Currently, the Chinese domestic photovoltaic power generation projects that have connected to the grid contain four categories: the Golden Sun Pilot Project, the Building Integrated Photovoltaic (BIPV) Project, the Grid-Connected Photovoltaic Power Station Project, and the Distributed Photovoltaic Power Generation Project. The electricity price and subsidies in the aforementioned four photovoltaic power generation projects are treated differently depending on their categories, which means that different policies shall be applied to them. This article will briefly introduce the electricity price and subsidies of the four categories.

  1. The Golden Sun Pilot Project.

In 2009, the Chinese government launched the Golden Sun Pilot Project. Currently, China subsidizes the grid-connected photovoltaic power generation projects in the Golden Sun Pilot Project, and also supports those projects by purchasing their electricity at the benchmarking of electricity price of the desulfurization coal-fired units.

This policy of the electricity price consists in that the electricity generated by the grid-connected photovoltaic power generation projects incorporated into public grid will be acquired by the grid companies in total sum at the local benchmarking grid purchase price of desulfurization coal-fired units.

The policy of the subsidy consists in that the central finance department provides fiscal subsidy through investment to the grid-connected photovoltaic power generation projects. The government makes the subsidy arrangements for the Golden Sun Pilot Project annually. In 2009, regarding the grid-connected photovoltaic power generation projects, the subsidy proportion was 50% of the total investment in the photovoltaic power generation system and its transmission and distribution projects in principle; and the subsidy for the independent photovoltaic power generation systems in remote areas that have no access to electricity was 70% of the total investment therein.

In 2010, the central government fiscal subsidy criteria for the grid-connected photovoltaic power generation projects were: (1) the central government provided a proportion of the tender winning price to the critical equipment used in the pilot project. The subsidy proportion for the electricity generated by the user side-on-grid photovoltaic power generation projects was 50%, and for independent photovoltaic power generation systems in remote areas that have no access to electricity supply, the subsidy proportion was 70%; (2) set quotas of subsidies for other expenses in the construction of pilot projects. The subsidies were 4 RMB per kilowatt-hour to the electricity generated by user side-on-grid photovoltaic power generation projects, and were 10 RMB per kilowatt-hour to the independent photovoltaic power generation systems in remote areas that have no access to electricity supply.

In 2011, the central government fiscal subsidy criteria for the grid-connected photovoltaic power generation projects were:(1) 9 RMB per kilowatt-hour to the pilot projects using crystalline silicon modules, and 8 RMB per kilowatt-hour to the ones using amorphous-silicon thin-film modules. Due to the later concern that the construction costs of photovoltaic power generation systems had decreased sharply since the fourth quarter of 2011, the subsidy criteria for the user side-on-grid photovoltaic power generation projects were adjusted from 9 RMB to 8 RMB per kilowatt-hour. However, the projects may still apply for the 9 RMB subsidies if they really cannot achieve reasonable revenue under the adjusted subsidies; and (2) the subsidy criteria on the independent photovoltaic power generation project would be decided separately.

In 2012, the central government fiscal subsidy criteria for the grid-connected photovoltaic power generation projects were: (1) in principal, the subsidy standard of electricity generated by user side-on-grid photovoltaic power generation projects was 7 RMB per kilowatt-hour; and (2) the subsidy standard on independent photovoltaic project and wind solar hybrid power generation projects was decided separately. Due to the concerns about energy storage device equipment and other relevant elements, the subsidy standard based on 7 RMB per kilowatt-hour increased an appropriate proportion for the electricity generated by centralizing distributed user side-on-grid photovoltaic power generation projects which combined the smart grid with the micro grid technology.

There are no yet central government fiscal subsidy criteria for the Golden Sun Pilot Project of the year 2013. 

  1. The Building Integrated Photovoltaic (BIPV) Project.

Since 2006, the central government has granted free subsidies consisting in special funds to approved renewable energy architecture pilot projects. The government has arranged special funds to grant subsidies to the qualified Building Integrated Photovoltaic (BIPV) Project in order to partially support the initial investment in optoelectronic applications. The subsidy criteria are decided by the Ministry of Finance and the Ministry of Housing and Urban-Rural Development according to different elements including the cost of optoelectronic applications, scale effect, the sustainability of enterprises, etc. The subsidy standards are adjusted annually according to the development of new technologies and cost reduction. The government also annually organizes the subsidy work to be granted to BIPV. For instance, the general criteria for 2009 were 20 RMB/Wp, and the specific standards were set categorically according to the integration and architecture, the development of new photoelectric technologies, etc.

In 2010, the central government fiscal subsidy criteria were: (1) the central government provided a proportion of the tender winning price to the critical equipment used in the pilot projects. The subsidy proportion of the electricity generated by the user side-on-grid photovoltaic power generation projects was 50%, and the subsidy for independent photovoltaic power generation systems in remote areas of the counties that have no access to electricity supply was 70%; (2) setting quotas of subsidies for other expenses in the construction of pilot projects. For the electricity generated by user side-on-grid photovoltaic power generation projects, the subsidy was 4 RMB per kilowatt-hour(building material projects and constructing BIPV projects were 6 RMB per kilowatt-hour), and it was 10 RMB per kilowatt-hour to the independent photovoltaic power generation systems in remote areas of the counties that have no access to electricity supply (for household independent system, the subsidies were 6 RMB per kilowatt-hour).

In 2011, the central government fiscal subsidy criteria were: (1) the central government provided the subsidy separately to the cost and expense of the critical equipment used in the pilot project and engineering installation, within others costs; (2) subsidized 50% of the lowest tender winning price to the crystalline silicon modules, grid-connected inverter, energy storage lead-acid battery and other critical equipment used in pilot projects; (3) for the non-biding products (amorphous silicon solar panes), the subsidy standard was decided according to a certain proportion of the lowest tender winning price. Such subsidy proportion was tentatively fixed at 50%, and the amount of subsidy was checked and ratified according to the special examination report of working drawings(or special conclusion) and the supply of products confirmed in the supply agreement; (4) setting quotas of subsidies for other expenses and costs in engineering installation of pilot project construction. The standard was tentatively fixed at 6 RMB per kilowatt-hour.

In 2012, the central government fiscal subsidy criteria were: in building materials and such types of BIPV projects which integrated to the construction closely the standard was tentatively fixed at 9 RMB per kilowatt-hour, while as to the type which integrated to the construction, normally the standard was tentatively fixed at 7.5 RMB per kilowatt-hour. The final subsidy standard were checked and ratified according to the market price change of photovoltaic products.

There are no yet central government fiscal subsidy criteria for the BIPV Project of the year 2013.

  1. The Grid-Connected Photovoltaic Power Station Project.

China’s Grid-Connected PV Power Station project currently adopts a classification system for electricity prices: using the unified national benchmarking grid purchase price to unsolicited PV Power Station Projects, and for the owner of the solar photovoltaic power project who is determined through the tender process, the tender price will be applied to its electricity price of grid. 

For non-tendering photovoltaic power generation projects, the benchmarking grid purchase prices differ due to the different project approval processes (filing) in relation to the timeframe and operating schedule:

  1. For photovoltaic power generation projects approved prior to July 1th, 2011, and in operation as of December 31st, 2011, but still waiting for a pricing approval by the National Development and Reform Commission, the grid purchase price is 1.15 RMB per kilowatt-hour (tax included, [same below]).
  2. For photovoltaic power generation projects approved after July 1st, 2011, and those approved before July 1st, 2011, but not yet in operation by December 31st, 2011, the grid purchase price is 1 RMB per kilowatt-hour in all provinces (including autonomous regions and municipalities) except Tibet, which is still 1.15 RMB per kilowatt-hour.
  3. For photovoltaic power generation projects filed (or approved) after September 1st, 2013, and for those filed (or approved) before September 1st, 2013 but will only start operations on or after January 1st, 2014, the grid purchase prices are at a benchmarking price policy based on their locations. In this regard, China is divided into three regions of solar energy resources, according to the solar energy condition and construction cost: the “Type I Region” produces a benchmarking grid purchase price at 0.9 RMB per kilowatt-hour, “Type II Region” produces a benchmarking grid purchase price at 0.95 RMB per kilowatt-hour, and “Type III Region” produces a benchmarking grid purchase price at 1.0 RMB per kilowatt-hour. (Note: the Tibetan benchmarking grid purchase price of photovoltaic power projects is separately decided.)

The benchmarking grid purchase price mechanism will be implemented in photovoltaic power generation projects when they start operations till a period of 20 years in principle. For the part that the photovoltaic power generation price exceeds the benchmarking grid purchase price of local coal-fired units (except for Guangdong and Hunan, the electricity price for local de-sulfurized coal units of the rest parts of China is lower than 0.5 RMB per kilowatt-hour), the central government will cover through the Renewable Energy Development Fund. At present, the Chinese power grid companies settle the accounts with photovoltaic power plants at the benchmarking grid purchase price of local coal de-sulfurization units, while the finance will subsidize for the aforementioned disparity. As the subsidies that issued by the finance department are usually heavily delayed, a huge number of photovoltaic power companies are not able to afford the in bank loan interests through their the grid purchase income. As a result, such companies have to continue getting loans from the banks, and this significantly lessens their profits; causes cash flow problems; and in some cases, even leads to deficit. In order to alleviate the subsidy default, the Ministry of Finance released the “Circular of the Ministry of Finance regarding Policy on Implementation of Distributed Photovoltaic Electricity Generation Subsidies According to the Electric Quantity” (Cai Jian[2013]390) on July 24th, 2013. The Circular aims to simplify the subsidy distribution procedures within the authority scope of the State Grid Corporation and the Southern Power Grid Company for the grid-connected power generation and access projects. According to the Circular, subsidies are no longer distributed by the provincial finance department, but are allocated directly from the central finance department to the State Grid Corporation and the Southern Power Grid Company. Meanwhile, however, the grid-connected power generation projects of local independent grid companies still follows the instruction from the “Notice of the Ministry of Finance,the National Development and the Reform Commission,the National Energy Administration on Printing and Distributing the Interim Measures for Management of Additional Subsidy Fund to the Electricity Price for Renewable Energy” (Cai Jian[2012]102), and thus those subsidies are still distributed by the provincial finance departments.

  1. Distributed Photovoltaic Power Generation Project.

China currently subsidizes the distributed photovoltaic power generation projects as whole power quantity, and the subsidy standard is 0.42 RMB per kilowatt-hour (tax included). The central finance department subsidizes such projects through the Renewable Energy Development Fund, and subsidies from the fund are transferred from the grid companies to the photovoltaic power generation projects. Among the said subsidies, the grid companies will purchase the part of electricity that exceeds the amount that used by the Distributed Photovoltaic Power Generation Projects at the benchmarking grid purchase price of coal-fired units. Besides, for the electricity that used by the said projects themselves, fees for system spare capacity as well as other service charges are waived from the price charged. In principal, the period of aforementioned subsidy is 20 years.

However, for the projects that enjoy the Golden Sun Pilot Project subsidy or the Building Integrated Photovoltaic (BIPV) Project subsidy are not covered by the aforementioned subsidies for the Distributed Photovoltaic Power Generation Project. The Grid-Connected PV Power Station Projects that exercise the fixed price made by the government are not covered by the subsidy for the Distributed Photovoltaic Power Generation Project either.