What is China's policy on solar energy?

Between 2008 and 2013, China’s fledgling solar-electric panel industry dropped world prices by 80 percent, a stunning achievement in a fiercely competitive high-tech market. China had leapfrogged from nursing a tiny, rural-oriented solar program in the 1990s to become the globe’s leader in what may soon be the world’s largest renewable energy source.

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“They fundamentally changed the economics of solar all over the world,” said Amit Ronen, director of the Solar Institute of George Washington University, one of many scholars following the intense competition in the emerging $100 billion industry that supports the world’s growing solar energy demands.

China’s move eclipsed the leadership of the U.S. solar industry, which invented the technology, still holds many of the world’s patents and led the industry for more than three decades. Just how China accomplished that and why it did is still a matter of concern and debate among U.S. experts.

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One clear result is that the U.S. solar industry was hit hard by plunging prices and can no longer supply more than a third of rapidly growing U.S. appetite for solar panels, according to a recent Department of Energy report exploring “opportunities and challenges” of solar manufacturing.

China’s new dominance of nearly all aspects of solar use and manufacturing—markets that are predicted to expand by 13 percent a year, according to the report—came through a “unique, complex and interdependent set of circumstances” that is not likely to be repeated.

But if the United States innovates, cuts costs and nurtures newer technologies, it might emerge as the world’s second largest solar panel manufacturer by 2020, the report concludes.

The timeline of China’s rise began in the late 1990s when Germany, overwhelmed by the domestic response to a government incentive program to promote rooftop solar panels, provided the capital, technology and experts to lure China into making solar panels to meet the German demand.

“The Chinese took it and basically ran with it,” said Donald Chung, one of the authors of the DOE report, who studies the solar industry for DOE’s National Renewable Energy Laboratory in Golden, Colo.

An industry propelled by tax credits

China, according to Chung, had “dabbled” in solar energy only as a source of electricity to help impoverished rural areas remote from its power grid. But then some of its pioneering companies became intrigued by the income that manufacturing solar panels for export to Germany might bring in. When Spain and Italy began their own rapidly expanding solar incentives, adding to the demand, China began scouring the world, hiring more solar experts and shopping for machinery and polysilicon supplies to meet the expected surge of orders for solar panels.

According to some veterans in the U.S. solar industry, China bought solar companies and invited others to move to China, where they found cheap, skilled labor. Instead of paying taxes, they received tax credits.

Chung notes that China’s government was also generous in other ways. Making solar panels is difficult. To make them efficiently, the business requires large, semiautomated factories.

“It is not easy to add small bits of capacity to meet growing demands; you have to add it in big chunks,” he said. He called it a “yo-yo effect” that tends to create more and more capacity. That made solar still more attractive to China.

China’s solar companies have shareholders who want profits, Chung said. But the government “has other constituencies that are demanding jobs and factories to be put up.” That pressure came from provincial and local governments that found, according to DOE, that the federal government was willing to chip in as much as $47 billion to help build its solar manufacturing into what it calls a “strategic industry.”

Expanding renewable energy became one of seven categories of business that receive special attention including loans and tax incentives under China’s five-year plans.

The result was that in building up the world’s largest solar manufacturing industry, one that became the price leader in most aspects of the world’s market—beginning with cheaper solar panels—China had helped create a worldwide glut. There were roughly two panels being made for every one being ordered by an overseas customer.

According to Ronen, the expert from George Washington University, China then decided to follow Germany’s lead again, developing its own “feed-in tariff” that paid handsome prices for electricity generated by rooftop solar. The result was a surge in domestic demand for solar.

The demand was so great that in two years, by 2015, China’s domestic market bypassed Germany’s to be the largest in the world.

China tried to reduce the subsidy this year by setting a deadline for ending it, but that spurred another surge in domestic buying. “China put in 20 gigawatts in the first half of this year. The entire U.S. capacity is around 31 GW. The Chinese market appears enormous,” said Ronen.

‘They think they can wipe out all the competition’

China dominates the solar market in PV installation as well as total installed capacity, with the United States a distant third and fourth, respectively. Photo courtesy of the International Energy Agency.

U.S. experts are divided on where China’s policies on solar energy appear to be headed. Some think it’s a matter of government policies that ran out of control. After spending 30 years in the U.S. solar industry and in DOE watching solar markets, Ken Zweibel has recently retired, but he worries that there may be more to it than that. He calls it “black box economics.”

“If there was ever a situation where the Chinese have put their whole governmental system behind manufacturing, it’s got to be solar modules,” Zweibel said. “I think they think they can wipe out all the competition in the world. It makes all kinds of sense if you have the staying power.”

Wyatt Metzger, a principal scientist at NREL, takes a more benign view. “They have a centralized government and terrible pollution problems. They understand the need to get away from coal and to invest in clean energy,” he said.

Whatever the reasoning was behind China’s massive investment in solar module manufacturing, the impact on its U.S. competitors has not been benign. SunEdison of Belmont, Calif., filed for bankruptcy in April. The stocks of two other leading companies, First Solar and SunPower, were in the triple digits a decade ago. Now they are treading water, floating between 13 and 6 percent of their former values.

“[W]hat’s left of the solar universe is showing severe signs of stress, and given the tricky accounting and the prevalence of China-based companies among the panelmakers, that stress may very well be understated,” wrote Jim Collins in a recent market analysis for Forbesmagazine.

“People tend to view negatively that China has taken over [solar] module market share,” said David Mooney, director of NREL’s strategic energy analysis center. “It would have been better if that capacity had stayed in the U.S.”

“Another side of the coin, from my perspective,” he said, is 250,000 American jobs in the solar panel assembly, installation and maintenance business, many of which wouldn’t have happened without the push from China that dramatically lowered solar module prices.

“Those jobs can’t be outsourced,” he said.

Could China create a global grid?

Moreover, China’s plan for the global growth of the solar market is still a work in progress. In October, Liu Zhenya, former chairman of China’s state-owned power company, State Grid Corp., came to the United Nations to shed more light on his nation’s evolving solar ambitions, which he said are part of a plan aimed at organizing a global power grid that could transmit 80 percent renewable energy by 2050.

He calls his idea the Global Energy Interconnection. His speech invited U.N. support for a new international group to plan and build the grid. It’s called the Global Energy Interconnection Development and Cooperation Organization (GEIDCO), and China has named Liu its chairman. He ticked off the reasons for a global grid that would transmit solar, wind and hydroelectric-generated power from places on Earth where they are abundant to major population centers, where they are often not.

He gave three reasons for his new mission. Expanding energy demands will exhaust coal, oil and natural gas supplies over the next 110 years. Environmental pollution from fossil fuels will exacerbate serious pollution and health problems. And world leaders need a mechanism to cut the world’s greenhouse gas emissions by half to prevent a potential 4-degree-Celsius rise in the Earth’s average temperature, a possibility that Liu called “seriously threatening human survival.”

His grid’s development would take shape in three phases. First, Liu explained, individual nations would redesign their own power electric grids. He noted that China’s effort is already underway, generating 140 GW of wind power and 70 GW of solar power, “more than that of any country of the world.” By completing a network of long-distance, high-voltage direct-current power lines to move renewable power from the north to the south and from the east to the west, China could finish its new grid by 2025, he predicted.

The second phase, Liu described, would be an international effort to build regional grids that would be able to transmit substantially more power across national borders in Northeast and Southeast Asia, between Africa and Eurasia, and between nations in both North and South America. The third phase would build power lines and undersea cables that would connect the regional grids. The upshot would create what he called a “win-win situation” by generating clean electricity in places like Africa and Central America that are among the richest when it comes to sunshine, and selling the clean energy to major cities that have the biggest need for it.

The process would also bring more energy and energy-generating income to poorer nations, to help them develop. “In the Americas, we will speed up the development of Canada’s hydropower and clean energy in southwestern and central U.S. and northern Mexico to be delivered to load [demand] centers in [the] East and West coasts of North America,” he said.

There would be plenty of work for “all global players” to coordinate the effort, to share and innovate new technology, and to develop global standards and rules for cooperation, Liu promised. He closed his U.N. presentation with a glimpse of a future world where a combination of renewable energy, a network of high-voltage direct-current transmission lines and “smart grid” operating systems can serve the planet the way the human “blood-vascular system” serves the human body.

When the global grid is completed, “the world will turn into a peaceful and harmonious global village with sufficient energy, green lands and blue sky,” he predicted.

Just how much harmony China’s GEIDCO proposal might generate remains to be seen, but a U.N. press release noted that the meeting was attended by representatives of 70 organizations, including government organizations, businesses and universities. The U.S. delegation included people from DOE’s Argonne National Laboratory and Stanford University. During his visit to the United States, Liu also met separately with representatives of the Electric Power Research Institute, which serves American utilities.

Reprinted from ClimateWire with permission from E&E News. E&E provides daily coverage of essential energy and environmental news at www.eenews.net.

Cumulative installed PV capacity in gigawatts since 2007

China is the largest market in the world for both photovoltaics and solar thermal energy. China's photovoltaic industry began by making panels for satellites, and transitioned to the manufacture of domestic panels in the late 1990s.[1] After substantial government incentives were introduced in 2011, China's solar power market grew dramatically: the country became the world's leading installer of photovoltaics in 2013. China surpassed Germany as the world's largest producer of photovoltaic energy in 2015,[2][3] and became the first country to have over 100 GW of total installed photovoltaic capacity in 2017.[4]

At the end of 2020, China's total installed photovoltaic capacity was 253 GW, accounting for one-third of the world's total installed photovoltaic capacity (760.4 GW).[5] Most of China's solar power is generated within its western provinces and is transferred to other regions of the country. In 2011, China owned the largest solar power plant in the world at the time, the Huanghe Hydropower Golmud Solar Park, which had a photovoltaic capacity of 200 MW. In 2018, it held the record again with the Tengger Desert Solar Park with its photovoltaic capacity of 1.5 GW. China currently owns the second-largest solar plant in the world, the Huanghe Hydropower Hainan Solar Park, which has a capacity of 2.2 GW.[6] In 2023, China completed the world's largest hydro-solar power plant in Sichuan, which utilises the consistency in hydropower production to offset the variability in solar power.[7][8]

Solar power contributes to a small portion of China's total energy use, accounting for 3.5% of China's total energy capacity in 2020.[9] Chinese President Xi Jinping announced at the 2020 Climate Ambition Summit that China plans to have 1,200 GW of combined solar and wind energy capacity by 2030.[10]

Solar water heating is also extensively implemented, with a total installed capacity of 290 GWth at the end of 2014, representing about 70% of world's total installed solar thermal capacity.[11][12]

The expansion of the solar sector in China has been criticized due to the large quantities of waste being produced and improperly disposed of from the production of photovoltaic cells.[13] Criticism over large amounts of unused energy being produced has appeared along with criticism over the forced removal of native populations for development land and the usage of forced labor in the production of photovoltaic cells.[14][15][16]

As of at least 2023, solar power is cheaper than coal-fired power in China.[17]: 167  By the first quarter of 2024, the momentum continued with China installing 45.7 gigawatts of photovoltaic panels, a 34% increase from the previous year. This reflects ongoing growth, although the increase was less than the 154% surge seen in early 2023, showing some variability in expansion rates.[18]

History

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Photovoltaic research in China began in 1958 with the development of China's first piece of monocrystalline silicon. Research continued with the development of solar cells for space satellites in 1968. The Institute of Semiconductors of the Chinese Academy of Sciences led this research for a year, stopping after batteries failed to operate. Other research institutions continued the development and research of solar cells for Dongfanghong satellites. In 1975, domestic solar cell production began with factories in Ningbo and Kaifeng. These cells were produced in a similar fashion to the satellite cells of the past.[1] Annual solar capacity installations were still low, as only 0.5 kW of photovoltaic capacity was installed. This increased to 8 kW in 1980, 70 kW in 1985, 500 kW in 1990, and 1550 kW in 1995.[19]

China's Sixth Five-Year Plan (1981-1985) was the first to address government policy support for solar PV panel manufacturing.[20]: 34  Policy support for solar panel manufacturing has been a part of every Five-Year Plan since.[20]: 34 

In the early 1990s, Tsinghua University scientists developed a new type of evacuated tube solar water heater design.[21]: 409  These units became ubiquitous in rural China during the early 2000s. By 2014, China had more than 85 million solar water heaters, primarily operating in rural households.[21]: 409 

In 1998, demonstration projects for solar energy production began to appear, starting with a 3W polysilicon battery and applications for the energy. Yingli became one of the first producers of this new solar energy. However, annual capacity did not increase much until 2002 when a 10 MW solar cell production line was put into operation by Suntech Power.[1] That year, a program aimed to install more solar and wind energy in Tibet, Xinjiang, Qinghai, Gansu, Inner Mongolia, Shanxi, and Sichuan was introduced by the National Development and Planning Commission. This spurred solar cell production and annual installations skyrocketed from 3.3 MW in 2000 to 20.3 MW in 2002. Photovoltaic cell production expanded in the following years, with 140 MW manufactured in 2005. Only 5 MW of solar energy was installed in China that year, however, as most of the manufactured photovoltaic cells were sold to European countries, with Germany being the largest buyer. China's annual solar energy installations grew to 10 MW installed in 2006, increasing China's total installed solar energy capacity to 80 MW.[19] Annual solar energy installations continued to grow, with 20 MW of capacity installed in 2007 and 40 MW installed in 2008.

In 2007, the National Development and Reform Commission planned to have China's solar capacity increase to 1,800 MW by 2020. However, according to Wang Zhongying, the head of the National Development and Reform Commission's renewable energy development, stated that China would far exceed this goal, predicting that at least 10 GW can be installed by 2020, with 20 GW of installed capacity within the realm of possibility. Despite these predictions, solar energy accounted for only a small fraction of China's total installed energy in 2008.[22]

The global financial crisis of 2007-2008 prompted significant stimulus efforts by China to invigorate its then-struggling solar industry.[20]: 34 

In 2011, feed-in-tariffs for solar power projects completed before a certain deadline were introduced. These feed-in tariffs were extremely successful at expanding China's solar power sector, largely exceeding the Chinese government's expectations for growth.[23] The Huanghe Hydropower Golmud Solar Park was also completed in 2011 in Golmud, a county-level city in Qinghai province.[23][24] The solar park contains 200 MW of installed photovoltaic capacity and was the largest individual solar plant in the world on its completion.[25] Other solar parks such as the 20 MW Qinghai Golmud Solar Park were also installed in Golmud, with 570 MW of capacity installed in total at the end of 2011.[26]

The Chinese PV production system faced severe external shocks since 2010. A sharp recession in the global demand due to institutional alterations in the German market in 2010, followed by anti-dumping duties and anti-subsidy countervailing duties on Chinese PV products enforced in both USA and EU.[27] Chinese PV manufacturers, which were already running at full capacity, faced a difficult situation in 2011 and 2012 with huge financial losses that led to the bankruptcy of some important companies, such as Suntech Power in 2013 which defaulted on $541 million of convertible bonds.[27] To rescue the huge PV industry with its large labor market and assets, a comprehensive set of policies was introduced by the Chinese government mainly to stimulate the domestic market. Accordingly, the annual installed capacity in China experienced notable growth since 2011. This growth was mainly due to the construction of several PV power plants around the country.

In May 2011, the National People's Congress (NPC) revised the solar target again, setting 5 GW as an official minimum PV target for 2015, with a longer-term target of 20–30 GW by 2020.[28] According to a 2012 forecast by the European Photovoltaic Industry Association, the total installed capacity was predicted to reach between 47 GW and 66 GW by 2017.[29]: p. 35 

In 2014, the National Development and Reform Commission increased the solar capacity target to 70 GW by 2017.[30] The National Energy Administration also announced plans to install 100 GW of solar power along with other renewable energy sources and nuclear energy by 2020 in 2014.[31] However, market analysts expected for 110 GW to be installed by 2018 and that by 2020, more solar energy could be installed than planned.[32] In 2015, the solar capacity target was initially planned to be 15 GW but was increased in March 2015 by the National Energy Administration to 17.8 GW of installed solar capacity for the year.[33] This target was increased again to 23.1 GW in October, a very ambitious goal considering that the annual solar energy installations for the entire world in 2010 were less than 20 GW.[32] Despite these ambitious goals, China only 7.73 GW of solar energy in the first half of 2015.[34] By the end of 2015, China installed 15.1 GW of solar energy, failing to meet both of the raised goals, but meeting the original goal.[32] The plan for annual solar capacity for 2020 was also increased in October 2015 to 150 GW.[35]

A 50 MW photovoltaic solar power station built in Shanxi Province in 2017

In 2016, China added 34.5 GW of solar energy.[36] The first 105 GW solar capacity by 2020 goal set by Chinese authorities was met in July 2017. In the first nine months of 2017, China saw 43 GW of solar energy installed in the first nine months of the year and saw a total of 52.8 GW of solar energy installed for the entire year.[4] 2017 is currently the year with the largest addition of solar energy capacity in China. China's total photovoltaic energy capacity at the end of 2017 was 130 GW, surpassing Germany as the world's largest producer of solar energy.[37] In 2018, China saw a decrease in annual solar energy, dropping down to 44.4 GW. In 2019, annual solar energy installation further dropped to 30.1 GW, even lower than the installations made in 2016.[38] This decline in growth is attributed to the Chinese government restructuring government incentives to start solar energy projects in May 2018. Despite this decline in growth, China remained the largest market for solar energy with 205 GW total installed capacity in 2019, which was almost as much as the total installed capacity in the European Union (132 GW) and the United States (76 GW) combined.[39] However, from all of the total energy produced by China in 2019, only 3.9% of that energy was produced by solar energy. This was lower than the percent energy production from solar power of the European Union (4.9%) but greater than the percent share in the United States (2.8%).[39]

In 2020, China saw an increase in annual solar energy installations with 48.4 GW of solar energy capacity being added, accounting for 3.5% of China's energy capacity that year. 2020 is currently the year with the second-largest addition of solar energy capacity in China's history. Combined with wind energy, almost 10% of China's energy came from non-hydroelectric renewable power in 2020.[40] China's total photovoltaic energy capacity at the end of 2020 was 252.5 GW.[9] China has stated that it aims to increase the energy share of solar and wind energy to 11% by the end of 2021. Renewable energy subsidies for 2021 for increased, with subsidies for solar power having increased more than subsidies for wind energy.[40] The Huanghe Hydropower Hainan Solar Park was also completed in 2020 in Hainan Tibetan Autonomous Prefecture in Qinghai Province. The solar park has an installed capacity of 2.2 GW, making it the second-largest solar plant in the world as of 2021, behind the Bhadla Solar Park in India. The solar plant is connected to the world's first ultra-high voltage power line which gets all of its power from renewable energy and is capable of transferring power over 1000 km. The solar plant is planned to expand to a photovoltaic capacity of 10 GW.[6][41]

At the Climate Ambition Summit in 2020, Xi Jinping announced that China planned to have 1,200 GW of solar and wind energy capacity by 2030.[10]

Between first 6 months of 2022, China built nearly 31GW of new solar power capacity, which up 137% compared to a years before. It expected the full-year installations would hit a record high.[42] China added a total of 87.41 GW of solar in 2022, up 62% from the year before.[43]

Because solar works well as a distributed power source, recent Chinese policies have focused on increasing the prevalence of distributed solar energy and for developing systems so that electricity from solar energy can be used at its point of generation instead of transmitted over long distances.[20]: 34 

Solar resources

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Global Horizontal Irradiation in China.[44]

A July 2019 report found that local air pollution (black carbon and sulfur dioxide) has decreased the available solar energy that can be harnessed today by up to 15% compared to the 1960s.[45]

Solar photovoltaics

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Photovoltaics Year Capacity (MW) Installed/yr 1999 16 2000 19 3 2001 23.5 4.5 2002 42 8.5 2003 52 10 2004 62 10 2005 70 8 2006 80 10 2007 100 20 2008 140 40 2009 300 160 2010 800 500 2011 3,300 2,500 2012 4,198 898 2013 16,137 12,119 2014 28,050 11,733 2015 43,180 15,130 2016 77,420 34,240 2017 130,200 52,780 2018 174,460 44,260 2019 204,680 30,220 2020 253,430 48,750 2021 306,560 53,130 2022 392,610 87,410 Sources: IEA for years up to and incl 2011;[46][47] China National Energy Administration for data from 2012 onwards[48][49][50][51][52][53][54][55][56]

Solar PV by province

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A large part of the solar power capacity installed in China is in the form of large PV power plants in the west of the country, an area much less populated than the eastern part but with better solar resources and available land.

Solar PV by type

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PV installations by sector, 2018[61] Sector Annual MW Cumulative MW Power Plant 23,300 123,730 Distributed 20,960 51,250 Off-grid 360 Total 44,260 175,340

In 2018 23,300 MW of utility scale power plant installations were added bring the cumulative total in this sector to 123,730 MW of power. Distributed installations rose by almost as much during 2018 at 20,960 MW bringing the cumulative total in the sector to 51,250 MW by year end 2018. Off-grid solar was the smallest component in 2018 with just 360 MW cumulatively installed.

Manufacturers

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Data on the world's largest solar PV producers, including China, Taiwan, US, Japan, and Germany

China has been the world's largest manufacturer of solar panels since 2008 and, since 2011, has produced the majority of global photovoltaics on an annualized basis.[62] Industry projections estimated that, by the end of 2017, China would have enough manufacturing capacity to produce 51 GW of PV modules per year, an amount over twice as large as 2010's global production of 24 GW.[63][64]

The industry is dominated by several major manufacturers. They include CHINT Group Corporation, JA Solar Holdings, Jinniu Energy, Suntech Power, Yingli, China Sunergy and Hanwha SolarOne.[65][66] Large debt challenges several manufacturers.[67]

Concentrated solar power

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The China Energy Engineering Corporation 50 MW Hami power tower has 8 hours of molten-salt storage

Solar resource

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China has large potential for concentrated solar power (CSP), especially in the south-western part of the country.[68] The highest daily mean values of direct normal radiation are found in the Qinghai-Tibet Plateau and Sichuan Basin, at 9 kWh/m2. Most of northern and western China has daily average direct normal radiation over 5 kWh/m2, considered the limit for economical use of CSP.[68] Practical limitations for deployment of CSP include mountainous terrain and distance from energy load centers, mostly concentrated in the east.[68]

Public policy

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The 12th five-year plan, for 2011 to 2015, called for the installation of 1,000 MW by 2015, and 3,000 MW of CSP plants by 2020. However, at the end of 2014, only several demonstration stations were operational in the country.[68] In the subsequent 13th five-year plan a demonstration batch for 20 CSP plants for 1.35 GW was launched, which aimed to bring latest international technologies to China and build a domestic CSP industry. Plants were located in different provinces and used several different routes, including parabolic trough, central receiver towers and a novel beam-down tower design.[69] The initially target for 2018 could not be met and deadlines were extended multiple times, and the initially planned second batch was canceled. At the end of 2021 the installed capacity stood at 550 MW.[70] Chinese industry has gained considerable experience in the molten-salt storage technology and operating results of the plants are promising and meet their design parameters.[71]

In the current 14th five-year plan there is no federal support for CSP. However, several provinces including Gansu, Qinghai, Xinjian UAR and Jilin have announced CSP projects in the context of the storage and peak shaving legislation. Optimistic assessments suggest that several GW could be built in the next five years [72]

Solar water heating

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Rooftop solar water heaters are ubiquitous in China

New solar hot water installations during 2007, worldwide

China is the leading country for solar water heating capacity in the world, with 290 GWth in operation at the end of 2014, accounting for about 70% of the total world capacity. In terms of capacity per unit of population, China comes 7th in the world with 213 kWth per 1,000 people. Most of the installed capacity (92%) was evacuated tube water heaters.[12]

Effects on the global solar power industry

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The growth of solar power industries worldwide has been rapidly accelerated by the growth of the solar market in China. Chinese-produced photovoltaic cells have made the construction of new solar power projects much cheaper than in previous years. Domestic solar projects have also been heavily subsidized by the Chinese government, allowing for China's solar energy capacity to dramatically soar. As a result, they have become the leading country for solar energy, passing Germany's capacity in 2015.[3] As other countries from around the world look to switch to renewable energy sources, cheap options for solar and wind have become focal points of interest for investments.[73] China's mass production of cheap photovoltaic cells and wind energy have consequently spurred investments in Chinese products from around the world and expanded the construction of solar energy projects worldwide.[74]

Government incentives

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The China Development Bank provided $20 billion of financing to domestic solar manufacturers in 2010.[20]: 1 

In 2011, new feed-in tariffs were promised to potential solar power developers to help drive investments and growth in the solar power market. The government of Qinghai province offered solar projects that were operational before 30 September, 1.15 yuan ($0.18) for each kWh they produced in May 2011. The National Development and Reform Commission offered same-priced subsidies to potential solar power project operators nationwide.[75] These tariffs were not capped. Other subsidies, such as Top Runner and Poverty Alleviation programs, were used in conjunction with feed-in tariffs to help grow the solar power market immensely.[76] These incentives were more successful in garnering attention and investment to the solar power sector than the Chinese government expected. Consequently, the Chinese government has struggled to keep up with these incentives. The government incentives have also contributed to the curtailment of solar energy, as many of the solar projects have been built in northern and western regions of China where there is a low demand for electricity and a lack of infrastructure to transfer energy towards China's main power grid.[14]

In response to the growing problems of the rapidly expanding solar power market and the need to meet promised subsidies, the National Development and Reform Commission announced in May 2018 that solar power subsidies would be slashed and feed-in tariffs would be significantly reduced in favor of an auction-based system.[14] In 2020, the Ministry of Finance of the People's Republic of China slashed the solar energy subsidy budget down to 1.5 billion yuan ($233 million) from 3 billion yuan in 2019. With the auction-based system, companies are to submit subsidies bids for solar power construction projects to the National Energy Administration. Companies that do not partake in competitive bidding must instead accept a largely reduced amount of subsidies for projects that are already in operation while new projects do not receive any subsidies outside of auctions.[77][78] The switch to the auction system and capping of subsidies was designed to alleviate costs of solar subsidies and is attributed to the decline of the growth of the Chinese solar market in 2018 and 2019.[36] However, the auction system has made renewable energy in western provinces cheaper than thermal energy in some cases, with Qinghai observing periods of time in which all of its energy usage was supplied through renewable energy.[79]

China's budget for renewable energy subsidies was increased to 6 billion yuan for 2021, with solar power receiving 3.38 billion yuan.[80] These grants are set to be distributed to 14 provinces, with Inner Mongolia receiving the majority of the funding with 5.10 billion yuan.[81]

Controversy

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Government incentives

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The government subsidies for solar power energy projects have been considered "unsustainable" as the costs of subsidizing a rapidly growing industry are massive and some of China's struggles dealing with the costs have become visible. The renewable energy fund, which is paid by consumers, has a 100 billion yuan deficit[14] while tariff payments have occasionally been paid late.[82] Government subsidies for solar power have also been attributed to over construction, as many solar power projects have been funded by the Chinese government but do not operate at full capacity due to the inability to transfer the full energy capacity from production sites.[14]

Solar cell production pollution

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Chinese green energy companies such as Luoyang Zhonggui High-Technology Co. in Henan have become large producers of polysilicon in response to growing the demand for solar cells. However, polysilicon production produces silicon tetrachloride as a byproduct. Silicon tetrachloride is a poisonous material that can make soil infertile and harm humans if it is not disposed of properly. In developed countries, silicon tetrachloride is recycled and reprocessed, preventing the substance from entering the environment. However, special technology and large amounts of energy are required to reprocess silicon tetrachloride. Chinese green energy companies have not invested in recycling this byproduct, instead opting to lower production costs and dump waste into nearby residential areas. This lack of investment into environmental safety protocols has also been attributed to Chinese factories attempting to open much sooner than it would take normally.[13]

Some solar cells are also made with chemicals such as sulfuric acid and phosphine gas as well as metals such as lead, chromium, and cadmium. These chemicals and metals are toxic to humans through contact and contamination of resources. While many developed countries that produce photovoltaic cells have properly disposed of or repurposed wasted solar cells, many Chinese firms have not adopted the practice recycling solar panels and waste. Non-hazardous materials have also been dumped instead of repurposed, further contributing to waste.[83]

Various protests over solar cell production pollution have been staged. In Zhejiang province, protests over the destruction of fish habitats emerged in September 2011. Hundreds of villagers rioted in the Zhejiang Jinko Solar Co., Ltd. factory, which produces photovoltaic cells and wafers. The factory had previously failed pollution tests in April and that its waste control was inadequate despite warnings from the local environmental protection bureau. The protests occurred over multiple days, in which company property was damaged and destroyed.[84]

Climate change contribution

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China has pledged to peak its carbon emissions by 2030 and has invested into renewable sources of energy, including solar power, to help meet this pledge.[85] China has been opening new plants for solar energy production.[86] Critics of China's climate policy argue that China is not trying to replace fossil fuels with renewable sources of energy, but instead trying to increase the energy capacity of both forms of energy. Although China's solar energy capacity has increased dramatically in recent years, its carbon emissions have risen as well.[87] Consequently, critics have seen China's pledge to peak its carbon emissions as a time window for it to increase its carbon emissions rather than reduce them, with its investments into renewable energy sources such as solar power being used as a coverup for China's plan to continue expanding with fossil fuel-powered production.[88]

The mass government subsidy-fueled construction of solar power plants has also been linked to climate change contribution as mass construction has contributed to increases in carbon emissions while the energy produced by the projects has not been fully used.[88]

Green grabbing

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China's expansion of solar power capacity has been met with criticism over implications of "green grabbing". Critics argue that China has seized land from native populations and repurposed it for its own projects, such as solar farms, using the need to protect the country from climate change as a justification for land seizure. Renewable energy projects, such as solar power plants, have been built in western regions of China where many native nomadic people have had their land taken away. As such, critics argue that investments into renewable energy sources such as solar power are means to increase the power of the central state rather than protect the environment. This argument has been complemented by China's expansion of fossil fuel plants in conjunction with solar energy.[15]

Following claims of China has taken land from rural natives under the guise of climate protection, many rural populations have been encouraged to move to government housing or urban centers. However, as expectations for the arrival of urban citizens have risen, so has the construction of buildings infrastructure projects. This speculation of the growth of urban centers has led to a housing bubble in China, where buildings and infrastructure are being constructed at a rate in which much of the construction is unused or redundant.[89] As these unused buildings and towns are constructed, more carbon emissions are produced due to the usage of cement and other building materials. Thus, China's "green grabbing" has also been criticized by environmentalists who see China's urban expansion as useless and damaging to the environment. The forced movement of rural populations, as critics claim that these rural populations do not receive adequate compensation for removal[90] and face discrimination and a lack of support to thrive in urban centers in contrast to citizens who have lived in urban centers throughout their lives.[91]

Curtailment

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The high amount of government incentives has encouraged the mass development of solar projects, especially in the northern and western regions of China. Consequently, there has been mass investment in energy production in low-population regions where energy usage is relatively low and not enough investment in infrastructure to transfer this produced energy to China's main power grid. This has caused the curtailment of solar energy to which critics point out to argue that many of China's heavy investments in renewable energy are inefficient and will become unsustainable for the country in the future.[14] This inability to transfer energy to regions that require it has led many critics to call for China to invest more into power transfer infrastructure instead of solely energy capacity. Although curtailment rates have lowered since 2016, dropping down from 17% to 7% in 2016, some critics argue that these rates are still too high. Critics have used solar power curtailment as an example to argue for China to change its methods for dealing with the climate crisis as they see that its current efforts are ineffective.[92]

Use of forced labor

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China's production of cheap photovoltaic cells has been the target of a large amount of criticism due to claims of forced labor being used to drive production costs down. Reports of large Chinese solar manufacturing companies using forced labor from Uyghurs of Xinjiang to produce photovoltaic cells have appeared.[93] Reports for forced labor being used to acquire polysilicon, a key component of solar panels, have also emerged. Although the Chinese government claims that the labor used for material acquisition and production is voluntary, reports claim that there is substantial evidence that Uyghur laborers have been coerced to produce solar panels, threatened by internment camps.[94] As the demand for solar power increases due to climate change, the cheap nature of Chinese photovoltaic cells has resulted in China's solar exports growing massively in recent years in spite of the labor used in production. The usage of forced labor in China has only been partially condemned globally, in part due to the fact that many countries depend on China's cheap labor and photovoltaic cells to afford the transition from thermal energy to renewable energy. Since China is responsible for 80% of the world's polysilicon production, with half of the world's polysilicon produced in Xinjiang, many critics of the forced labor usage have stated that it is difficult for many countries to avoid Chinese made solar power solutions. As a result, debates over whether or not solar energy components from China should be used have arisen.[16][95]

U.S. sanctions

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In June 2021, the United States Department of Commerce placed five Chinese solar companies, including Daqo New Energy, on the Bureau of Industry and Security's Entity List.[96] An extensive questionnaire was sent to companies by US Customs and Border Protection in early 2024. The survey indicated Customs taking a strong enforcement approach that will be difficult to answer for small/medium-sized solar companies without stable supply chains.[97]

See also

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References

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