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Policies favorable for distributed photovoltaic power generation applications usher in new developments
The solar photovoltaic industry has experienced rapid growth in recent years, with China consistently leading the world in photovoltaic output for five consecutive years. However, challenges such as product homogenization, overcapacity, and cutthroat competition have emerged alongside this success. In addition, international trade barriers have hindered the export of Chinese photovoltaic products over the past two years, placing the industry in a difficult position.
When faced with adversity, those who are resilient can not only survive but also thrive. “In response to this tough situation, we have pushed for the transformation and upgrading of our new energy companies, explored new markets, and shifted from being pure product suppliers to providing integrated services and applications,†said an official from the Hangzhou Economic and Credit Commission.
To support the development of the photovoltaic sector, the State Council issued "Several Opinions on Promoting the Healthy Development of the Photovoltaic Industry" in July. The policy aims to reach a total installed capacity of more than 35 million kilowatts by 2015, offering significant opportunities for growth. In August, the Ministry of Industry and Information Technology released the "Regulations for Photovoltaic Manufacturing Industry (Draft for Soliciting Opinions)," reinforcing existing policies and setting the stage for future development.
Zhejiang province is also actively working on new policies to guide and promote the growth of its new energy industries.
Industry Status: Leading Companies Drive Innovation, SMEs Flourish
From mid-2012 to the first half of this year, Hangzhou's new energy sector, particularly the photovoltaic industry, faced a challenging period. However, it also became a time of innovation, helping companies break free from homogeneity and unhealthy competition, achieving initial success.
According to officials from the Municipal Economic and Information Commission, positive changes have been observed in domestic policy and market conditions. The reshuffling of the industry has accelerated, and demand has shown signs of recovery. While uncertainties remain, the overall situation has improved. With the leadership of major companies, small and medium-sized PV enterprises have reduced their reliance on subsidies and avoided excessive price wars. The entire photovoltaic industry is now driven by new products and innovative business models, especially in areas like accessories, BIPV applications, and micro-grid systems.
According to the Hangzhou Statistics Bureau, in 2012, the city’s solar energy and other new energy industries generated sales of 18.723 billion yuan and added value of 4.405 billion yuan. Export of photovoltaic modules reached 419 million U.S. dollars, with emerging markets in Africa and Latin America showing growth. The export market expanded to 19 countries and regions.
In the first half of this year, the added value of the new energy industry in Hangzhou reached 1.822 billion yuan, with the decline continuing to narrow compared to the previous quarter.
Despite progress, the industry still faces challenges during its transformation and development. “The biggest issue remains financial constraints,†said an official from the Municipal Economic and Information Commission. New energy sectors require large investments and long payback periods, and the sluggish performance of photovoltaics and wind power has made financing difficult.
Local support policies for new energy industries in Hangzhou have lagged behind other provinces. While Jiangsu and cities like Hefei, Ningbo, and Jiaxing have already introduced local policies, Hangzhou is still catching up.
To address these issues, the commission suggested encouraging industry growth, promoting cooperation between SMEs and leading companies, and supporting resource integration and market exploration. It also emphasized the need for product differentiation, profitability, and sustainable growth.
Road to Transformation: Innovation, Differentiation, and Market Expansion
On August 6th, China and the EU reached an agreement on photovoltaic exports, ending the era of low-price competition in the European market. Faced with rising costs and limited export volumes, Chinese PV companies must find new ways to grow.
According to the Municipal Economic and Information Commission, Hangzhou’s solar industry must pursue innovation, high-end development, and differentiation to succeed.
“While many industries suffer from overcapacity, the photovoltaic sector is especially affected,†said Lu Chuan, Vice President of Zhejiang Zhengtai Solar Energy Technology Co., Ltd. The company has adjusted its strategy, shifting from component sales to green energy development, collaborating with research institutes, and developing new technologies like OLED and HIT. These efforts have significantly reduced production costs.
Chint also diversified its market, reducing its reliance on Europe and increasing sales in Japan, South Africa, India, and the U.S. This timely shift helped the company avoid the impact of EU trade restrictions, achieving a sales value of 3.679 billion yuan and a profit of 115 million yuan in 2012.
Industry insiders note that several innovative companies in Hangzhou are focusing on niche markets and developing unique products, moving away from low-price competition and pursuing healthy growth. Companies like Chint, Sonny, Heda, Longxi, and Sola are leading the way, with smaller firms also finding success through specialized products.
Policy Impact: Distributed PV Applications Enter a Golden Decade
Government support is crucial for the development of the new energy sector. The promotion of distributed photovoltaic applications has become a national priority, seen as a key driver for the industry’s recovery.
Heda has collected hundreds of distributed PV projects across the country, with many connected to the grid in Hangzhou. Good policies not only benefit enterprises but also provide real advantages to consumers, driving further development.
The State Council’s "Several Opinions on Promoting the Healthy Development of the Photovoltaic Industry" sets a target of 35 million kilowatts by 2015, marking a shift from heavy infrastructure to market-driven distributed generation.
On August 27th, the 50MW Tonglu Economic Development Zone project was launched, one of the first 18 national demonstration zones and the largest in the province. The project is led by Hangzhou Zhejiang University Sunny Energy Technology Co., Ltd.
Recent policies, such as the National Development and Reform Commission’s circular on pricing incentives, offer subsidies of 0.42 yuan per kilowatt-hour for distributed PV projects. As favorable policies continue to roll out, Hangzhou’s new energy industry is poised for a new phase of growth after the transition.