What Are Photovoltaics?

Photovoltaic industry, referred to as PV (photovoltaic). 76% of China s land is abundant in light and the energy resources are more evenly distributed. Compared with hydropower, wind power, and nuclear power, solar power generation has no emissions and noise, and its application technology is mature, safe and reliable.

Photovoltaic industry

Photovoltaic industry, referred to as PV (photovoltaic). 76% of our country

The "13th Five-Year Plan" for energy development proposes that by 2020, the installed capacity of distributed photovoltaics will reach 60GW. According to the "Thirteenth Five-Year Plan" for energy development, China's distributed photovoltaic installed capacity will exceed 10GW per year from 2018 to 2020.

In April 2018, the National Energy Administration issued the "Distributed Power Generation Management Measures (Consultation Draft)" and the "Distributed Photovoltaic Power Generation Project Management Measures (Consultation Draft)". These two measures strengthened the management of photovoltaic projects and reduced The amount of subsidies. However, with the coming of the 531 New Deal this year, the scale of the distributed indicator of 10GW may be very small. The follow-up demand for this year depends on the supplements of various developers. The details of the distributed photovoltaic management approach will greatly affect the demand situation of 2H18-2020. Provinces with a better distributed photovoltaic development environment are more favorable, while poorer provinces will be more difficult. Later, distributed photovoltaics will experience a cold winter. ^[6]

As one of China's strategic emerging industries, the photovoltaic industry can be described as thrilling in recent years. The entire industry expanded rapidly in 2009 and 2010, and it is booming. However, after only two years, the situation has changed drastically. In 2012, the entire industry was plunged into a collective loss. On March 20, 2013, Suntech announced bankruptcy and reorganization, and the market was pessimistic about the future of photovoltaic companies.

After the United States launched a double counter-measure against Chinese photovoltaic companies in 2012, the European Union also began anti-dumping investigations against Chinese photovoltaic companies. Following successive blows, the Chinese government released the "State Council on Printing and Distributing Energy Development" "Planning Notice" is about to increase the target of the 12th Five-Year Plan for photovoltaic power generation capacity to 21GW, which is 66.7% higher than the previous plan.

Through detailed analysis and investigation, we believe that the worst period of the photovoltaic industry has passed, and various favorable factors are emerging. For various investors, grasping this wave of investment opportunities will determine the future market structure.

On July 27, 2013, the representatives of the Chinese photovoltaic industry and the European Commission reached an agreement on a "price commitment" on the trade disputes between China and the European photovoltaic products. This agreement was formally implemented on August 6. In the history of China-EU trade, a trade dispute involving the highest amount of cases has come to an end.

In 2012, although photovoltaic companies were generally in difficulties, the development of the photovoltaic industry still showed a rapid development momentum, in which the industry scale and investment were constantly increasing. The nation's new installed capacity is about 4.5GW, a year-on-year increase of 66%, accounting for about 14% of the global market share. The total output value of the photovoltaic industry exceeds 300 billion yuan, and the number of employed people is close to 500,000. In addition, among the top ten global component manufacturers, Chinese companies occupy 6-7 seats.

What kind of development path should the photovoltaic market take? China's photovoltaic enterprises already have independent technology and independent brands, and are completely independent in terms of technology and sales channels, and do not depend on foreign manufacturers. Most enterprises are also private enterprises, which are more flexible and agile in terms of operational performance and market responsiveness, and have stronger survivability.

In order to promote the fair, healthy, sustainable and stable development of renewable energy, including the solar industry, a sound business model is needed, because without a mature business model, investors will not be attracted to invest. To this end, it is necessary to promote the Marketization and capitalization.

Of course, to form a mature business model, marketization alone is not enough. Capitalization is also an important prerequisite for a successful business model. Capitalization includes two important aspects, one is to solve the problems of the industry's early investment, and the other is to solve the problems of long-term financing of enterprises and projects.

Therefore, opening large investment funds is the entrance to the door of the photovoltaic market. For example, in foreign countries, large-scale funds that prefer long-term and stable returns, such as pensions and insurance, hold solar power stations. This is because solar power stations can bring stable returns and cash flow benefits while receiving state-submitted subsidies. We might as well follow the example and encourage the entry of such funds to promote the development of the renewable energy industry.

Marketization of the photovoltaic industry

Ensuring the grid connection and operation of legal power stations, generating timely subsidies, and improving relevant laws and regulations for distributed power stations are the core contents of promoting marketization.
To promote the marketization of the photovoltaic industry, we should start from the following aspects:

1. To ensure the grid connection and operation of legal power plants. It is gratifying to note that the Renewable Energy Power Priority Management System, which focuses on solving the difficulty of fully acquiring wind and solar power, is being formulated by the National Energy Administration; the industry s long-awaited renewable energy power quota "Administrative Measures" will also be introduced. We believe the introduction of these two favorable policies will effectively solve this problem.

2. Subsidies for power stations should be paid in a timely manner. It is necessary to comprehensively consider the interests of photovoltaic power stations, power grid companies and power generation ends, and provide certain subsidies for the construction of power grids, peak shaving power supplies and photovoltaic power generation to ensure that all clean energy generated by photovoltaic power stations is fully utilized. The timely issuance of electricity price subsidies will effectively encourage the development of photovoltaic power stations and the application of renewable energy, so this is an issue that needs to be implemented.

3. Improve the relevant laws and regulations of distributed power stations. Now that China is vigorously promoting the application of distributed power stations, it is also facing a series of legal issues. For example, the use rights and ownership of commercial rooftop power stations, the standard of power station compensation, etc .; the rights and obligations of rooftop owners and power station owners must also be clarified.

4. An important sign of marketization is commercialization. Relevant policies should be put in place to ensure that power generation holders can generate power for their own use and surplus electricity goes online; at the same time, relevant policy and regulatory bottlenecks should be eliminated, and market participants should not be limited to large state-owned power generation groups to encourage private and foreign capital to participate in competition. This can motivate more and more investors to look to the future and hold power stations for a long time.

5. Clearly implement detailed rules to promote the improvement of business models. There are still many details about the policies and regulations on photovoltaic power plants. Details such as the duration of the subsidy, distribution rules, and land issues need to be clarified as soon as possible.

Capitalization of the photovoltaic industry

Capitalization includes two important aspects, one is to solve the problems of the industry's early investment, and the other is to solve the problems of long-term financing of enterprises and projects.

In response to the first question, we make the following suggestions:

1. Improve the priority of photovoltaic companies in the capital market. It is recommended to establish a fast track for renewable energy power generation enterprises so that they can get certain priority in financing channels such as listing and bond issuance, which can solve the capital needs of enterprises to become larger and stronger.

2. Open the door for large investment funds to enter the photovoltaic market. In foreign countries, large-scale funds such as pensions and insurance that prefer long-term and stable returns hold photovoltaic power plants.

3. Open foreign capital window. At present, it is very difficult for foreign capital to enter the domestic photovoltaic market, which has also delayed the development of the domestic photovoltaic power generation industry to a certain extent. Therefore, due consideration can be given to liberalizing restrictions on the capital market and strengthening the orientation of capital liquidity.

4. Consider tax refund policies and encourage private capital. According to the US bill, 30% of the investment in photovoltaic power generation can receive government cash subsidies. For this reason, a large amount of capital has poured into the residential photovoltaic and utility photovoltaic markets, and the situation of full bloom has promoted the good development of the photovoltaic market in the United States. In this regard, China can also learn from the mature model of the United States and attract high-quality investors to enter the photovoltaic market through tax refund policies.

In solving the long-term financing of enterprises and projects, there are two ways to start:

1. Reduce the threshold for commercial banks to enter the photovoltaic power generation market. At present, China's general commercial banks can only provide loans for up to 5 years, and the longest operating period of photovoltaic power plants is 25 years, which is a major bottleneck for the development of clean energy.

2. Interest subsidies to guide capital entry. Interest subsidies can be used to reduce financing costs and allow private capital and funds to enter the renewable energy sector.