Solar Power Industry to Reshuffle With ‘531 Policy’
China National Development and Reform Commission, Ministry of Finance and National Energy Administration put brakes on the solar power industry on 31 May 2018, now known as the ‘531 policy’. The policy imposes caps on market scale, accelerates subsidy cuts and lowers the on-grid tariffs (prices paid to power producers). By 2020, solar power is expected to reach grid parity and government subsidies won’t be needed anymore, according to Tsinghua University Energy Internet Research Institute. It projects that the subsidies for solar power will peak at C¥10–17.5 billion between 2022-25.
The solar power industry will reshuffle after the ‘531 policy’ and only the most technologically advanced and cost-efficient enterprises will thrive, says Xu Qinhua Renmin University National Academy of Development and Strategy vice dean and Center for Research on Energy and Resource Strategies deputy director.
The policy aims to phase out outdated and subsidy-dependent enterprises by imposing different regulations on solar power projects. Besides reshuffling the industry, the policy is vital to the healthy development of the solar power industry, says Xu, noting it will
- ease the financial burden on the government
- slow down the pace of development to solve curtailment problem
- encourage enterprises to innovate and be sensitive to market demand
- urge local governments to adopt incentive policy and reduce excessive fees and taxation
Xu identifies several problems facing the solar power industry, including
- large government subsidy; in 2017, the solar power industry required more than C¥45.5 bn annual subsidies in total
- curtailment prevails, meanwhile, the imbalance between supply in the west and demand in the east is severe
- the industry is plagued by a glut of low-end products
- innovation capacity is weak and the product portfolio is simple
- protectionism hinders industry’s global growth