Development and Reform Commission plans to significantly reduce PV tariff subsidies

Yesterday, the National Development and Reform Commission issued the "Notice on Adjusting the New Energy Benchmarking On-grid Price (Draft for Comment)" (hereinafter referred to as the "Draft for Comment"), and it is proposed to reduce the subsidy. According to industry insiders, the New Deal has challenged the profitability of photovoltaic companies.
The "Consultation Draft" on the adjustment of new energy tariffs highlighted the changes in the three types of new energy feed-in tariffs, the most significant of which is the PV price. According to the “Draft for Comment”, the PV on-grid tariffs of the first, second and third resource zones of the ground power station are planned to be adjusted to 0.55 yuan, 0.65 yuan and 0.75 yuan, which are 0.25 yuan, 0.23 yuan and 0.23 yuan lower than the current electricity price standards. That is, the declines were 31%, 26% and 23% respectively. The New Deal will be implemented on January 1, 2017.
The New Deal also adjusted the subsidy standards for distributed photovoltaic power generation projects. The new subsidies are: 0.2 yuan/degree for one type of resource area, 0.25 yuan/degree for second-class resource area, and 0.3 yuan/degree for three types of resource area. Compared with the original 0.42 yuan / kWh, it has dropped by about 40%.
Li Peng, an expert from the China Renewable Energy Society, explained that the current PV grid price has been implemented for more than two years, and the expiration time should be June 30 this year. The “Draft for Comment” has significantly reduced the on-grid tariffs in line with the development of the photovoltaic industry.
China's PV industry relied heavily on overseas markets in the early days, and more than 95% of its products were sold to Europe and the United States. After the outbreak of the financial crisis in 2008, developed countries have cut down on subsidies for photovoltaic products, and at the same time launched "double anti-" for Chinese PV products. Since then, Chinese companies have begun to vigorously cultivate the domestic photovoltaic market, and the rapid development of photovoltaic power plants and distributed photovoltaics. Last year, the total installed capacity of photovoltaic power in China reached 43GW, making it the country with the largest installed capacity of photovoltaic power generation in the world.
The rapid expansion of the market scale has greatly reduced the cost of enterprises. For example, the price of photovoltaic modules has dropped by 14.28% in the most recent year. The cost of building photovoltaic power plants has dropped significantly. According to the original PV subsidy policy, the company has a large profit margin. At the same time, in order to seize the deadline for the policy deadline, the total installed capacity of PV in China in the first half of this year exceeded 20GW, which is more than the 2016 PV installed total target of 18.1GW determined by the National Development and Reform Commission.
Li Peng believes that the National Development and Reform Commission has significantly lowered the price of photovoltaic subsidies. First, by lowering electricity prices, controlling overheating of photovoltaics, and preventing enterprises from advancing; second, reducing the pressure on financial subsidies; third, promoting technological progress in the industry.
Officials from the National Energy Administration revealed at a meeting that in the first half of this year, China's renewable energy subsidy gap reached 55 billion yuan.
After the photovoltaic power price is lowered sharply, is the company still profitable? At the time of bidding for PV power plants in some provinces this year, the company's quotation reached 0.52 yuan per kWh. This explains to some extent the potential of corporate profitability. However, Li Peng is suspicious of whether the company can make a profit under this quotation: "There may be gains, but it does not rule out that some enterprises are poorly charged, resulting in the attenuation of photovoltaic power generation efficiency."

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