China Confirms 14 Gigawatts of Solar Energy Incentives for 2014
- February 19, 2014
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China will be the number one solar market again in 2014 if it meets its recently announced goals.
China’s National Energy Administration has set a 2014 goal of incentivizing 14 gigawatts of domestic solar capacity, 6 gigawatts aimed at utility scale and 8 gigawatts aimed at distributed generation.
Adam James of Greentech Media notes, “The 14 gigawatt target is consistent with our expectations for how the Chinese government will approach PV development in 2014. We do note, however, that reaching this target may present some difficulties: particularly if the allocation between utility-scale generation and distributed generation is enforced as a strict funding cap. On the one hand, the distributed market in China is still very new and has some growing pains, so reaching 8 gigawatts is highly ambitious. On the other hand, constraining utility scale generation to 6 gigawatts may present challenges for companies who already have sizeable expected pipelines in 2014. Despite these headwinds, we do expect China to be the largest market for installed capacity in 2014.”
China was the market in leader in 2013 with about 12 gigawatts — after growing from approximately 3 gigawatts in 2012.
Deutsche Bank Equity Research notes that China has set quotas for individual provinces with the Eastern provinces of Shandong, Jiangsu and Zhejiang at a quota of 1.2 gigawatts each. Vishal Shah of Deutsche Bank writes, “If grids are unable to absorb the power and solar panels stay idle, the agency may reduce the quotas.”
Shah adds, “While there are specific targets laid out for each province, it is still unclear how well the government is able to track installations given the localized permitting structure. We believe the tier 1 module suppliers are well positioned to capitalize on the domestic market and expand their installation business in the process. Given attractive IRR’s on most projects in the region, we believe the country can likely reach this target, which will put further upward pressure on pricing in the industry. Given several planned poly expansions coming online over the next 1-2 years and rising prices, we believe further long term agreements between poly and module suppliers are likely.
Deutsche Bank sees this announcement as positive for Trina Solar and Yingli.
Photo Credit: China Solar Growth/shutterstock
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