In this article, we explore the recent policy updates regarding photovoltaic (PV) power generation in China. The government has introduced a revised pricing mechanism to better support the growth of the solar energy sector and ensure its long-term sustainability. This decision aligns with the "State Council’s Opinions on Promoting Healthy Development of the Photovoltaic Industry" (Guofa [2013] No. 24), aiming to leverage price signals to guide resource allocation more efficiently.
Under the new framework, the national PV power station benchmark on-grid tariffs have been categorized into three different levels based on solar resource availability and construction costs. Each region will now have a tailored tariff that reflects its specific conditions. Additionally, the on-grid prices for PV power stations are set higher than those of local coal-fired units, with the difference being covered by renewable energy development funds.
For distributed PV systems, a full power subsidy policy is now in place. The electricity subsidy rate is set at 0.42 yuan per kilowatt-hour (inclusive of tax), which is paid through the renewable energy fund and managed by grid companies. Moreover, any excess electricity generated can be fed back into the grid, with the grid company purchasing it at the same rate as coal-fired plants.
Importantly, all additional fees, such as surcharges and system capacity charges, related to self-consumption of distributed PV systems will no longer apply. This helps reduce the overall cost burden on PV system owners.
The time-based benchmark on-grid tariff policy applies to projects approved after September 1, 2013, while those approved before that date are subject to different rules. Projects starting operations after January 1, 2014, must follow the updated tariff standards. The subsidy regime also excludes projects already receiving central government investment support.
Other key provisions include compliance with national renewable energy plans, adherence to investment approval procedures, and a 20-year tariff guarantee from project start-up. Over time, the government will gradually lower on-grid tariffs and subsidies to encourage technological innovation, reduce costs, and improve market competitiveness.
Bidding and competitive selection methods are encouraged to determine tariffs or subsidies, but they cannot exceed the national benchmarks. Grid companies are required to provide timely grid connection services, metering, and settlement processes. They must also accurately measure and report the amount of electricity generated and fed into the grid.
Both PV enterprises and grid companies must maintain accurate records of electricity usage, settlements, and subsidies, and be prepared for regulatory oversight. Any fraudulent activity or price violations will be investigated.
Finally, local pricing authorities are tasked with ensuring proper implementation of the PV pricing policies, maintaining transparency, and supporting the sustainable development of the solar industry.
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