7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

1/20

Financing Mechanisms for Solar PVDistribution in China

Wang Sicheng Energy Research Institute, NDRC

June 7, 2012 Manila

Strategies for FinancingSmall-Scale Solar Power Plants

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

2/20

Sectors of PV Utilization

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

3/20

Rural Electrification

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

4/20

Industry&

Commun.

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

5/20

Solar Products

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

6/20

PV Buildings

BIPV&BAPV

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

7/20

LS-PV in Gobi - Desert

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

8/20

The largest PV power plant in the world, 2011-10-29

200MW PV Power Plant by Yellow-River Hydropower

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

9/20

Cost Reduction of PV in Last 6 Years Year 2007 2008 2009 2010 2011 2012

Cumulative Installation GWp 0.10 0.14 0.30 0.80 3.30 8.30

Module Price Yuan/Wp 36.0 30.0 19.0 13.0 9.0 6.0System Price Yuan/Wp 60.0 50.0 35.0 25.0 17.5 12.0

Lifetime of PV Module Year 20 25 25 30 30 >30

Reasonable Tariff of PV(Yuan/kWh)

3.20 3.00 2.50 2.00 1.15 1.00

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2007 2008 2009 2010 2011 2012

Year

A v e r a g e

S e l l i n g

P r i c e

( Y u a n /

W p

Module Price System Price

83% of PV moduleprice has beenreduced during last6 years;

80% of PV systemprice has beenreduced during last6 years.

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

10/20

Cost of PV is still higher than other RE

Power Source Capital Cost (Yuan/kW) Tariff (Yuan/kWh)

Coal-Fire Power 4000-5000 0.35-0.45

Gas Power 4500 0.50-0.60

Nuclear Power 12000-15000 0.40-0.50

Wind Power 6000 0.51-0.61

Biomass Power 6000 0.60-0.70

Solar PV 12000 1.00-1.30

1. The reasonable tariff of PV still higher than other powersources (nearly double), so subsidy is requiredcurrently.

2. So, financing mechanism is very important.

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

11/20

Incentives for PV Rural Electrification

1. PV Supply for Remote Villages

70 - 100% of capital investment financed by centraland local government (poverty alleviation);The left cost will be born by project developer andallow to charge tariff to the end users;For centralized village power systems, governmentprovide 4000 Yuan/kW per year to subsidy batteryreplacement and afterword services.

2. Solar Home Systems50 - 70% of capital investment financed by centralgovernment and the left is born by end users;The afterward service and replacement of batteryneed to be paid by the end users after warrantee

period.

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

12/20

Solar Home Systems

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

13/20Centralized PV Station for Villages

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

14/20The Tibetan Kids and PV Plant

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

15/20

Who will finance battery replacement forcentralized PV stations?

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

16/20

Solution for Rural Electrification SHS:

All barriers relative with SHS, cost and quality, even

afterward services, can be removed by commercial way . Government needs to give support mainly in quality

control, training and establishing service networks .

Village Power System: Government should give financial support not only to

capital investment but also to the afterward service andbattery replacement.

RESCO is needed and to be selected to take charge ofafterward services and technology support for at least 15years .

EPC Co. and RESCO should be bound together and beselected through bidding . RESCO shall be responsiblefor not only system installation and also afterward service .

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

17/20

PV Market in China (2004-2011)

0

5001000

1500

2000

2500

3000

2007 2008 2009 2010 2011

Year

I n s t a l

l e d P V ( M W

off-grid PVgrid-tied PV

Year 2004 2005 2006 2007 2008 2009 2010 2011

Off-Grid (MW) 8.8 7.4 9 17.8 19 18 25 20

Grid-Tied (MW) 1.2 1.5 1 2.2 21 142 475 2480 Annual Inst. 10 7.9 10 20 40 160 500 2500

Cumulative (MW) 62.1 70 80 100 140 300 800 3300

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

18/20

Incentive Policies for Grid-Tied RE

22 Billion Yuan per Year 10 Billion Yuan per Year

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

19/20

Financing for Grid-connected PV Projects Grid-connected PV projects will enjoy FIT, but the capital

investment must be borne by project developers. It is

difficult for private companies .The LS-PV power plants usually have capacity largerthan 20MW , the capital investment is at least 200 Million Yuan;Bank should be willing to issue loan to the project

developers if they have PPA with grid-company, butBank needs to be guaranteed if the PV plants canreliably generate electricity for 15-20 years as theydesigned.So, insurance will be the key factor to assure the quality

to the Banks;The evaluation standard for long-term PV powergeneration is the key to persuade Insurance Company .(Technical Evaluation is required : solar resources,design, quality of hardware, quality of construction,degradation, efficiency, etc..)

7/31/2019 Wang Sicheng - Financing Mechanisms for Solar PV Distribution in China

20/20