In 2014, the national forecast predicted that total photovoltaic power generation in China would reach 14GW. Early in the year, the National Energy Administration increased the target for distributed photovoltaic construction from 6GW in 2013 to 8GW. However, achieving these targets proved challenging. What are the key obstacles facing the development of China's distributed photovoltaic industry?
**1. Financing Challenges**
Financing has long been a critical issue in the solar sector. While the reasons behind the funding difficulties are not clearly explained, major banks and investment institutions remain cautious. The government has yet to introduce concrete policies to support this area. According to reports from Wuhan Jiejie, aside from the China Development Bank (CDB), other commercial banks have only reached the initial contact stage with distributed power projects. CDB has not yet provided loans to any of the national distributed PV demonstration zones. These financing hurdles have made it difficult for many PV projects to get off the ground, especially for private companies. Although some innovative financing models such as crowdfunding, local government-led funds, and attracting private equity and foreign investment have emerged, the actual implementation remains slow. Companies are still hesitant due to concerns about return on investment.
**2. Issues with Distributed Photovoltaic Models**
The promotion of distributed PV in China faces significant challenges. Two main approaches are being discussed: increasing electricity prices or implementing a fully grid-connected model with full-state subsidies. Both options involve trade-offs. Raising electricity rates is unlikely to gain public support, and even if done, it may not effectively encourage widespread adoption of solar. On the other hand, a fully grid-connected system with state subsidies might be unrealistic at this stage, though it could become feasible in the future when coal prices rise.
**3. Industrial Upgrading Needs**
Sustainable growth in the solar industry requires continuous industrial upgrading. After the "solar winter," many domestic manufacturing companies shut down, but fundamental issues like product quality and overproduction remain unresolved. To ensure long-term development, the industry must shift its model, eliminate weak players, and foster new service-oriented enterprises. Specialized integration of photovoltaics into buildings and clear division of responsibilities among stakeholders are essential for healthy industry growth.
**4. Challenges in Residential Rooftop Installations**
Due to the low energy density of solar power, high-quality sites are limited. Once they are taken, they are no longer available. This makes good western power stations scarce and highly competitive. As a result, many developers are focusing on large-scale rooftop projects in central and eastern regions, often targeting state-owned enterprises and big buildings. However, developing residential rooftop solar systems remains a long-term challenge. While large-scale installations are now in a saturated market ("Red Sea"), home-based PV systems represent a "Blue Ocean" opportunity. Despite this, the development of residential solar is still slow due to various barriers and will take time to grow.
Overall, the Chinese photovoltaic industry continues to face numerous challenges. Many factors hinder its progress, but with ongoing efforts and policy improvements, the sector is expected to see gradual and sustained development in the years ahead.
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