Page 33 - A Comprehensive Guide to Solar Energy Systems

Chapter 2 • Solar Power Development in China 27

2.3 Industrial Policy

The development path for the Chinese PV industry has been clear over the last two 5-year
plans. The priority over the period of 12th five-year plan was to establish a complete indus-
trial chain and during the 13th five-year plan, the aim is to promote technological progress,
cost reduction, and diversification of application. A number of polices have been put in place
to incentivize the development of solar energy and are discussed in the following subsections.

2.3.1 Laws and Regulations
The renewable Energy Act came into effect on January 1, 2006. It specified the implementa-
tion of FiT on renewable energy and full purchase of renewable energy, and the difference
between the FiT and price of the electricity derived by conventional energy be apportioned
among the customers with access to the grid. The Act of 2005 version placed an obligation on
grid companies to purchase all the renewable energy added to the grid, regardless of the cost.
In the renewable Energy Act Amendment issued in December 2009, the provision
regarding full purchase of renewable energy was modified to “guaranteed purchase of
renewable energy”; hence, providing the grid companies with the justification to decline
the access of renewable energy when an electricity surplus occurs or when the price of
conventional energy falls.
According to the amendment, the renewable Energy Development Fund (rEDF) was
established and financed by special financial funds for renewable energy and revenue
from the “Electricity Surcharge Due to renewable Energy” (ESrE). The ESrE, levied on
industrial and commercial users of electricity (approximately 80% of the national total
consumption), has been exclusively used for the price subsidies of renewable energy and
investment subsidies to projects that integrate renewable energy into the grid (includ-
ing wind power, biomass power, and PV power). The special financial funds for renew-
able energy were used for the renewable power projects in remote unelectrified areas, and
renewable energy pilot projects.

2.3.2 Government Funds Available for Solar Energy

The economic incentives for PV power have been obtained from price subsidies and direct
financial subsidies of the initial investments. The investment subsidies were used for the
Golden Sun Demonstration projects, and distributed PV projects such as Photovoltaic
Architecture. Since 2014, the economic incentives for PV power have focused more on
price rather than utility investment and favored more distributed PVs.
The ESrE, the primary revenue for the government to subsidize renewables, has been
levied since August 2006. Being raised every 2 years, it has increased to rMB 1.9 cents (kW
h) from the initial level of 0.1 cents (kW h) . In the next few years, the annual revenue
−1
−1
9
from the ESrE is expected to be about rMB yuan 70–90 × 10 , based on the volume of
industrial and commercial electricity consumption. However, the actual ESrE revenues in
the past were far below the expected (Table 2.4).