Skip to main content

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

  • Analysis
  • Published:

City-level analysis of subsidy-free solar photovoltaic electricity price, profits and grid parity in China

Subjects

Abstract

In recent years, China has become not just a large producer but a major market for solar photovoltaics (PV), increasing interest in solar electricity prices in China. The cost of solar PV electricity generation is affected by many local factors, making it a challenge to understand whether China has reached the threshold at which a grid-connected solar PV system supplies electricity to the end user at the same price as grid-supplied power or the price of desulfurized coal electricity, or even lower. Here, we analyse the net costs and net profits associated with building and operating a distributed solar PV project over its lifetime, taking into consideration total project investments, electricity outputs and trading prices in 344 prefecture-level Chinese cities. We reveal that all of these cities can achieve—without subsidies—solar PV electricity prices lower than grid-supplied prices, and around 22% of the cities’ solar generation electricity prices can compete with desulfurized coal benchmark electricity prices.

This is a preview of subscription content, access via your institution

Access options

Buy this article

Purchase on Springer Link

Instant access to full article PDF

Prices may be subject to local taxes which are calculated during checkout

Fig. 1: Historical LCOE of solar PV power generation in China.
Fig. 2: Grid parity indices for distributed PV projects in 344 prefecture-level cities without subsidies.
Fig. 3: Economic feasibility and profitability of solar PV in 344 prefecture-level cities without subsidies.
Fig. 4: Comparison between GPIu and GPIp values.

Similar content being viewed by others

Data availability

Data on electricity market prices and desulfurized coal benchmark prices were compiled from the National Development and Reform Commission, and the price bureaus of different provinces. The historical module costs in Fig. 1 are available from the National Survey Report of PV Power Applications in China (2011–2013 and 2015–2017)(http://iea-pvps.org/index.php?id=93&tx_damfrontend_pi1=&tx_damfrontend_pi1%5BcatPlus%5D=&tx_damfrontend_pi1%5BcatEquals%5D=&tx_damfrontend_pi1%5BcatMinus%5D=57&tx_damfrontend_pi1%5BcatPlus_Rec%5D=&tx_damfrontend_pi1%5BcatMinus_Rec%5D=&tx_damfrontend_pi1%5BtreeID%5D=201&tx_damfrontend_pi1%5Bid%5D=93), Photovoltaic Power Systems Programme Annual Report (2000–2018) (http://www.iea-pvps.org/index.php?id=6) and NDRC Energy Research Institute of China (www.eri.org.cn). The historical lending interest rate data are available from The World Bank (https://data.worldbank.org/indicator/FR.INR.LEND?locations=CN&view=chart). The calculation results are provided in Supplementary Table 3. Investment, operation and maintenance costs data were compiled from the China Photovoltaic Industry Association (China PV industry development roadmap; http://www.chinapv.org.cn/road_map.html), National Survey Report of PV Power Applications in China (2011–2013 and 2015–2017) and Photovoltaic Power Systems Programme Annual Report (2000–2018). Policies data are available from the Law Information Database of Peking University (http://www.pkulaw.cn/). The climatic data were retrieved from the Meteonorm global database (http://www.meteonorm.com). The other data that support the plots within this paper and other findings of this study are available from the corresponding authors on request.

Code availability

Solar power production analysis and sensitivity analysis were conducted using MATLAB. The codes are available on request from the corresponding authors. The solar power production analysis code can also be accessed via the open-source package OptiCE written in MATLAB language at http://optice.net/team%20and%20projects.html.

References

  1. Elliston, B., MacGill, I. & Diesendorf, M. Grid parity: a potentially misleading concept? In Proc. Solar2010—the 48th AuSES Annual Conference (Australian Solar Energy Society, 2010).

  2. Spertino, F., Di Leo, P. & Cocina, V. Which are the constraints to the photovoltaic grid-parity in the main European markets? Sol. Energy 105, 390–400 (2014).

    Article  Google Scholar 

  3. Yang, C. J. Reconsidering solar grid parity. Energy Policy 38, 3270–3273 (2010).

    Article  Google Scholar 

  4. Breyer, C. & Gerlach, A. Global overview on grid-parity. Prog. Photovolt. 21, 121–136 (2013).

    Article  Google Scholar 

  5. Biondi, T. & Moretto, M. Solar grid parity dynamics in Italy: a real option approach. Energy 80, 293–302 (2015).

    Article  Google Scholar 

  6. Bhandari, R. & Stadler, I. Grid parity analysis of solar photovoltaic systems in Germany using experience curves. Sol. Energy 83, 1634–1644 (2009).

    Article  Google Scholar 

  7. Fokaides, P. A. & Kylili, A. Towards grid parity in insular energy systems: the case of photovoltaics (PV) in Cyprus. Energy Policy 65, 223–228 (2014).

    Article  Google Scholar 

  8. Reichelstein, S. & Yorston, M. The prospects for cost competitive solar PV power. Energy Policy 55, 117–127 (2013).

    Article  Google Scholar 

  9. Karneyeva, Y. & Wüstenhagen, R. Solar feed-in tariffs in a post-grid parity world: the role of risk, investor diversity and business models. Energy Policy 106, 445–456 (2017).

    Article  Google Scholar 

  10. Rigter, J. & Vidican, G. Cost and optimal feed-in tariff for small scale photovoltaic systems in China. Energy Policy 38, 6989–7000 (2010).

    Article  Google Scholar 

  11. Bazilian, M. et al. Re-considering the economics of photovoltaic power. Renew. Energy 53, 329–338 (2013).

    Article  Google Scholar 

  12. Zou, H., Du, H., Brown, M. A. & Mao, G. Large-scale PV power generation in China: a grid parity and techno-economic analysis. Energy 134, 256–268 (2017).

    Article  Google Scholar 

  13. Hernández-Moro, J. & Martínez-Duart, J. M. Analytical model for solar PV and CSP electricity costs: present LCOE values and their future evolution. Renew. Sust. Energy Rev. 20, 119–132 (2013).

    Article  Google Scholar 

  14. Honrubia-Escribano, A. et al. Influence of solar technology in the economic performance of PV power plants in Europe. A comprehensive analysis. Renew. Sust. Energy Rev. 82, 488–501 (2018).

    Article  Google Scholar 

  15. Tyagi, V. V., Rahim, N. A., Rahim, N. A., Jeyraj, A. & Selvaraj, L. Progress in solar PV technology: research and achievement. Renew. Sust. Energy Rev. 20, 443–461 (2013).

    Article  Google Scholar 

  16. Best Research-Cell Efficiencies (National Renewable Energy Laboratory, 2019); https://www.nrel.gov/pv/assets/pdfs/pv-efficiency-chart.20190103.pdf

  17. O’Regan, B. & Grätzel, M. A low-cost, high-efficiency solar cell based on dye-sensitized colloidal TiO2 films. Nature 353, 737–740 (1991).

    Article  Google Scholar 

  18. Peng, M. et al. Electric-field driven photoluminescence probe of photoelectric conversion in InGaN-based photovoltaics. Opt. Express 26, A615–A625 (2018).

    Article  Google Scholar 

  19. Photovoltaic Grid Parity “Twilight Appear for the First Time” (State Council of China, 2018); http://www.gov.cn/xinwen/2018-06/15/content_5298881.htm

  20. Zhao, X. G., Wan, G. & Yang, Y. The turning point of solar photovoltaic industry in China: will it come? Renew. Sust. Energy Rev. 41, 178–188 (2015).

    Article  Google Scholar 

  21. Long, R., Cui, W. & Li, Q. The evolution and effect evaluation of photovoltaic industry policy in China. Sustainability 9, 2147 (2017).

    Article  Google Scholar 

  22. Snapshot of Global Photovoltaic Markets 2017 (International Energy Agency, 2018); http://www.iea-pvps.org/fileadmin/dam/public/report/statistics/IEA-PVPS_-_A_Snapshot_of_Global_PV_-_1992-2017.pdf

  23. Interpretation of Sichuan 13th Five-Year Plan for Energy Development (The People’s Government of Sichuan Province, 2017); http://www.sc.gov.cn/10462/10464/13298/13299/2017/3/7/10416476.shtml

  24. Liang, F. & Xia, X. A. Long-term trends in solar radiation and the associated climatic factors over China for 1961–2000. Ann. Geophys. 23, 2425–2432 (2005).

    Article  Google Scholar 

  25. He, G. & Kammen, D. M. Where, when and how much solar is available? A provincial-scale solar resource assessment for China. Renew. Energy 85, 74–82 (2016).

    Article  Google Scholar 

  26. Wang, Y. H., Luo, G. L. & Guo, Y. W. Why is there overcapacity in China’s PV industry in its early growth stage? Renew. Energy 72, 188–194 (2014).

    Article  Google Scholar 

  27. Yang, Z. Mechanism of overcapacity and governance from the perspective of incentive distortion. Economist 10, 48–54 (2013).

    Google Scholar 

  28. Han, X. A look at new energy overcapacity and policies: a case of wind and solar industry. Manage. World 8, 171–175 (2012).

    Google Scholar 

  29. Zhang, H., Zheng, Y., Ozturk, U. A. & Li, S. The impact of subsidies on overcapacity: a comparison of wind and solar energy companies in China. Energy 94, 821–827 (2016).

    Article  Google Scholar 

  30. Li, J. & Wang, S. China Roadmap of Photovoltaics Development: A Pathway to Grid Parity (China Renewable Energy Industries Association, 2011); http://img1.ally.net.cn/2011/0905/20110905023307912.pdf

  31. Fu, R., Feldman, D., Margolis, R., Woodhouse, M. & Ardani, K. US Solar Photovoltaic System Cost Benchmark: Q1 2017 (No. NREL/TP-6A20-68925) (EERE Publication and Product Library, 2017).

  32. Notice on Actively Promoting the Work Related to Subsidy-Free Wind Power and Photovoltaic Power Generation for Grid Parity (National Development and Reform Commission of China & National Energy Agency, 2019); http://www.ndrc.gov.cn/zcfb/zcfbtz/201901/t20190109_925398.html

  33. Zhang, S. Innovative business models and financing mechanisms for distributed solar PV (DSPV) deployment in China. Energy Policy 95, 458–467 (2016).

    Article  Google Scholar 

  34. Zhang, S. Analysis of DSPV (distributed solar PV) power policy in China. Energy 98, 92–100 (2016).

    Article  Google Scholar 

  35. Luo, G. L., Long, C. F., Wei, X. & Tang, W. J. Financing risks involved in distributed PV power generation in China and analysis of countermeasures. Renew. Sust. Energy Rev. 63, 93–101 (2016).

    Article  Google Scholar 

  36. Huo, M. L. & Zhang, D. W. Lessons from photovoltaic policies in China for future development. Energy Policy 51, 38–45 (2012).

    Article  Google Scholar 

  37. Opinions on Financial Services Supporting Distributed Solar PV Generation (National Energy Agency, 2013); http://www.nea.gov.cn/2014-09/04/c_133620586.htm

  38. Yuan, J., Sun, S., Zhang, W. & Xiong, M. The economy of distributed PV in China. Energy 78, 939–949 (2014).

    Article  Google Scholar 

  39. Distributed Photovoltaic Power Generation Projects will be Freely Connected to the National Grid (National Energy Agency, 2012); http://www.nea.gov.cn/2012-10/30/c_131938413.htm

  40. Distributed Photovoltaic Power Generation Service Guide (China Southern Power Grid Corporation, 2013); https://www.cnrec.org.cn/go/AttachmentDownload.aspx?id=bbf9cc0f-00ae-4512-9c8e-39cb692739ed

  41. Notice on Exerting Price Leverage to Promote the Healthy Development of the Solar PV Industry (National Development and Reform Commission of China, 2013); http://www.ndrc.gov.cn/zwfwzx/zfdj/jggg/201308/t20130830_556127.html

  42. Photovoltaic Construction and Operation in the First Half Year of 2018 (National Energy Administration of China, 2018); http://www.nea.gov.cn/2018-08/02/c_137363846.htm

  43. Gao, Z. Analysis on the impact of distributed photovoltaic generation on grid company operation. Power Demand Side Manage. 6, 34–37 (2013).

    Google Scholar 

  44. Notice on Printing and Distributing the Interim Measures for the Administration of Renewable Energy Tariffs (Ministry of Finance, 2012); http://www.nea.gov.cn/2012-04/06/c_131510095.htm

  45. Notice on the Continuation of the Value-Added Tax Policy for PV Power Generation (Ministry of Finance & State Administration of Taxation, 2016); http://www.chinatax.gov.cn/n810341/n810765/n1990035/n1990100/c2354828/content.html

  46. Notice of the Value-Added Tax Policy for PV Power Generation (National Energy Agency & State Administration of Taxation, 2013); http://www.chinatax.gov.cn/n810341/n810765/n812146/n812323/c1080750/content.html

  47. The Tax Burden of Photovoltaic Enterprises is Expected to be Greatly Reduced (The Central People’s Government of the People’s Republic of China, 2017); http://www.gov.cn/xinwen/2017-10/12/content_5231190.htm

  48. Notice on Piloting Market-Based Trading of Distributed Power Generation (National Development and Reform Commission of China & National Energy Agency, 2017); http://zfxxgk.nea.gov.cn/auto87/201711/t20171113_3055.htm

  49. Supplementary Notice on the Pilot Project of Distributed Power Generation Marketization (National Development and Reform Commission of China & National Energy Agency, 2018); http://zfxxgk.nea.gov.cn/auto87/201801/t20180103_3094.htm

  50. Desideri, U. & Campana, P. E. Analysis and comparison between a concentrating solar and a photovoltaic power plant. Appl. Energy 113, 422–433 (2014).

    Article  Google Scholar 

  51. ABB Central Inverters (ABB, 2011); https://new.abb.com/docs/librariesprovider22/technical-documentation/pvs800-central-inverters-flyer.pdf?sfvrsn=2

  52. Maghami, M. R. et al. Power loss due to soiling on solar panel: a review. Renew. Sust. Energy Rev. 59, 1307–1316 (2016).

    Article  Google Scholar 

  53. Leloux, J., Narvarte, L. & Trebosc, D. Review of the performance of residential PV systems in Belgium. Renew. Sust. Energy Rev. 16, 178–184 (2012).

    Article  Google Scholar 

  54. Mirzaei, P. A., Olsthoorn, D., Torjan, M. & Haghighat, F. Urban neighborhood characteristics influence on a building indoor environment. Sustain. Cities Soc. 19, 403–413 (2015).

    Article  Google Scholar 

  55. Raise the Roof on Performance (Yingli Solar, 2011); https://www.energymatters.com.au/images/yingli/yingli-solar-panda.pdf; http://www.solargy.com.sg/pdtsvc.php?subcat=SPVYLM

  56. Campana, P. E. et al. An open-source optimization tool for solar home systems: a case study in Namibia. Energy Convers. Manage. 130, 106–118 (2016).

    Article  Google Scholar 

  57. Hafez, A. Z., Soliman, A., El-Metwally, K. A. & Ismail, I. M. Tilt and azimuth angles in solar energy applications—a review. Renew. Sust. Energy Rev. 77, 147–168 (2017).

    Article  Google Scholar 

  58. Duffie, J. A., Beckman, W. A. & Worek, W. M. Solar Engineering of Thermal Processes (John Wiley & Sons, 2013).

  59. Liu, B. Y. & Jordan, R. C. The long-term average performance of flat-plate solar-energy collectors: with design data for the US, its outlying possessions and Canada. Sol. Energy 7, 53–74 (1963).

    Article  Google Scholar 

  60. Campana, P. E. et al. Economic optimization of photovoltaic water pumping systems for irrigation. Energy Convers. Manage. 95, 32–41 (2015).

    Article  Google Scholar 

  61. Kaabeche, A., Belhamel, M. & Ibtiouen, R. Techno-economic valuation and optimization of integrated photovoltaic/wind energy conversion system. Sol. Energy 85, 2407–2420 (2011).

    Article  Google Scholar 

  62. Lai, C. S. & McCulloch, M. D. Levelized cost of energy for PV and grid scale energy storage systems. Preprint at https://arxiv.org/abs/1609.06000 (2016).

  63. Campbell, M., Aschenbrenner, P., Blunden, J., Smeloff, E. & Wright, S. The Drivers of the Levelized Cost of Electricity for Utility-Scale Photovoltaics White Paper (SunPower Corporation, 2008).

  64. Rodrigues, S., Chen, X. & Morgado-Dias, F. J. E. P. Economic analysis of photovoltaic systems for the residential market under China’s new regulation. Energy Policy 101, 467–472 (2017).

    Article  Google Scholar 

Download references

Acknowledgements

The authors acknowledge the support from the Swedish Knowledge Foundation (KK-stiftelsen) Future Energy Profile through the projects iREST and FREE, and the National Key Research and Development Program of China (grant number 2016YFE0102400). The authors acknowledge S. Wang (Beijing Xianjian Energy Consulting) for initial discussion. The authors acknowledge Dr. H. Zhan from Guangzhou Institute of Geochemistry, Chinese Academy of Sciences, for the figures formatting. Y.Y. acknowledges financial support from the China Scholarship Council.

Author information

Authors and Affiliations

Authors

Contributions

J.Y. designed the study with the assistance from J.H. All authors were involved in data collection. P.E.C. and Y.Y. developed the electricity production and prices dataset. Y.Y. performed the solar PV grid parity calculations, mapping work and analysis. J.Y. and Y.Y. formulated the structure of the manuscript. Y.Y. wrote the manuscript with support from J.Y., P.E.C. and J.H. J.Y., P.E.C. and Y.Y. revised the manuscript.

Corresponding authors

Correspondence to Jinyue Yan or Ying Yang.

Ethics declarations

Competing interests

The authors declare no competing interests.

Additional information

Publisher’s note: Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Supplementary information

Supplementary Information

Supplementary Notes 1–5, Supplementary Figs. 1–4, Supplementary Tables 1–5 and Supplementary refs. 1–33.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Yan, J., Yang, Y., Elia Campana, P. et al. City-level analysis of subsidy-free solar photovoltaic electricity price, profits and grid parity in China. Nat Energy 4, 709–717 (2019). https://doi.org/10.1038/s41560-019-0441-z

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1038/s41560-019-0441-z

This article is cited by

Search

Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing