Photovoltaic Viability in China

Over the past 30 years, China has undergone exponential growth unmatched by any other country in a similar compressed time frame. To accommodate such amazing industrialization, China’s electricity generating capacity has been forced to expand rapidly. The source of this expansion has largely been derived from increases in coal fired power plants. The result has been dramatic environmental issues that not only affect China’s continued industrial expansion, but also the health of Chinese citizens.

My project explored the history of China’s electrical expansion via coal fired power plants and the resulting environmental issues. I included a brief summary of alternative energy solutions which could displace coal as a generation source (wind, solar, biomass and hydro). I didn’t include nuclear as that technology is still in its infancy in China. The focus of my paper was on photovoltaic generation as an alternative source of electricity generation. I found that there had been two main barriers for photovoltaic to naturally grow (without government assistance via policy) in China – the low cost of subsidized coal electricity and the location of good solar intensity (east) and population density (west). Although China is currently the 3rd largest manufacturer of photovoltaic panels, approximately 90% of the panels are exported from the country – very little of the panels are retained for domestic generation.

My recommendation was that the Chinese government should pursue policy actions that will incentivize growth in photovoltaic generation in China. China can implement this policy using a number of different vehicles (RPS, feed-in tariffs, tax credits, subsidies, direct investment, etc). The best vehicles will be to use a feed-in tariff in addition to direct funding of photovoltaic projects. This would include building a pilot plant in the western part of the country to assess the viability of photovoltaic generation for long distance transmission. Further, the government should help domestic Chinese solar manufacturers be more competitive in solar technology by increasing IP protection and by direct R&D grants. By increasing the amount of photovoltaic generation in China, the country will experience decreased reliance on goal generated electricity which will benefit the environment. Further, by stimulating the growth in photovoltaic generation, the Chinese economy would be benefited.