Solar now 'cheaper than grid electricity' in every Chinese city, study finds

carbonbrief.org Solar 2019-08-14 08:45:19

Solar power has become cheaper than grid electricity across China, a development that could boost the prospects of industrial and commercial solar projects, according to a new study.


Projects in every city analysed by the researchers could be built today without subsidy, at lower prices than those supplied by the grid, and around a fifth could also compete with the nation's coal electricity prices.


The study says grid parity – the "tipping point" at which solar generation costs the same as electricity from the grid – represents a key stage in the expansion of renewable energy sources.


While previous studies of nations such as Germany and the US have concluded that solar could achieve grid parity by 2020 in most developed countries, some have suggested China would have to wait decades.


However, the new paper published in Nature Energy concludes a combination of technological advances, cost declines and government support has helped make grid parity a reality in Chinese today.


Despite these results, grid parity may not drive a surge in the uptake of solar, a leading analyst tells Carbon Brief.


Competitive pricing

China's solar industry has rapidly expanded from a small, rural programme in the 1990s to the largest in the world. It is both the biggest generator of solar power and the biggest installer of solar panels.


The installed capacity of solar panels in China in 2018 amounted to more than a third of the global total, with the country accounting for half the world's solar additions that year.


Since 2000, the Chinese government has unveiled over 100 policies supporting the PV industry, and technological progress has helped make solar power less expensive. This has led to the cost of electricity from solar power dropping, as demonstrated in the chart below.

In their paper, Prof Jinyue Yan of Sweden's Royal Institute of Technology and his colleagues explain that this "stunning" performance has been accelerated by government subsidies, but has also seen China overinvesting in "redundant construction and overcapacity".


The authors write: "Recently, the Chinese government has been trying to lead the PV industry onto a more sustainable and efficient development track by tightening incentive policies with China's 531 New Policy."


The researchers say the subsidy cuts under this policy in 2018 were a signal that the government wanted to make the industry less dependent on state support and shift its focus from scale to quality.


This, they say, has "brought the industry to a crossroads", with discussions taking place in China about when solar electricity generation could achieve grid parity.


In their analysis, Yan and his team examined the prospects for building industrial and commercial solar projects without state support in 344 cities across China, attempting to gauge where or whether grid parity could be achieved.


The team estimated the total lifetime price of solar energy systems in all of these cities, taking into account net costs and profits, including project investments, electricity output and trading prices.


Besides establishing that installations in every city tested could supply cheaper electricity than the grid, they also compared solar to the price of coal-generated power. They found that 22% of the cities could build solar systems capable of producing electricity at cheaper prices than coal.


(Writing by Jessie Jia  Editing by Harry Huo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

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