Analysis of feed-in tariff policies for solar photovoltaic in China 2011–2016

Liang-Cheng Ye,João F.D Rodrigues,Hai Xiang Lin

doi:10.1016/j.apenergy.2017.06.037

Liang-Cheng Ye, João F.D Rodrigues + Show 1 more

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https://doi.org/10.1016/j.apenergy.2017.06.037

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Abstract

In 2011 China initiated policies to promote the adoption of solar photovoltaic (PV) using feed-in tariff (FIT) policies. Since then the PV domestic market expanded substantially. In the past six years, the FIT policies were updated (adjustment of tariff levels, division of three FIT regions, setting of installation quotas) to address emerging problems such as PV waste, explosive installation, unbalanced spatial distribution. This paper aims to investigate the historical development and implementation of FIT policies in China from 2011 to 2016. The tools of net present value (NPV)/internal rate of return (IRR), learning curve and the system dynamics are employed to show the degree of economic incentives of FIT policies, to understand the learning rate of centralized PV systems, and to study the dynamic mechanism of the FIT system. We conclude that in the near term the tariff levels should be adjusted more frequently to keep IRR values in the range of 8–12%, and a tight quota combined with the deployment of ultra-high voltage (UHV) lines should be continued for the provinces with severe PV waste.

Highlights

The Chinese government set as a target that by the end of 2020 non-fossil energy should account for at least 15% of national primary energy consumption [1]
We study the economic incentives of feed-in tariffs (FIT) policies of seven representative provinces from 2011 to 2016 by calculating net present value (NPV)/internal rate of return (IRR) values
Our analysis shows that in the near term the central authority should adjust the tariff levels of three FIT regions more frequently to keep NPV/IRR values in the range of 8% – 12%, and a tight quota combined with the deployment of ultra-high voltage (UHV) lines should be continued for the provinces with severe PV waste

Summary

Introduction

The Chinese government set as a target that by the end of 2020 non-fossil energy should account for at least 15% of national primary energy consumption [1]. The central authority sponsored two rounds of public tender for solar power projects in 2009 and 2010 with a total capacity of 290 MW, which aimed to test the benchmark price of domestic PV power generation [8]. Those programs promoted the domestic adoption of PV technology. In July, 2011, in order to deal with the severe manufacturing capacity surplus and the deteriorating international market, China started implementing feed-in tariffs (FIT) policies, marking a new era in the development of solar PV. Today China is a dominant global player in the PV supply chain, including manufacturing of silicon, ingot, wafer, cells and modules [10]

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