In recent months, there has been growing talk about the decline in on-grid photovoltaic (PV) prices. According to official reports, the distributed PV subsidy is set to drop to 0.3 yuan per kWh starting January 1, 2018. This shift signals a new phase in China's solar energy landscape, particularly for distributed PV systems.
Amid these changes, distributed photovoltaics are experiencing rapid growth. In the first half of 2017, the country added 24.4 million kilowatts of new PV capacity, with 17.29 million kilowatts coming from large-scale power stations—a 16% year-on-year decrease. Meanwhile, distributed PV installations surged to 7.11 million kilowatts, marking a 2.9-fold increase compared to the same period last year.
Ren Xiaokun, deputy general manager of Yingli Distributed Energy Co., Ltd., explained that during the early years of large-scale ground-mounted PV projects, the industry faced challenges such as limited land availability and issues with grid connection in remote areas like the western deserts. As a result, smaller, land-efficient systems that generate electricity locally and connect directly to the grid have become more attractive, especially in densely populated eastern regions with high electricity demand. However, even with this progress, household PV systems still face several obstacles.
The rise of residential PV has been driven by government policies, including the Renewable Energy Law and various supportive measures. Since 2015, China has led the world in installed PV capacity, and the sector has played an increasingly vital role in the national energy transition. By June 2017, over 7 million kilowatts of distributed PV were added in the first half of the year—up nearly seven times from the previous year.
Industry experts suggest that 2017 marked the true beginning of a distributed PV boom at the household level. Companies like Yingli, Jingke Energy, and Trina Solar have all expanded into the residential market. For example, Yingli saw its installed capacity in the first half of 2017 reach over 60,000 kilowatts, doubling the previous year’s figure.
Analyst Feng Haicheng from Zhuo Chuang noted that the surge in household PV installations was fueled by strong domestic electricity demand, improving economic conditions, and falling PV costs due to technological advancements. Additionally, government policies promoting distributed systems, such as the "One Million Rooftops" initiative in Zhejiang and Jiangsu provinces, have accelerated adoption.
Zhejiang's policy, launched in 2016, aimed to install over one million residential PV systems by 2020, totaling around 3 million kilowatts. As of July 2017, the province had already connected 6.66 million kilowatts of PV to the grid, with 3.91 million kilowatts from households alone—over 50% of the total. The number of household PV connections reached over 85,000, making Zhejiang the top province in the country.
Other provinces, such as Jiangxi and Shandong, have also introduced similar initiatives, including "Ten Thousand Roofs" programs. Ren Xiaokun emphasized that residential PV is particularly well-suited for economically developed eastern regions with high electricity consumption and minimal risk of curtailment, leading to higher efficiency.
However, the rapid expansion has brought challenges. Feng Haicheng warned that the influx of developers into the market has led to a wide range of products, some of which may not meet quality standards. This has affected consumer confidence and squeezed profit margins for companies.
The low barriers to entry have attracted many small players, including informal workshops producing substandard components. Some dealers reported using OEM parts that cost half as much as branded panels, raising concerns about system reliability and long-term performance. Ren Xiaokun pointed out that such practices undermine product quality and pose risks to long-term operation.
The China Photovoltaic Industry Association is currently working on setting standards for residential PV systems, aiming to improve market transparency and quality control. At the same time, policy shifts, such as the expected reduction in subsidies in 2018, are also shaping the industry.
Currently, 90% of installed residential PV systems rely on subsidies, while only a small portion is used for self-consumption. Ren Xiaokun described household PV as a financial asset, noting that declining costs and existing subsidies have made it an attractive investment for many.
Looking ahead, the trend toward cheaper renewable energy and grid parity is accelerating. As demonstration projects move closer to wind-level pricing, the pace of adoption is expected to quicken. Experts predict that by 2020, PV will achieve grid parity, making subsidies unnecessary.
Wang Shujuan, an expert advisor, estimated that the subsidy gap could reach 240 billion yuan by 2020, with most grid-connected PV projects currently without support. As the industry moves toward cost-competitive solutions, companies must focus on reducing costs and improving quality to survive.
In conclusion, the future of the residential PV market looks promising but also highly competitive. Companies that can innovate, reduce costs, and maintain quality will thrive, while those unable to adapt may struggle. The era of cheap, clean energy is here—and the industry must evolve to meet it.
zhejiang ttn electric co.,ltd , https://www.ttnpower.com