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An analysis of the factors driving utility-scale solar PV investments in China: How effective was the feed-in tariff policy?

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  • Zhang, Alex Hongliang
  • Sirin, Selahattin Murat
  • Fan, Conglai
  • Bu, Maoliang

Abstract

China has become a global manufacturing hub for many industries; recently, thanks to various renewable energy support schemes, we also see the country's growing share in renewable energy investments. However, significant renewable energy investment is still required to achieve China's ambitious carbon targets: achieving carbon peak by 2030, and carbon neutrality by 2060. Based on province-level data covering the whole period of feed-in tariff (FIT) support mechanism, this paper explores the effect of renewable energy subsidies, costs and other economic factors on the installed capacity of utility-scale solar PV (UPV) in China. Our findings indicate that the FIT mechanism in tandem with a significant reduction in renewable energy investment costs have been the major drivers of China's dramatic increase in UPV investments. However, subsidies to distributed solar PV investments also have a crowding-out effect on UPV investments, which result in a statistically significant co-opetition relationship between UPV and Distributed PV. Furthermore, heterogeneity in provincial power consumption and energy supply also affect these investment dynamics.

Suggested Citation

  • Zhang, Alex Hongliang & Sirin, Selahattin Murat & Fan, Conglai & Bu, Maoliang, 2022. "An analysis of the factors driving utility-scale solar PV investments in China: How effective was the feed-in tariff policy?," Energy Policy, Elsevier, vol. 167(C).
    • Handle: RePEc:eee:enepol:v:167:y:2022:i:c:s0301421522002695
    DOI: 10.1016/j.enpol.2022.113044
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    Cited by:

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    4. Jiehui Yuan & Wenli Yuan & Juan Yuan & Zhihong Liu & Jia Liao & Xunmin Ou, 2023. "Policy Recommendations for Distributed Solar PV Aiming for a Carbon-Neutral Future," Sustainability, MDPI, vol. 15(4), pages 1-16, February.
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