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2021 will be a key year in the development of the solar
PV market in China. It is the first year of the 14th
five-year plan, the first calendar year after President Xi Jinping
announced the 2030-2060 carbon commitment, and the first year for
utility and commercial un-subsidized projects. IHS Markit expects
the solar industry in China to reach another milestone with more
than 60 GW of installations, advancing the ground for the energy
transition and displacement of traditional energy sources to
fulfill the goal of net carbon future in the next four decades.
The strong outlook for solar PV installations in China is a
reflection of the development of the industry in the last decade
that is forecast to continue after the publication of the new
carbon target.
What happened in the last decade in the Chinese solar
market?
1. China dominated global solar PV installations in
2011-2020 (and will continue being the largest installation
market.)
With 48.2GW of additional solar capacity in 2020, the National
Energy Administration ("NEA") announced 253GW of cumulative solar
connection during the period, with roughly 70% of those connection
comes deriving from utility-scale projects, driven by
feed-in-tariffs.
Demand grew significantly during the 13th five-year plan period
(2016-2020) with 210GWac of solar connections, a five time increase
from the 12th five-year plan period (2011-2015).
Over the next five years, IHS Markit expects China mainland to
continue being the largest solar market globally in installation
terms.
2. China solar capacity additions were fueled by feed-in
tariff incentives during the past ten years
Policy support has played a significant role in the industry's
size, business model, time frame of speed of installations and
supply chain movements of solar PV in China.
Chinese solar policy schemes followed a few key stages. First,
at the beginning of the 12th five-year plan, the key national wide
solar policy was the "Gold Sun Program 2009-2013" and
"Building-integrated PV (BIPV) projects 2009-2013," which provided
a solar system subsidy (CNY/W). Secondly, a FiT scheme was put into
place. After July 2013, the State Council of China released "The
notice to promote the healthy development of the solar industry,"
which provided guidelines on the solar power generation subsidy
(CNY/kWh), a "feed-in tariff" on solar power generation.
However, with financial incentives and technology advancements
in the solar industry successfully lowering the cost of solar in
capex terms, the policy scheme shifted to un-subsidized projects by
the end of the 13th five-year plan. Since 2019, NDRC and NEA have
already released two rounds of un-subsided projects tenders.
How much will China install in 2021?
IHS Markit expects 2021 to be another record-breaking year, with
61GWdc of solar additions, equating to an annual installation
growth rate of 26% year-on-year. The main demand drivers are (i)
the unsubsidized program, (ii) the residential segment, (iii)
special pilot projects in high-voltage transmission and
distribution lines, (iv) and renewable parks in some provinces and
(V), some additional policy schemes like the special transmission
and distribution pilot projects. Former policy drivers like the PV
poverty alleviation program and the Top runner program have been
now already phased out.
There is a strong pipeline of projects from the unsubsidized PV
program announced in 2019-2020 and a further 8 GW of subsidized
projects that are being transferred into the pool of unsubsidized
projects. Yet, IHS Markit remains cautious that additional policy
developments in China or additional supply chain price increases
could put at risk our installation forecast that is strongly skewed
to the second half of the year.
Climate commitment has become a central theme in the
14th five-year plan and solar PV will benefit from this
momentum.
Chinese President Xi Jinping first announced the 2030 carbon
targets at the Climate Ambition Summit in September 2020. By the
end of 2020, President Xi updated the 2030 carbon targets at the
Climate Ambition Summit, representing a part of China's new
Intended Nationally Determined Commitment (NDC).
Energy-related goals included in the 14th five-year plan
strengthen both the updated 2030 Nationally Determined
Contributions (NDCs) and the carbon emissions peaking target. The
development of low-carbon-emissions energies, such as renewables
and nuclear, will accelerate, while coal consumption growth will be
under tight control.
Main points included:
Reduce carbon emissions per unit of GDP by over 65% from the
2005 level;
Increase non-fossil fuels in primary energy consumption to
around 25%;
Increase the forest stock volume by 6 billion cubic meters from
the 2005 level;
Increase wind and solar power generation capacity to at least
1,200 GW.
As part of this announcement, the Chinese Government stated for
the first-time specific renewable installed capacity targets as
part of the new national climate goals. IHS Markit has revised
upwards the five-year solar PV installation outlook in China to
reflect the clear commitment to continue supporting renewable
development as a pillar of the decarbonization strategy in the
country in its search for carbon neutrality.
