Is solar power supply in China's cities cheaper than grid power?

Is solar power supply in China's cities cheaper than grid power?

Recent studies have shown that distributed solar energy can provide lower electricity prices than fossil energy generation in many cities in China.

Although solar energy is more low-carbon, it is often considered more expensive than fossil energy. However, according to a recently published study, in many cities in China, solar energy can provide lower electricity prices than fossil fuels without subsidies. The research team believes that with the rapid growth of China's electricity demand and the advancement of clean energy technologies, renewable energy investment will become more attractive. However, some experts and enterprise power users believe that the practical obstacles facing solar power still need to be solved.

Cheaper solar energy

Grid parity – the unsubsidized total cost of renewable energy is equal to the cost of fossil fuels, even lower than the cost of fossil fuels – is considered a key turning point in renewable energy expansion, marking a theoretically more investment flow to clean energy and technology.

According to the latest research published in the journal Nature and Energy, the research team of the Royal Institute of Technology in Sweden calculated the power generation price of megawatt-scale distributed photovoltaic power generation projects in 344 cities in China from the user side and the power generation side, respectively. The electricity price of the urban grid is compared with the local desulfurized coal price (that is, the electricity price sold by the coal-fired power company to the grid company). Among them, the urban grid electricity price is the user side electricity price, including power generation cost, transmission and distribution cost, enterprise profit, government funds, and surcharges; the power generation side electricity price includes power generation cost and power plant profit rate.

The study found that even in the absence of state subsidies (and their expected distortions), on the user side, the total solar cost of all 344 research cities is lower than the city's electricity price; In 76 cities (22%), solar power generation prices are flat or lower than coal-fired power plants.

Studies have shown that investments in renewable energy will not only be “moral choices” for climate and environmental concerns, but also for legitimate considerations of economic interest.

The study also pointed out that there are differences in price competitiveness between different cities, mainly due to the solar radiation level of each city, the on-grid price of desulfurization coal-fired coal, the price of the electricity market and the investment cost of photovoltaic system.

However, in addition to technical factors, there are still many objective conditions that restrict the competitiveness of solar power generation in the electricity market. Tao Ye, deputy director of the Renewable Energy Development Center of the Energy Research Institute of the National Development and Reform Commission, believes that some of the conditions in the theoretical economic measurement are uncertain. Under the current power market environment, coal-fired power and renewable energy have competition in the acquisition of market space, and coal-fired power has the ability to further reduce the price of online. In addition, non-technical costs such as land and roof acquisition may also increase photovoltaic power generation costs.

Support policies to promote photovoltaic development

The initial goal of China's solar energy industry development is mainly to face the rural areas and popularize power supply and poverty alleviation in remote areas. After 30 years of development, today's solar energy industry in China has grown to more than double the photovoltaic panels of any other country. The rapid decline in marginal cost is largely due to government support policies for the photovoltaic industry. According to statistics, since 2000, the Chinese government has introduced more than 100 policies to support the photovoltaic industry.

For example, in 2013 and 2014, the State Grid and the National Energy Administration introduced support policies for distributed solar energy, which cleared some of the institutional barriers for the generation and development of small-scale solar power generators. At the same time, the subsidy policy for photovoltaic power generation is also very powerful: for centralized photovoltaic power plants, the part of the on-grid electricity price higher than the coal-fired electricity price is subsidized by the national renewable energy development fund, and the distributed electricity is fully charged. subsidy. With the support of substantial financial subsidies, photovoltaic power generation has achieved a surge in installed capacity in a shorter period of time. In 2011, China's cumulative PV installed capacity was 6.02GW, and the cumulative installed capacity in 2014 was 26.52GW. By the end of 2018, the cumulative installed capacity has exceeded 170GW, of which distributed PV installed accounts for about 29%.

However, continuous government subsidies have also created a market of “excessive prosperity”, and speculators who have spawned “fraud subsidies” in the early days have entered the photovoltaic industry.

In 2018, under the background of the central renewable energy power generation subsidy exceeding 100 billion yuan, the Chinese government has greatly reduced the subsidies to the solar industry, which has brought a great shock to the industry, but this shock has also promoted the independence of the industry. growing up. Tao Ye said, “20% of the new PV projects in 2019 achieved parity or low prices, and this target is expected to exceed 35% in 2020”. With the large-scale centralized solar power project in the western region facing a difficult situation, the construction of distributed photovoltaic projects closer to the power consumption center in the developed eastern region has become a new trend. In 2017 alone, China's new distributed PV installations reached 19.44GW, the sum of the previous three years.

Realistic bottleneck

The volatility and instability of renewable energy generation is considered to be one of the bottlenecks that have long plagued the industry. However, Zhang Shuwei, director of the Zall's Environment (Beijing) Research Center and chief energy economist, believes that this is not the reason why the grid refuses to consume renewable energy, because the development of renewable energy has never been for system balance purposes, but to reduce emissions; In addition, the role of the grid is to deal with various fluctuations and uncertainties. The key to the problem is whether the solution is more cost-effective and whether it is the lowest cost option.

Land resources are another bottleneck limiting the expansion of the solar industry. Therefore, distributed photovoltaic projects using rooftop resources are considered to have great potential and can save a lot of cost for enterprises, especially for power-hungry technology parks, industrial enterprises, and data centers with high power consumption in recent years. Wait. However, in reality, it is not smooth to promote rooftop photovoltaic power generation due to policy influence. For example, the property rights of Chinese urban roofs are often unclear, and enterprises have difficulty in obtaining roof resources.

Another obstacle to limiting the development of renewable energy generation is the lack of voice for business users. Traditionally, companies using electricity that is uniformly delivered by grid companies cannot determine the source of electricity themselves.