China is expected to add a record 125 GWp solar capacity this year, 5x the next biggest player (US) and up 44% over capacity addition in 2022, which itself was up 64% over the previous year. Total solar capacity is expected to cross 500 GWp by the end of this year, ahead of national target. The country has become a giant on the international solar scene with some staggering statistics:
In December 2022 alone, it added 21 GWp solar capacity, more than what any other country added in the whole year and 1.3x India’s capacity addition in 2022.
Distributed solar, comprising rooftop and small ground-mounted projects, contributed a massive 63% share (55 GWp) in new capacity addition in 2022.
It produced 827,000 MT polysilicon (up 64% YOY), 357 GW wafers (57%), 318 GW cells (61%) and 289 GW modules (59%) last year accounting for about 80-95% of global production.
Total solar exports comprising 154 GW modules (up 42% YOY), 24 GW cells (220%) and 41 GW wafers (41%) touched a record high of USD 52 billion in 2022.
Figure: Solar capacity addition and module production in China, GW
Source: PVTime, BRIDGE TO INDIA research
Back in 2009, China identified solar as one of ten emerging industrial sectors where it wanted to achieve global leadership. The country has strategically marshalled resources, implemented policies across different arms of the government and ploughed massive capital in R&D and new industrial bases. The national government sets growth targets through five year plans, wherein the current plan envisages increasing share of renewables (ex-hydro) in consumption from 11.4% in 2020 to 18% by 2025. The targets are considered sacrosanct and often realised ahead of time.
The government has brought in key policy changes to overcome emerging constraints in the sector. Capacity addition was historically incentivised with attractive feed-in-tariffs but an accumulation of unpaid subsidies drove a move to market determined prices in August 2021. When meeting enormous land and transmission infrastructure requirements of the sector became a problem, the government took initiatives like locating projects in desert areas and pivot to distributed renewables. Under the Whole County Rooftop Solar scheme, large developers are allocated whole counties with targets to cover a certain percentage of rooftops within a set timeline. Another initiative involves aggregation of demand by regional players and sale of bulk project development rights to large developers, typically state-owned enterprises.
The government has played a critical role in developing domestic technology expertise by subsidising R&D and offering incentives to both manufacturers and project developers. The hugely successful Top Runner programme with tariff subsidies for higher efficiency modules is credited with accelerated shift from multi-crystalline PV to mono-PERC. Now, many provincial governments have mandated use of storage in new projects to address solar’s intermittency concerns.
It helps that China has an absolutist government style that can cut through bureaucracy and override public opinion. No other country can match it on speed of decision making, execution or huge size of the domestic market – share of solar in total power generation capacity and total power generation is still only 15% (16% in India) and 3% (5%) respectively. Despite emphatic efforts and willingness to bear a heavy financial burden, other countries are struggling to reduce their dependence on Chinese manufacturing. But China’s long-term vision and extensive use of state support with special focus on scale and technology still offer useful lessons for Indian policy makers.
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