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The economy of distributed PV in China


  • Yuan, Jiahai
  • Sun, Shenghui
  • Zhang, Wenhua
  • Xiong, Minpeng


Distributed PV (DPV) has become the policy priority of renewable energy development in China since 2012 and ambitious planning for it has been formulated and updated. In 2013 a national unified subsidy policy was put into implementation. However, the actual progress is far below expectation. In this paper, the analytical framework of levelized cost of electricity (LCOE) is employed to estimate the generation cost of DPV in China. We find that under existing tariff and subsidy policies, with ideal conditions of most favorable financial arrangement and maximum annual operation hours, DPV projects located in regions with best solar resource or high commercial/industrial retail electricity prices are able to break even; but with practical conditions DPV projects are economically unfeasible at most cases. We further find that, difficulty in obtaining roof space, complicated grid integration procedure, barriers in obtaining bank loan, and unattractive and rigid subsidy policy, lead to high investment risks, which largely explains why DPV can't take off in China. A series of policy packages are proposed to address these issues.

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  • Yuan, Jiahai & Sun, Shenghui & Zhang, Wenhua & Xiong, Minpeng, 2014. "The economy of distributed PV in China," Energy, Elsevier, vol. 78(C), pages 939-949.
  • Handle: RePEc:eee:energy:v:78:y:2014:i:c:p:939-949
    DOI: 10.1016/

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    References listed on IDEAS

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    7. Zhang, Sufang, 2016. "Analysis of DSPV (distributed solar PV) power policy in China," Energy, Elsevier, vol. 98(C), pages 92-100.
    8. Aotian Song & Lin Lu & Zhizhao Liu & Man Sing Wong, 2016. "A Study of Incentive Policies for Building-Integrated Photovoltaic Technology in Hong Kong," Sustainability, MDPI, Open Access Journal, vol. 8(8), pages 1-21, August.
    9. repec:eee:appene:v:228:y:2018:i:c:p:1136-1146 is not listed on IDEAS
    10. Cartelle Barros, Juan José & Lara Coira, Manuel & de la Cruz López, María Pilar & del Caño Gochi, Alfredo, 2016. "Probabilistic life-cycle cost analysis for renewable and non-renewable power plants," Energy, Elsevier, vol. 112(C), pages 774-787.
    11. repec:gam:jeners:v:12:y:2019:i:14:p:2820-:d:250580 is not listed on IDEAS
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    13. Zhao, Zhen-Yu & Chen, Yu-Long & Thomson, John Douglas, 2017. "Levelized cost of energy modeling for concentrated solar power projects: A China study," Energy, Elsevier, vol. 120(C), pages 117-127.
    14. Yuan, Jiahai & Lei, Qi & Xiong, Minpeng & Guo, Jingsheng & Hu, Zheng, 2016. "The prospective of coal power in China: Will it reach a plateau in the coming decade?," Energy Policy, Elsevier, vol. 98(C), pages 495-504.
    15. Kayser, Dirk, 2016. "Solar photovoltaic projects in China: High investment risks and the need for institutional response," Applied Energy, Elsevier, vol. 174(C), pages 144-152.
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