground-mounted systems small than 20 MW. The majority of these are to be found in the agricultural sector, which acted as a chief catalyst for DG growth in 2016.

Utility-scale solar was still the chief driver for PV growth, with only a handful of China’s provinces recording a semblance of balance between ground-mount and DG. These include Anhui, Jiangsu, Shandong and Zhejiang.

Collectively, solar PV met 1% of China’s overall power needs in 2016. The AECEA expects first half (H1) demand this year to reach close to 20 GW, which is only 2 GW shy of last year’s H1 performance. Further FIT cuts of around 13-19% this year are unlikely to negatively impact installation rates too much, the analysts believe, largely due to the continued price decline of domestic solar systems.

Over the course of 2017, 25 GW+ of new solar PV additions are likely, the AECEA forecasts, but beyond that the lack of visibility out to Q3 will obscure matters until much later this year.

A question of curtailment
The NEA data shows that national energy consumption in China rose by 5% compared to 2015, which is an generally accurate reflection of rising GDP (up 6.7%). New power generation capacity hit 120 GW. Despite these huge additions, the Chinese power grid was unable to keep pace with overall power capacity growth, registering 50 billion kWh of curtailed power last year (based on available provincial data) – an increase of nearly 48% on 2015’s figures.

For solar PV specifically, the China Electricity Council (CEC) finds that the average utilization for solar power fell to 1,125 hours, which is a year-on-year drop of 99 hours. China’s state grid operator is keenly aware of this problem, and has announced plans to construct ultra-high voltage (UHV) lines totaling 89,000 kilometers by 2020. This would comprise 11 individual lines capable of transferring 86 GW of power capacity annually. Existing UHV lines in some provinces are, however, being under-utilized, highlighting the additional logistical challenges facing the Chinese power sector.

The AECEA projects that it will be at least two more years until China’s national curtailment rate will fall to acceptable levels, which it pitches at 10% of cumulative installed power.