Legislative System of Photovoltaic Industry Development in China

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1		Dongdong Song	+ 2768 word(s)	2768	2022-01-12 04:13:23	\|
2	format corrected.	Beatrix Zheng	Meta information modification	2768	2022-01-20 03:16:04	\|

This entry is adapted from the peer-reviewed paper 10.3390/en15010306

As one of the world’s largest energy consumers, China is facing the challenge of growing energy demand. Under this background, China is actively implementing the concept of green development and sustainable development route. As inexhaustible green energy, solar energy, has been established as an independent energy type by the Renewable Energy Law and has a broad development prospect. At present, the industrialization level of photovoltaic manufacturing in China is constantly improving, and the efficiency of photovoltaic power generation is constantly improving. However, from the perspective of the system, China’s photovoltaic industry supporting legal system is not perfect. There is a mismatch between the existing laws and industrial development needs, which restricts the future development of photovoltaic power generation in China. The legal environment is crucial to the development of a country’s relevant industries. Only with a good supporting legal system can the development and utilization of solar energy be carried out reasonably and orderly. The PV industry legislation should be adjusted and responded to in a timely manner according to the development situation of the PV industry and the PV market, so as to speed up the introduction of core laws in the PV field, continuously improve the supporting legal system, and effectively play the role of institutional protection of the law.

ecological civilization green development photovoltaic industry renewable energy law

1. Development Status and Existing Problems of China’s Photovoltaic Industry

1.1. Development Status of China’s Photovoltaic Industry

1.1.1. Development History

With the promulgation of the Renewable Energy Law and the Opinions on the Golden Sun Demonstration Project, China has given key support to the photovoltaic industry. This action has laid a solid foundation for the large-scale development of China’s photovoltaic industry, which makes domestic photovoltaic products continuously increase their share in the international market. Exporting to foreign countries has become the main means of sales ^[1]. In 2010, China’s solar cell output exceeded that of Germany. Subsequently, China’s solar cell output accounted for more than 60% of the world’s total output ^[2]. However, the good times did not last long. When China’s photovoltaic industry was developing rapidly, the United States carried out “countervailing and anti-dumping” investigations against China’s solar cell modules. Europe followed suit and began a “countervailing and anti-dumping“ investigation into China’s photovoltaic products, including Silicon Valley chips, crystalline silicon solar cells, and their components in 2011. One after another, the “countervailing and anti-dumping” investigation is like a slap in the face so that domestic photovoltaic enterprises have suffered heavy economic losses.

The Chinese government took this opportunity to change the development direction, to guide domestic photovoltaic enterprises to carry out strategic adjustment and apply the domestic photovoltaic products exported from abroad to construct domestic photovoltaic power stations to promote the development of domestic photovoltaic power stations. With the introduction of the national PV zone on-grid price system in 2013, the domestic PV installed capacity has exploded ^[3].

With continuous development, by the end of 2015, China had become the country with the world’s largest installed capacity of photovoltaic power generation. In 2017, the cumulative installed capacity reached 130.78 million KWH, seven times the cumulative installed capacity in 2013. At the same time, in the 13th Five-Year Plan, the photovoltaic industry continues to develop rapidly, and the cumulative installed capacity achieved the original development target of 105 GW in 2017 ^[4].

With the continuous increase of installed capacity, photovoltaic power generation is also increasing year by year. China’s photovoltaic power generation capacity was 66.2 billion KWH in 2016, accounting for 1.1% of all energy generation. This photovoltaic power data for the first time in history is listed in the national power industry statistics. Photovoltaic power generation has become the fifth-largest power support in China, ranking behind thermal power, hydropower, wind power, and nuclear power. After a series of construction, a photovoltaic industry cluster has been formed in northeast China, northwest China, and North China, which accounts for more than 70% of the domestic installed photovoltaic capacity ^[5].

1.1.2. Current Development Situation

For the specific analysis of 2018, first, observe the solar energy equipment and its components. In 2018, the national battery production will be about 87.2 GW, with a year-on-year growth of 21.1%. The national module output reached 85.7 GW in 2018, with a year-on-year growth of 14.3%, mainly consisting of crystalline silicon components, in terms of photovoltaic equipment components ^[6].

Secondly, in terms of the photovoltaic market, the new photovoltaic grid-connected network’s installed capacity in China reached 44 GW in 2018, down 17% year-on-year. The cumulative grid-connected photovoltaic installation capacity exceeds 174 GW. It ranks first in the world in both new and accumulated installed capacity. Annual photovoltaic power generation is about 180 billion kilowatt-hours, accounting for about 2.6% of the country’s total annual power generation. The cumulative installed capacity of PV in China keeps ranking the first in the world ^[7].

Finally, focus on the photovoltaic industry chain. At present, China’s PV industry has been formed the industrial chain of relations, mainly including the upper, middle, and lower reaches of the three links. The upstream of the photovoltaic industry is monocrystalline and polycrystalline silicon rods, rods, monocrystalline, and polycrystalline silicon slices. The middle stream is the link between the upstream production materials of monocrystalline silicon and polycrystalline silicon solar cells and the component’s raw material. The downstream industry is based on the upper and middle links. It uses the middle link in producing monocrystalline and polycrystalline silicon solar cells, components, photovoltaic systems, and photovoltaic products formed by the market.

From the point of each link, the photovoltaic industry chain on the middle and lower reaches the three links of differences. In a different competitive environment, the overall national continuously publish relevant policies to support the development of industry, the photovoltaic industry in our country development momentum is on the rise, industrial production, investment scale, and technical level are developing at high speed.

1.2. Existing Problems in China’s Photovoltaic Industry

1.2.1. Photovoltaic Power Generation Project Is Seriously Abandoned

At present, the absorption capacity of China’s photovoltaic industry has obvious shortcomings, and there is a serious phenomenon of “abandoning light”. According to statistics, in 2016, the power quantity of “abandoned light” in northwest China alone reached 7 billion kilowatt-hours, with an average “abandoned light” rate of nearly 20%. In Xinjiang and Gansu, the “light abandonment” rate is as high as 32% and 30%, respectively. In the first quarter of 2017, 2.7 billion kilowatt-hours of electricity were discarded, and the national average was 13% ^[5]. Therefore, there is an urgent need to improve the absorption capacity of new energy power and complete the online conversion of solar power.

To fundamentally solve the problem of abandonment, it is necessary to accelerate the substitution of renewable energy for traditional power generation, strengthen the local absorption capacity of photovoltaic power generation, improve the construction of power output channels, and establish the power consumption market in the Middle East and western Part of China. In recent years, the Chinese government has attached great importance to and taken a series of measures, such as the fully guaranteed purchase of photovoltaic power generation and control of newly built centralized power stations, which have alleviated the problem of abandonment. In the first half of 2019, China’s photovoltaic power generation capacity reached 106.73 billion KWH, up by 30% year-on-year; 2.61 billion KWH of power discarded, a year-on-year decrease of 570 million KWH; The light abandonment rate was 2.4%, down 1.2% points year on year, realizing the “double reduction” of the electricity quantity and the light abandonment rate ^[8].

1.2.2. Photovoltaic Subsidy Is in Arrears and the Subsidy Fund Gap Is Large

At the present stage, the continuous expansion of the photovoltaic industry has resulted in an insufficient additional collection of photovoltaic power generation, serious government subsidy arrears, and a serious shortage of funds, which have brought greater challenges to the development of the industry. Secondly, the existing financial support measures are limited. It is difficult for photovoltaic enterprises to obtain bank loans, and the financing channels are narrow, which causes great obstacles to industrial development. Once there is any fluctuation, the industry will be plunged into a huge shock and crisis. Therefore, it is necessary to introduce new measures to solve the problems of subsidy abuse, insufficiency, and default. At the same time, the construction of the photovoltaic industry-standard system is not perfect, photovoltaic industry related industrial standards are insufficient, many standards have not been established, the progress of standard formulation and modification does not match the speed of industrial development, industrial standardization system has not been established for a long time, attention is not enough, and the research and formulation efficiency is low.

To solve the problem of insufficient subsidies for newly added photovoltaic enterprises, the Chinese government divides all photovoltaic projects into newly added projects and stock projects at the present stage. It takes different solutions according to different projects. The following measures will be taken for the new projects: First, the Chinese government has actively promoted the affordable Internet access project. The Chinese government has announced the list of the first batch of affordable Internet access projects totaling 20.76 million kilowatts. Second, the Chinese government will regulate and optimize the development rate, increase the competitive allocation, make it clear that new wind power and photovoltaic power generation projects must be allocated through competition, give priority to the construction of projects with low subsidy intensity, and effectively reduce the subsidy intensity of new projects. Third, the guiding price of new photovoltaic power generation projects in 2019 has been lowered to 0.4 RMB per KWH, and the subsidy intensity can be further reduced by intensifying competitive allocation. Through the above measures, it is effective to reduce the subsidy funds needed for new scale projects and alleviate the widening trend of the subsidy gap ^[9].

Take the following measures for stock items: First, the catalog management is to be liberalized, and power grid enterprises confirm projects eligible for subsidies to simplify the allocation process. Second, the demand for subsidies should be reduced by means of “green certificate” trading and market trading. Third, it is to keep communication with the tax authorities, further strengthen the renewable energy electricity price additional tax, increasing subsidies income. Fourth, in appropriate circumstances, to gradually issue special Treasury bonds to support the development of photovoltaic enterprises. Through the above measures, the subsidy pressure of stock items can be gradually alleviated.

1.2.3. Photovoltaic Cost Is in Gradual Reduction

The 2019 grid parity project has received the strongest policy support, which is expected to bring new opportunities for the PV market. From the perspective of industry development, the era of grid parity is approaching, and in the next few years, the number of projects that can get subsidies is bound to get smaller and smaller, and grid parity projects will become mainstream, and eventually will completely say goodbye to subsidies and enter the subsidy-free era. With the maturity of photovoltaic power generation technology, the gradual reduction of cost, the initial clarification of feed-in tariff and the increase of national needs to improve the energy structure, photovoltaic power generation is developing rapidly.

In view of the actual development of photovoltaic power generation in China, relevant state departments have issued timely policy documents to encourage the transformation of photovoltaic power generation from relying on subsidies to competitive pricing and price parity. The average investment cost of centralized PV power plants in China decreased from US $3193/kW in 2011 to US $760/kW in 2019, a decrease of 76.2%; the cost of kilowatt-hour decreased from US $0.18/kWh in 2011 to US $0.064/kWh in 2019, a decrease of 64.5% ^[10].

1.2.4. Photovoltaic Technicality Is Becoming Increasingly Mature

The main theme of PV industry development will continue to be technological progress, with the conversion efficiency of mainstream high-efficiency polycrystalline cells expected to exceed 20%, monocrystalline cells expected to reach 22.5% to 23%, and the power of mainstream module products to reach 285 W and 320 W respectively. The application of diamond wire cutting for polycrystalline silicon wafers will be further expanded to 30%, and the replacement of diamond wire cutting for monocrystalline silicon wafers will be completed; the scale production capacity of PERC cells and N-type cells will be further enhanced, and the application of advanced packaging technologies, such as module stacking and half-sheet will be further expanded.

2. Existing Legal System of Photovoltaic Industry

In recent years, with the improvement of understanding of renewable resources, China has a legal policy about solar energy resources are also constantly increased, has published and revised the circular economy promotion law, renewable energy law, the electric power law and the energy conservation law, and form a complete set of administrative regulations, department regulations, local laws, and regulations. These legal systems provide guiding principles for the development and utilization of solar energy resources in China, promote the steady and healthy development of China’s society and the economy as a common goal, and play a guiding role in the development of the solar photovoltaic industry.

2.1. Relevant Laws

From the perspective of legal distribution, China’s current laws on solar energy development and utilization are scattered. The relevant articles in the Constitution Law, The Energy Conservation Law, and the Environmental Protection Law only provide guidance and suggestions for China’s solar energy development and utilization but do not make specific provisions according to their characteristics. In contrast, China’s Renewable Energy Law, for the first time, clearly stipulates the importance of solar energy in China’s economic development in the form of law, such as the renewable energy law in the provisions of article 4, the state shall encourage and support the development and utilization of renewable energy, from the national level to help establish and develop renewable energy market, article 17 from photovoltaic industry technology promotion and application aspects, strongly encourages units and individuals to buy the use of photovoltaic power generation related products. The Renewable Energy Law also makes it clear that solar energy will be regarded as one of the clean energy resources that China will vigorously develop in the future and supporting guarantee mechanisms and compensation mechanisms of renewable energy development and utilization, namely a quota system and fixed-price system, will be established for them. Both of these systems promote the development of the photovoltaic industry. In addition, the Renewable Energy Law has also set up five systems that serve the sound development of all types of renewable energy, namely, the total volume target system, the cost-sharing system, the development fund system, the classified electricity price system, and the compulsory Internet access system. To better play the role of the above system in practice, relevant functional departments have also issued supporting implementation rules to explain and clarify laws and detailed specific provisions to ensure the effective development and utilization of all renewable energy.

2.2. Departmental Rules and Local Regulations

Since the Renewable Energy Law starts from the macro perspective of renewable energy, seeks for the commonalities of all renewable energy, and formulates supporting laws, the space involved in photovoltaic energy is limited. When the core solar energy legislation is not available, the departmental regulations issued by relevant departments of the State Council and local regulations issued by local authorities bear the burden of adjusting the development of the photovoltaic industry. These administrative regulations, departmental regulations, and local regulations act as the implementation rules of the Renewable Energy Law in the field of photovoltaic power generation.

First, they have detailed regulations on the construction of the photovoltaic industry. The first is the departmental regulation, which is to approve the construction of many solar photovoltaic power stations in northeast, northwest and North China. To develop the photovoltaic power purchase preferential subsidy system; to solve the specific legal issues surrounding the construction of photovoltaic power stations. The second is the local laws and regulations, which mainly include guiding photovoltaic power generation online, photovoltaic power generation into the grid operation, and photovoltaic power station line construction. After local regulations of active guidance, has given rise to a series, such as photovoltaic building application demonstration projects, golden sun demonstration projects, solar roof plans and franchise bidding demonstration projects, this makes photovoltaic prices drop substantially, fast development of the photovoltaic industry in China, franchise bidding online electricity price dropped to below 1.15 yuan/kWh ^[11].

Secondly, in terms of policies, specific development plans have been formulated, such as the Outline of the National Medium and Long Term Development Plan for Science and Technology (2006–2020), the Development Plan for The National Strategic Emerging Industries during the 13th Five-Year Plan period, and the 13th Five-Year Plan for Energy Development. The National Development and Reform Commission has formulated the 13th Five-Year Plan for Solar PV Industry, the Medium and Long-term Development Plan for Renewable Energy, and the National Energy Administration has formulated the 13th Five-year Plan for Solar Power Generation.

To sum up, China’s photovoltaic industry legal system has formed a relatively complete legal system guided by the Renewable Energy Law and supplemented by departmental rules and local regulations.

References

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Update Date: 20 Jan 2022

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