Solar power in China - Wikipedia

China is the largest market in the world for both photovoltaics (PV) and solar thermal energy. Its PV capacity crossed 1,000 gigawatt (one terawatt, 1 TW) in May .[1]

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China's photovoltaic industry began by making panels for satellites, and transitioned to the manufacture of domestic panels in the late s.[2] After substantial government incentives were introduced in , China's solar power market grew dramatically: the country became the world's leading installer of photovoltaics in . China surpassed Germany as the world's largest producer of photovoltaic energy in ,[3][4] and became the first country to have over 100 GW of total installed photovoltaic capacity in .[5] As of at least , Chinese firms are the industry leaders in almost all of the key parts of the solar industry supply chain, including polysilicon, silicon wafers, batteries, and photovoltaic modules.

As of at least , China has one third of the world's installed solar panel capacity. Most of China's solar power is generated within its western provinces and is transferred to other regions of the country. In , China owned the largest solar power plant in the world at the time, the Huanghe Hydropower Golmud Solar Park, which had a photovoltaic capacity of 200 MW. In , it held the record again with the Tengger Desert Solar Park with its photovoltaic capacity of 1.5 GW. China currently owns the second-largest solar plant in the world, the Huanghe Hydropower Hainan Solar Park, which has a capacity of 2.2 GW.[6] In , China completed the world's largest hydro-solar power plant in Sichuan, which utilises the consistency in hydropower production to offset the variability in solar power.[7][8]

Solar power contributes to a small portion of China's total energy use, accounting for 3.5% of China's total energy capacity in .[9] Chinese President Xi Jinping announced at the Climate Ambition Summit that China plans to have 1,200 GW of combined solar and wind energy capacity by .[10]

Solar water heating is also extensively implemented, with a total installed capacity of 290 GWth at the end of , representing about 70% of world's total installed solar thermal capacity.[11][12]

The expansion of the solar sector in China has been criticized due to the large quantities of waste being produced and improperly disposed of from the production of photovoltaic cells.[13] Criticism over large amounts of unused energy being produced has appeared along with criticism over the forced removal of native populations for development land and the usage of forced labor in the production of photovoltaic cells.[14][15][16]

As of at least , solar power is cheaper than coal-fired power in China.[17]: 167  By the first quarter of , the momentum continued with China installing 45.7 gigawatts of photovoltaic panels, a 34% increase from the previous year. This reflects ongoing growth, although the increase was less than the 154% surge seen in early , showing some variability in expansion rates.[18]

In , China added 277 gigawatts (GW) of solar power, which was equivalent to 15% of the world's total cumulative installed solar capacity.[19]

History

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Photovoltaic research in China began in with the development of China's first piece of monocrystalline silicon. Research continued with the development of solar cells for space satellites in . The Institute of Semiconductors of the Chinese Academy of Sciences led this research for a year, stopping after batteries failed to operate. Other research institutions continued the development and research of solar cells for Dongfanghong satellites. In , domestic solar cell production began with factories in Ningbo and Kaifeng. These cells were produced in a similar fashion to the satellite cells of the past.[2] Annual solar capacity installations were still low, as only 0.5 kW of photovoltaic capacity was installed. This increased to 8 kW in , 70 kW in , 500 kW in , and  kW in .[20]

China's Sixth Five-Year Plan (-) was the first to address government policy support for solar PV panel manufacturing.[21]: 34  Policy support for solar panel manufacturing has been a part of every Five-Year Plan since.[21]: 34 

In the early s, Tsinghua University scientists developed a new type of evacuated tube solar water heater design.[22]: 409  These units became ubiquitous in rural China during the early s. By , China had more than 85 million solar water heaters, primarily operating in rural households.[22]: 409 

In , demonstration projects for solar energy production began to appear, starting with a 3W polysilicon battery and applications for the energy. Yingli became one of the first producers of this new solar energy. However, annual capacity did not increase much until when a 10 MW solar cell production line was put into operation by Suntech Power.[2] That year, a program aimed to install more solar and wind energy in Tibet, Xinjiang, Qinghai, Gansu, Inner Mongolia, Shanxi, and Sichuan was introduced by the National Development and Planning Commission. This spurred solar cell production and annual installations skyrocketed from 3.3 MW in to 20.3 MW in . Photovoltaic cell production expanded in the following years, with 140 MW manufactured in . Only 5 MW of solar energy was installed in China that year, however, as most of the manufactured photovoltaic cells were sold to European countries, with Germany being the largest buyer. China's annual solar energy installations grew to 10 MW installed in , increasing China's total installed solar energy capacity to 80 MW.[20] Annual solar energy installations continued to grow, with 20 MW of capacity installed in and 40 MW installed in .

After Suntech's listing on the New York Stock Exchange in , founder Shi Zhengrong became the richest person in China.[23]: 144  Academic Lan Xiaohuan writes that Shi's wealth following the listing "acted as a strong demonstration effect and local governments across China soon began to invest in the solar industry."[23]: 144 

In , the National Development and Reform Commission planned to have China's solar capacity increase to 1,800 MW by . However, according to Wang Zhongying, the head of the National Development and Reform Commission's renewable energy development, stated that China would far exceed this goal, predicting that at least 10 GW can be installed by , with 20 GW of installed capacity within the realm of possibility. Despite these predictions, solar energy accounted for only a small fraction of China's total installed energy in .[24]

The financial crisis prompted significant stimulus efforts by China to invigorate its then-struggling solar industry.[21]: 34  Policy tools to stimulate growth in the industry included inexpensive land, tax incentives, and subsidized loans.[23]: 144 

In , feed-in-tariffs for solar power projects completed before a certain deadline were introduced. These feed-in tariffs were extremely successful at expanding China's solar power sector, largely exceeding the Chinese government's expectations for growth.[25] The Huanghe Hydropower Golmud Solar Park was also completed in in Golmud, a county-level city in Qinghai province.[25][26] The solar park contains 200 MW of installed photovoltaic capacity and was the largest individual solar plant in the world on its completion.[27] Other solar parks such as the 20 MW Qinghai Golmud Solar Park were also installed in Golmud, with 570 MW of capacity installed in total at the end of .[28]

The Chinese PV production system faced severe external shocks since . A sharp recession in the global demand due to institutional alterations in the German market in , followed by anti-dumping duties and anti-subsidy countervailing duties on Chinese PV products enforced in both USA and EU.[29] Chinese PV manufacturers, which were already running at full capacity, faced a difficult situation in and with huge financial losses that led to the bankruptcy of some important companies, such as Suntech Power in which defaulted on $541 million of convertible bonds.[29] To rescue the huge PV industry with its large labor market and assets, a comprehensive set of policies was introduced by the Chinese government mainly to stimulate the domestic market. Accordingly, the annual installed capacity in China experienced notable growth since . This growth was mainly due to the construction of several PV power plants around the country.

In May , the National People's Congress (NPC) revised the solar target again, setting 5 GW as an official minimum PV target for , with a longer-term target of 20–30 GW by .[30] According to a forecast by the European Photovoltaic Industry Association, the total installed capacity was predicted to reach between 47 GW and 66 GW by .[31]: 35 

Beginning in , China's domestic demand for the solar industry rapidly increase.[23]: 150 

In , the National Development and Reform Commission increased the solar capacity target to 70 GW by .[32] The National Energy Administration also announced plans to install 100 GW of solar power along with other renewable energy sources and nuclear energy by in .[33] However, market analysts expected for 110 GW to be installed by and that by , more solar energy could be installed than planned.[34] In , the solar capacity target was initially planned to be 15 GW but was increased in March by the National Energy Administration to 17.8 GW of installed solar capacity for the year.[35] This target was increased again to 23.1 GW in October, a very ambitious goal considering that the annual solar energy installations for the entire world in were less than 20 GW.[34] Despite these ambitious goals, China only 7.73 GW of solar energy in the first half of .[36] By the end of , China installed 15.1 GW of solar energy, failing to meet both of the raised goals, but meeting the original goal.[34] The plan for annual solar capacity for was also increased in October to 150 GW.[37]

In , China added 34.5 GW of solar energy.[38] The first 105 GW solar capacity by goal set by Chinese authorities was met in July . In the first nine months of , China saw 43 GW of solar energy installed in the first nine months of the year and saw a total of 52.8 GW of solar energy installed for the entire year.[5] is currently the year with the largest addition of solar energy capacity in China. China's total photovoltaic energy capacity at the end of was 130 GW, surpassing Germany as the world's largest producer of solar energy.[39] In , China saw a decrease in annual solar energy, dropping down to 44.4 GW. In , annual solar energy installation further dropped to 30.1 GW, even lower than the installations made in .[40] This decline in growth is attributed to the Chinese government restructuring government incentives to start solar energy projects in May . Despite this decline in growth, China remained the largest market for solar energy with 205 GW total installed capacity in , which was almost as much as the total installed capacity in the European Union (132 GW) and the United States (76 GW) combined.[41] However, from all of the total energy produced by China in , only 3.9% of that energy was produced by solar energy. This was lower than the percent energy production from solar power of the European Union (4.9%) but greater than the percent share in the United States (2.8%).[41]

In , China saw an increase in annual solar energy installations with 48.4 GW of solar energy capacity being added, accounting for 3.5% of China's energy capacity that year. is currently the year with the second-largest addition of solar energy capacity in China's history. Combined with wind energy, almost 10% of China's energy came from non-hydroelectric renewable power in .[42] China's total photovoltaic energy capacity at the end of was 252.5 GW.[9] China has stated that it aims to increase the energy share of solar and wind energy to 11% by the end of . Renewable energy subsidies for for increased, with subsidies for solar power having increased more than subsidies for wind energy.[42] The Huanghe Hydropower Hainan Solar Park was also completed in in Hainan Tibetan Autonomous Prefecture in Qinghai Province. The solar park has an installed capacity of 2.2 GW, making it the second-largest solar plant in the world as of , behind the Bhadla Solar Park in India. The solar plant is connected to the world's first ultra-high voltage power line which gets all of its power from renewable energy and is capable of transferring power over  km. The solar plant is planned to expand to a photovoltaic capacity of 10 GW.[6][43]

At the Climate Ambition Summit in , Xi Jinping announced that China planned to have 1,200 GW of solar and wind energy capacity by .[10]

Between first 6 months of , China built nearly 31GW of new solar power capacity, which up 137% compared to a years before. It expected the full-year installations would hit a record high.[44] China added a total of 87.41 GW of solar in , up 62% from the year before.[45] As producers rushed to gain the last access to subsidies ending by June , China set a monthly record of 93 GW of new solar capacity in May .[46]

Because solar works well as a distributed power source, recent Chinese policies have focused on increasing the prevalence of distributed solar energy and for developing systems so that electricity from solar energy can be used at its point of generation instead of transmitted over long distances.[21]: 34 

In June , China activated the world's largest solar power facility, a 3.5-gigawatt (GW) installation in Urumqi, Xinjiang. Built by Power Construction Corporation of China, this plant produces around 6.09 billion kilowatt hours (kWh) of electricity annually.[47]

Although in some countries there are aesthetic objections to large-scale solar farms, in China they are often perceived as an aesthetic positive due to their associations with modernity and green development.[48]: 119 

Solar resources

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A July report found that local air pollution (black carbon and sulfur dioxide) has decreased the available solar energy that can be harnessed today by up to 15% compared to the s.[50]

Solar photovoltaics

[edit] Photovoltaics Year Capacity (MW) Installed/yr 16 19 3 23.5 4.5 42 8.5 52 10 62 10 70 8 80 10 100 20 140 40 300 160 800 500 3,300 2,500 4,198 898 16,137 12,119 28,050 11,733 43,180 15,130 77,420 34,240 130,200 52,780 174,460 44,260 204,680 30,220 253,430 48,750 306,560 53,130 392,610 87,410 609,490 216,880 886,660 277,170 Sources: IEA for years up to and incl ;[51][52] China National Energy Administration for data from onwards[53][54][55][56][57][58][59][60][61][62]

As of at least , China has one third of the world's installed solar panel capacity and is the largest domestic market for solar panels.[23]: 143 

Solar PV by province

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A large part of the solar power capacity installed in China is in the form of large PV power plants in the west of the country, an area much less populated than the eastern part but with better solar resources and available land.

Installed solar PV capacity in MW by province[63][66] Province end of end of end of end of end of end of China total 43,170 77,420 130,200 174,460 204,300 253,430 Shandong 1,330 4,450 10,520 13,610 16,190 22,720 Hebei 2,390 4,430 8,680 12,340 14,740 21,900 Jiangsu 4,220 5,460 9,070 13,320 14,860 16,840 Qinghai 5,640 6,820 7,910 9,560 11,010 16,010 Zhejiang 1,640 3,380 8,410 11,380 13,390 15,170 Anhui 1,210 3,450 8,880 11,180 12,540 13,700 Shanxi 1,140 2,970 5,910 8,460 10,880 13,090 Xinjiang 4,060 8,620 9,470 9,920 10,410 12,660 Inner Mongolia 4,880 6,370 7,430 9,450 10,810 12,370 Ningxia 3,080 5,260 6,200 8,160 9,180 11,970 Henan 410 2,840 7,030 9,910 10,540 11,740 Shaanxi 1,170 3,340 5,240 7,160 9,390 10,860 Guizhou 30 460 1,370 1,780 5,100 10,570 Gansu 6,100 6,860 7,840 8,280 9,080 9,650 Jiangxi 440 2,280 4,500 5,360 6,300 7,760 Hubei 480 1,870 4,140 5,100 6,210 6,970 Guangdong 640 1,560 3,310 5,270 6,100 6,970 Liaoning 170 520 2,230 3,020 3,430 4,000 Hunan 290 300 1,760 2,920 3,440 3,910 Yunnan 640 2,080 2,330 3,430 3,750 3,890 Jilin 60 560 1,590 2,650 2,740 3,380 Heilongjiang 20 170 940 2,150 2,740 3,180 Guangxi 120 180 690 1,240 1,350 2,070 Fujian 150 270 920 1,480 1,690 2,020 Sichuan 370 960 1,340 1,810 1,880 1,910 Tianjin 120 600 680 1,280 1,430 1,640 Hainan 240 340 320 1,360 1,400 1,400 Shanghai 200 350 580 890 1,090 1,370 Tibet Autonomous Region 170 330 790 980 1,100 1,370 Chongqing 5 5 130 430 650 630 Beijing 160 240 250 400 510 610

Solar PV by type

[edit] PV installations by sector, [67] Sector Annual MW Cumulative MW Power Plant 23,300 123,730 Distributed 20,960 51,250 Off-grid 360 Total 44,260 175,340

In 23,300 MW of utility scale power plant installations were added bring the cumulative total in this sector to 123,730 MW of power. Distributed installations rose by almost as much during at 20,960 MW bringing the cumulative total in the sector to 51,250 MW by year end . Off-grid solar was the smallest component in with just 360 MW cumulatively installed.

Manufacturers

[edit] See also: List of photovoltaics companies

China has been the world's largest manufacturer of solar panels since and, since , has produced the majority of global photovoltaics on an annualized basis.[68] Industry projections estimated that, by the end of , China would have enough manufacturing capacity to produce 51 GW of PV modules per year, an amount over twice as large as 's global production of 24 GW.[69][70]

The industry is dominated by several major manufacturers. They include CHINT Group Corporation, JA Solar Holdings, Jinniu Energy, Suntech Power, Yingli, China Sunergy and Hanwha SolarOne.[71][72] Large debt challenged several manufacturers in .[73] By , the industry had overcapacity and price wars.[46]

Concentrated solar power

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Solar resource

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China has large potential for concentrated solar power (CSP), especially in the south-western part of the country.[74] The highest daily mean values of direct normal radiation are found in the Qinghai-Tibet Plateau and Sichuan Basin, at 9 kWh/m2. Most of northern and western China has daily average direct normal radiation over 5 kWh/m2, considered the limit for economical use of CSP.[74] Practical limitations for deployment of CSP include mountainous terrain and distance from energy load centers, mostly concentrated in the east.[74]

Public policy

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The 12th five-year plan, for to , called for the installation of 1,000 MW by , and 3,000 MW of CSP plants by . However, at the end of , only several demonstration stations were operational in the country.[74] In the subsequent 13th five-year plan a demonstration batch for 20 CSP plants for 1.35 GW was launched, which aimed to bring latest international technologies to China and build a domestic CSP industry. Plants were located in different provinces and used several different routes, including parabolic trough, central receiver towers and a novel beam-down tower design.[75] The initially target for could not be met and deadlines were extended multiple times, and the initially planned second batch was canceled. At the end of the installed capacity stood at 550 MW.[76] Chinese industry has gained considerable experience in the molten-salt storage technology and operating results of the plants are promising and meet their design parameters.[77]

In the current 14th five-year plan there is no federal support for CSP. However, several provinces including Gansu, Qinghai, Xinjian UAR and Jilin have announced CSP projects in the context of the storage and peak shaving legislation. Optimistic assessments suggest that several GW could be built in the next five years.[78]

Solar water heating

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China is the leading country for solar water heating capacity in the world, with 290 GWth in operation at the end of , accounting for about 70% of the total world capacity. In terms of capacity per unit of population, China comes 7th in the world with 213 kWth per 1,000 people. Most of the installed capacity (92%) was evacuated tube water heaters.[12]

Effects on the global solar power industry

[edit] See also: Growth of photovoltaics

The growth of solar power industries worldwide has been rapidly accelerated by the growth of the solar market in China. Chinese-produced photovoltaic cells have made the construction of new solar power projects much cheaper than in previous years. Domestic solar projects have also been heavily subsidized by the Chinese government, allowing for China's solar energy capacity to dramatically soar. As a result, they have become the leading country for solar energy, passing Germany's capacity in .[4] As other countries from around the world look to switch to renewable energy sources, cheap options for solar and wind have become focal points of interest for investments.[79] China's mass production of cheap photovoltaic cells and wind energy have consequently spurred investments in Chinese products from around the world and expanded the construction of solar energy projects worldwide.[80]

As of at least , Chinese firms are the industry leaders in almost all of the key parts of the solar industry supply chain, including polysilicon, silicon wafers, batteries, and photovoltaic modules.[23]: 143  China's impact on economies of scale and technological development was an important contributor in the 85% drop in the price of photovoltaic modules from -.[23]: 143 

Government incentives

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The China Development Bank provided $20 billion of financing to domestic solar manufacturers in .[21]: 1 

In , new feed-in tariffs were promised to potential solar power developers to help drive investments and growth in the solar power market. The government of Qinghai province offered solar projects that were operational before 30 September, 1.15 yuan ($0.18) for each kWh they produced in May . The National Development and Reform Commission offered same-priced subsidies to potential solar power project operators nationwide.[81] These tariffs were not capped. Other subsidies, such as Top Runner and Poverty Alleviation programs, were used in conjunction with feed-in tariffs to help grow the solar power market immensely.[82] These incentives were more successful in garnering attention and investment to the solar power sector than the Chinese government expected. Consequently, the Chinese government has struggled to keep up with these incentives. The government incentives have also contributed to the curtailment of solar energy, as many of the solar projects have been built in northern and western regions of China where there is a low demand for electricity and a lack of infrastructure to transfer energy towards China's main power grid.[14]

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In response to the growing problems of the rapidly expanding solar power market and the need to meet promised subsidies, the National Development and Reform Commission announced in May that solar power subsidies would be slashed and feed-in tariffs would be significantly reduced in favor of an auction-based system.[14] In , the Ministry of Finance of the People's Republic of China slashed the solar energy subsidy budget down to 1.5 billion yuan ($233 million) from 3 billion yuan in . With the auction-based system, companies are to submit subsidies bids for solar power construction projects to the National Energy Administration. Companies that do not partake in competitive bidding must instead accept a largely reduced amount of subsidies for projects that are already in operation while new projects do not receive any subsidies outside of auctions.[83][84] The switch to the auction system and capping of subsidies was designed to alleviate costs of solar subsidies and is attributed to the decline of the growth of the Chinese solar market in and .[38] However, the auction system has made renewable energy in western provinces cheaper than thermal energy in some cases, with Qinghai observing periods of time in which all of its energy usage was supplied through renewable energy.[85]

China's budget for renewable energy subsidies was increased to 6 billion yuan for , with solar power receiving 3.38 billion yuan.[86] These grants are set to be distributed to 14 provinces, with Inner Mongolia receiving the majority of the funding with 5.10 billion yuan.[87] The price guarantee ended in June .[46]

Controversy

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Government incentives

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The government subsidies for solar power energy projects have been considered "unsustainable" as the costs of subsidizing a rapidly growing industry are massive and some of China's struggles dealing with the costs have become visible. The renewable energy fund, which is paid by consumers, has a 100 billion yuan deficit[14] while tariff payments have occasionally been paid late.[88] Government subsidies for solar power have also been attributed to over construction, as many solar power projects have been funded by the Chinese government but are curtailed (they do not operate at full capacity) due to the inability to transfer the full energy capacity from production sites.[14]

Solar cell production pollution

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Chinese green energy companies such as Luoyang Zhonggui High-Technology Co. in Henan have become large producers of polysilicon in response to growing the demand for solar cells. However, polysilicon production produces silicon tetrachloride as a byproduct. Silicon tetrachloride is a poisonous material that can make soil infertile and harm humans if it is not disposed of properly. In developed countries, silicon tetrachloride is recycled and reprocessed, preventing the substance from entering the environment. However, special technology and large amounts of energy are required to reprocess silicon tetrachloride. Chinese green energy companies have not invested in recycling this byproduct, instead opting to lower production costs and dump waste into nearby residential areas. This lack of investment into environmental safety protocols has also been attributed to Chinese factories attempting to open much sooner than it would take normally.[13]

Some solar cells are also made with chemicals such as sulfuric acid and phosphine gas as well as metals such as lead, chromium, and cadmium. These chemicals and metals are toxic to humans through contact and contamination of resources. While many developed countries that produce photovoltaic cells have properly disposed of or repurposed wasted solar cells, many Chinese firms have not adopted the practice recycling solar panels and waste. Non-hazardous materials have also been dumped instead of repurposed, further contributing to waste.[89]

Various protests over solar cell production pollution have been staged. In Zhejiang province, protests over the destruction of fish habitats emerged in September . Hundreds of villagers rioted in the Zhejiang Jinko Solar Co., Ltd. factory, which produces photovoltaic cells and wafers. The factory had previously failed pollution tests in April and that its waste control was inadequate despite warnings from the local environmental protection bureau. The protests occurred over multiple days, in which company property was damaged and destroyed.[90]

Climate change contribution

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China has pledged to peak its carbon emissions by and has invested into renewable sources of energy, including solar power, to help meet this pledge.[91] China has been opening new plants for solar energy production.[92] Critics of China's climate policy argue that China is not trying to replace fossil fuels with renewable sources of energy, but instead trying to increase the energy capacity of both forms of energy. Although China's solar energy capacity has increased dramatically in recent years, its carbon emissions have risen as well.[93] Consequently, critics have seen China's pledge to peak its carbon emissions as a time window for it to increase its carbon emissions rather than reduce them, with its investments into renewable energy sources such as solar power being used as a coverup for China's plan to continue expanding with fossil fuel-powered production.[94]

The mass government subsidy-fueled construction of solar power plants has also been linked to climate change contribution as mass construction has contributed to increases in carbon emissions while the energy produced by the projects has not been fully used.[94]

Green grabbing

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China's expansion of solar power capacity has been met with criticism over implications of "green grabbing". Critics argue that China has seized land from native populations and repurposed it for its own projects, such as solar farms, using the need to protect the country from climate change as a justification for land seizure. Renewable energy projects, such as solar power plants, have been built in western regions of China where many native nomadic people have had their land taken away. As such, critics argue that investments into renewable energy sources such as solar power are means to increase the power of the central state rather than protect the environment. This argument has been complemented by China's expansion of fossil fuel plants in conjunction with solar energy.[15]

Following claims of China has taken land from rural natives under the guise of climate protection, many rural populations have been encouraged to move to government housing or urban centers. However, as expectations for the arrival of urban citizens have risen, so has the construction of buildings infrastructure projects. This speculation of the growth of urban centers has led to a housing bubble in China, where buildings and infrastructure are being constructed at a rate in which much of the construction is unused or redundant.[95] As these unused buildings and towns are constructed, more carbon emissions are produced due to the usage of cement and other building materials. Thus, China's "green grabbing" has also been criticized by environmentalists who see China's urban expansion as useless and damaging to the environment. The forced movement of rural populations, as critics claim that these rural populations do not receive adequate compensation for removal[96] and face discrimination and a lack of support to thrive in urban centers in contrast to citizens who have lived in urban centers throughout their lives.[97]

Curtailment

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The high amount of government incentives has encouraged the mass development of solar projects, especially in the northern and western regions of China. Consequently, there has been mass investment in energy production in low-population regions where energy usage is relatively low and not enough investment in infrastructure to transfer this produced energy to China's main power grid. This has caused the curtailment of solar energy to which critics point out to argue that many of China's heavy investments in renewable energy are inefficient and will become unsustainable for the country in the future.[14] This inability to transfer energy to regions that require it has led many critics to call for China to invest more into power transfer infrastructure instead of solely energy capacity. Although curtailment rates have lowered since , dropping down from 17% to 7% in , some critics argue that these rates are still too high. Critics have used solar power curtailment as an example to argue for China to change its methods for dealing with the climate crisis as they see that its current efforts are ineffective.[98]

Use of forced labor

[edit] See also: Xinjiang internment camps

China's production of cheap photovoltaic cells has been the target of a large amount of criticism due to claims of forced labor being used to drive production costs down. Reports of large Chinese solar manufacturing companies using forced labor from Uyghurs of Xinjiang to produce photovoltaic cells have appeared.[99] Reports for forced labor being used to acquire polysilicon, a key component of solar panels, have also emerged. Although the Chinese government claims that the labor used for material acquisition and production is voluntary, reports claim that there is substantial evidence that Uyghur laborers have been coerced to produce solar panels, threatened by internment camps.[100] As the demand for solar power increases due to climate change, the cheap nature of Chinese photovoltaic cells has resulted in China's solar exports growing massively in recent years in spite of the labor used in production. The usage of forced labor in China has only been partially condemned globally, in part due to the fact that many countries depend on China's cheap labor and photovoltaic cells to afford the transition from thermal energy to renewable energy. Since China is responsible for 80% of the world's polysilicon production, with half of the world's polysilicon produced in Xinjiang, many critics of the forced labor usage have stated that it is difficult for many countries to avoid Chinese made solar power solutions. As a result, debates over whether or not solar energy components from China should be used have arisen.[16][101]

U.S. sanctions

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In June , the United States Department of Commerce placed five Chinese solar companies, including Daqo New Energy, on the Bureau of Industry and Security's Entity List.[102] An extensive questionnaire was sent to companies by US Customs and Border Protection in early . The survey indicated Customs taking a strong enforcement approach that will be difficult to answer for small/medium-sized solar companies without stable supply chains.[103]

See also

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China witnessed an era of tremendous economic growth after , which also drove up the consumption of energy. Similarly to many other developing countries, China chose to rely on coal to satisfy its rising energy demand. Even though the use of coal in the last ten years has seen a downward trend, as of , around 57% of China’s energy consumption still comes from coal. Likewise, electricity generation in China was, and in fact still is, dominated by cheap and reliable coal as shown in the graph below. The enormous consumption of coal would inevitably emit high levels of carbon, leaving severe environmental repercussions. The Chinese leadership started to pay more attention to the renewable industry, as they face increasing pressure from the public about air pollution, especially after the “air-apocalypse” in . In , China ratified the Paris Agreement, which promised to reach a carbon peak and increase the percentage of non-fossil fuel energy sources to 20% by . 

Other than serving as an alternative to coal and other fossil fuels, the worldwide development of renewable energy since the start of the 21st century represents a critical moment for China to take on global leadership in these new high-tech industries. Climate change mitigation became the “window of opportunity” for China to move away from an export-driven model. Since the Hu Jintao regime, and highlighted further under Xi Jinping, China has sought to transform its economy through the huge investment in innovative technology.

What is unique about solar energy in China is that it was an important export industry in the early s, before it emerged as a critical renewable energy industry. We have witnessed a special policy dynamic for solar energy in the last ten years: from stimulating solar energy equipment manufacturers, to stimulating solar power generators, and now trending towards de-capacity. 

The Past: Over-Subsidizing Solar Manufacturers

In , China’s first domestic photovoltaic (PV) cell production line was put into operation, with 10MW of capacity. In , China began exporting PV cells to Europe, taking advantage of the development of PV power generation in European countries, especially Germany.

After the global financial crisis, the heavily export-dependent PV industry witnessed a massive drop in overseas demand. To support the solar energy industry, the Chinese government began subsidizing solar companies.

Similar to other sectors, there are two layers of decision making in China’s solar policies. The upper layer is the central government, which crafts the grand strategy for the whole industry. Central decision making reflects its current priority. The lower layer is made up of local governments, both provincial and municipal, which handle the execution of policies. They have the authority to impose more detailed regulations, or even lobby the central government for policies that are better suited to the local economy. The latter happened in Qinghai province, with the creation of a feed-in tariff scheme that will be discussed later.

At the central level, the solar energy market was supported by cheap capital after the financial crisis. A four trillion RMB stimulus package along with about 10 trillion RMB of bank credit were implemented after . In Jiangsu province alone, the local PV industry received over 10 billion RMB in credit from the China Development Bank (CDB). The CDB financed the solar industry out of the needs of national grand strategy. At the same time, out of the growing concern about climate change after the Copenhagen Convention in , several foreign financial institutions also started to subsidize their countries’ domestic solar industries as part of their stimulus plan. This drove up the demand for Chinese PV batteries once again. This created an illusion that the PV market had already recovered, causing many bankers to lend money to PV manufacturers. The relaxing credit pool plus the improving export market falsely signaled the solar companies to expand their capacity. Unfortunately, many of these loans became bad performance loans in the next few years. 

At the local level, provincial and municipal officials strongly supported solar manufacturers mainly due to the alignment of their interests. China’s cadre evaluation system was designed in a way that “rational” bureaucrats would pay more attention to projects and targets beneficial to their promotion. Using Suzhou City as an example, the municipal government released an announcement about developing renewable energy, and set a target of reaching 30 billion RMB of PV industry output value by . Suzhou New District (SND) signed a strategic partnership contract with Canadian Solar (阿斯特太阳能公司) which experienced a severe cash shortage at the time. SND promised to use Canadian Solar’s products to build rooftop solar power plants and extended 15 billion RMB in bank credit. In exchange for preferential policy and financial support, Canadian Solar would establish its research center and Chinese headquarters in Suzhou, as well as increase their capital investment and output volume. This strategic partnership not only helped municipal bureaucrats meet the targets mentioned in the announcement, but also increased future tax revenue and raised employment rates. The research center also boosted technological innovation in Suzhou. 

Because the export manufacturing industries were impacted by the financial crisis, the central government’s priority at the time included: maintain economic growth, look for new sectors that can generate future economic growth, maintain employment rates, and push for industrial structural reform. The solar industry was one of the industries due to be upgraded, as it relied heavily on the export market. At this point, the central government decided to heavily support the solar industry. Unfortunately, the policies did not successfully lead to the “healthy” growth of solar battery applications, and the solar industry still remains unable to fully marketize today.

In fact, the Chinese central government had already actively tried to expand the solar electricity generating capacity in China back in , through several subsidized projects, one of which was the infamous Golden Sun project (金太阳工程). The Golden Sun project would cover up to 50% of the investment of qualified solar power plants, transmission, and distribution projects. The lack of regulations and supervision led to massive wasted investment, as many of the solar companies “cheated” in order to receive more subsidies. For instance, many lied to the government about material cost and product quality. The Ministry of Finance had to announce a large withdrawal of subsidies, accounting for over 10 billion RMB in .

One important factor of incentivizing companies to enter the electricity-generation market is missing here: profitability. Even though subsidies had effectively lowered the material and installation cost, for solar power plants to make a profit without relying on government subsidies, their electricity needed to be sold to the national grid. Initially, the “license” of selling solar power to the national grid had to be bid over by solar power plant owners. At the same time, it was clear that the Chinese government also planned to study the German experience and adopt feed-in tariff (FIT) measures in the future to replace the bidding process. The feed-in tariff policy means that after the National Development and Reform Commission (NDRC) approved the electricity price, the government would collect a surcharge from consumers and pass it on to the solar power generators. This surcharge is used to fill the gap between the FIT price and the benchmark tariff (the cost of sulphur-scrubbed coal power). In this way, a profit margin was created for the solar companies and incentivized them to continue installing power plants. 

This feed-in tariff scheme was released almost two years after solar power subsidies were given, as solar power generation initially lacked government attention. The central government had always preferred to support wind power, because the latter has lower installation and operation costs, but also because the technology is more mature in China compared to solar power. The NDRC’s approval of FIT schemes was almost coerced by the provincial governments, as their local PV manufacturers faced export reduction pressure.  Jiangsu and Shandong drafted provincial feed-in tariff schemes and actively lobbied for approval after . Their plans were approved in June of and respectively. 

Qinghai province has abundant solar energy resources, and the local government hoped that the development of the local solar industry could drive up regional economic growth. As a result, the government signed 28 PV power project contracts with 25 firms since . Nevertheless, the developers refused to start construction without an electricity price being released. In , after a discussion between the anxious Qinghai provincial secretary and governor, and the head of the NDRC, the national feed-in tariff scheme was finally released. 

The Present: Current Challenges and Strategies

In the 13th FYP Development Plan for Solar Power, the National Administration listed out the current challenges for PV power. Among five of them, there are two that are most important: One is that solar electricity generation is too expensive, and the other is the conflict between the conventional power system and PV power system leads to difficulty in PV grid-connected operation and PV power consumption. Other relevant considerations are international protectionism and the solar heating industry developing slowly.

High PV power cost

In July , the State Council released a document calling for over 35 GW of total installed capacity by . This was also the first official document that provided a clear path for the future growth of the industry, clarifying that the industry should expand in sectors including Distributed Solar Generation (DSG), solar power plants, and the international market. With the release of complementary guidance in September laying out how power generators would make a profit in DSG, the market witnessed an increase in investment interest. However, the growth of this sector still remains limited as investors experienced fundraising difficulties and a lack of clarity over property rights for rooftops.

Later in , with the goal of lowering PV electricity price, the NDRC planned to reduce solar power subsidies starting in December. This in fact encouraged a temporary surge of solar installations, as companies sought to enjoy the subsidy before the reduction policies took place. The “forerunner” project that also started in created dozens of PV mega demonstration zones through developers’ bidding. The fierce competition between “forerunner” zones led to a solar electricity price that was more than 20% lower than the benchmark price, along with the improvement in solar power efficiency technology. As a result of multiple measures and projects over time, the cumulative installed solar capacity in China reached 43GW in –which is substantially higher than the 35GW target set in –and 205GW in . 

Grid integration

What the 13th FYP of Solar Development did not point out is that Northwest China had been suffering from high curtailment of renewable energy, which became particularly serious starting in . The total amount of wasted solar power in was 4.65 MWh, at a curtailment rate of 12.6%. These issues occur specifically in Gansu, Qinghai, Xinjiang and Ningxia. According to the State Grid Corporation of China (SGCC), solar energy curtailment is defined as the wasted potential of power plants producing energy. It is interesting to find that the National Energy Administration (NEA) suddenly started publishing the solar curtailment rate in Tibet in , which was 25.7% in the first half of and dropped 26.6 percentage points compared to the same period in the previous year. No data on the high curtailment rate in Tibet from before can be found, and the extraordinary numbers still lack an explanation. 

Most of the solar power in Northwest China is generated inutility-scale solar power plants, which led to power production that exceeded the targeted level in recent years. At the same time, the local demand for electricity was not growing enough to match with the rise of power supply. The discrepancy in energy supply and demand caused an enormous amount of solar resources that had the potential for conversion into electricity to be “wasted.” 

The inherent unreliability of solar power is another reason for power plant owners to refrain from using it, which was a phenomenon not only limited to Northwest China. Compared to the cheaper and more reliable energy sources (ie. coal and natural gas), there was hardly any incentive for grid owners to purchase renewable energy, especially under conditions where storage capacity was small. Lacking transmission lines in local areas also contributed to solar power rejection: if the solar energy exceeded load demand in certain time periods, the extra power could not be transmitted elsewhere. 

To solve this problem, the NDRC and NEA together released the Management Measures for the Full Guaranteed Acquisition of Renewable Energy Generation in , requiring full procurement of renewable energy power, while setting a minimum purchase amount of renewable power operating hours for each region. If the minimum purchase could not be satisfied, the provincial government would need to compensate the solar power generators. Lin Boqiang from Xiamen University believed that as the gap in power supply and demand grew into a national problem, treating the root of the issue–growing power capacity in areas with high curtailment rates–would be a better measure than requiring the local government to act as the “last resort.”

The Clean Energy Consumption Action Plan [-] was introduced in late , providing more comprehensive requirements for improving the grid integration of renewable energy power, though setting a somewhat arbitrary goal of achieving a nationwide solar power curtailment rate of under 5%. Since the solar power rejection problem was mostly concentrated in Northwest China, lacking specific solutions for certain regions cannot effectively solve the origin of the problem.

Subsidy Removal – Moving to the Era of “Grid Parity”

The previously high curtailment rate revealed that solar power is currently at overcapacity in China. In hopes of increasing the competitiveness of domestic solar companies and promoting the healthy development of the industry, China officially embarked on the road towards subsidy removal in , reducing subsidies by 0.05 RMB per KWh. The gradual removal of subsidies should benefit the solar industry in the long run, since it is no secret that Chinese solar companies mostly rely on subsidies for profit. By early , the NDRC and NEA pushed solar power owners even further with a document that removed all subsidies despite the challenges of COVID-19. China has officially entered the era of grid parity.

The Future: Uncertainty

It seems that the Chinese solar companies will continue to face pressure from both subsidy removal and challenges in grid integration. Under these pressures, it is not easy to predict the prospects of the industry. The effectiveness of recently implemented and drafted policies remains uncertain, especially as the 14th Five-Year Plan has not yet been published. 

Even with the phase-out of solar power subsidies, the International Energy Agency expects to see an increase in solar capacity in as shown below, because the government has demonstrated some willingness to exercise flexibility in the length of the phase-out. It will be a formidable challenge for the Chinese government to ensure that both the newly produced renewable power and the previously curtailed power could be efficiently integrated into the existing power system. 

A draft of the Energy Law released in April of last year potentially offers us some insights about how solar energy will be addressed in the 14th FYP. This new law aims to provide more concrete regulations and a reform path for the whole energy industry. The draft highlights that the reform will clearly state the legal status of the renewable energy consumption system by the state grid. Therefore, provincial government officials are obliged to ensure the smooth running of the system, as it also brings accountability to local energy targets. With an improvement in power integration, China most likely will benefit from dropping solar curtailment rates, even though Chinese experts have expressed that more detailed related measures should be provided.

(Image Source: Antonio Camelo)

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