Distributed photovoltaic power stations
Distributed photovoltaic power stations
Business Model Description
Distributed photovoltaic power stations make use of distributed resources. The stations are located close to users, converting solar energy into electrical power with a small installed capacity. The major profit model is "self-generation of power for self-use and access of surplus electricity quantity to power grids". The income comes from the on-grid price, while the cost includes device expense, maintenance, depreciation, etc.
Expected Impact
Distributed PV systems can reutilize idle resources; corporate carbon emissions can be reduced, and the strain on power load can be relieved. Meanwhile, people can access cheap green electricity.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Shaanxi
- China: Shandong
- China: Gansu
- China: Ningxia
- China: Guizhou
Sector Classification
Renewable Resources and Alternative Energy
China's current energy structure dominated by fossil energy. Fossil energy resources are limited and can release large amounts of carbon dioxide when burt, accelerating global climate change and extreme weather events. Thus, renewable energy is crucial to China's green transformation.
The proportion of non-fossil energy in total energy consumption should be increased to about 20%. State Council's action plan for carbon peaking stated that wind and solar power generation, biomass power generation and heating should be developed. By 2030, the total installed generation capacity of wind and solar power will reach above 1200 gigawatts. (1)
Renewable energy employs about 32% women, compared to 22% in the energy sector. (2)
The IOAs in the renewable energy sector center around the utilization of solar energy, wind energy, and biomass energy.
The energy endowment and demand follow the contrastive distribution. Hydropower generation is centralized in southwest China, while wind and solar energy are centralized in northern China, which is far away from the centers of consumption in the eastern and coastal areas. Instable renewable energy makes consumption and stable operation of the grid challenging.
Alternative Energy
Solar energy is an important renewable energy source in China. With dramatic cost reduction, China is gradually phasing out subsidy for solar project, posing pressure for PV industry's further development. (3)
China's Energy Work Guidance has set a goal that photovoltaic power generation share in total electricity consumption to reach 11% in 2021. In addition, it highlight the need to further improve the utilization efficiency and the utilization rate of renewable energy including solar power. (4)
A large number of PV power stations are built on barren lands such as western China gobi deserts. The PV panels can reduce evaporation and thus maintain soil moisture. Its ecological restoration effect is remarkable — take lands in Qinghai and Inner Mongolia as examples — they have become suitable for the growth of grassland plants or even crop production. (5)
IOAs in the PV sector center around the application of cells and PV modules.
The intermittent nature of solar energy makes it hard to be fully utilized (6)
Solar Technology and Project Developers
Pipeline Opportunity
Distributed photovoltaic power stations
Distributed photovoltaic power stations make use of distributed resources. The stations are located close to users, converting solar energy into electrical power with a small installed capacity. The major profit model is "self-generation of power for self-use and access of surplus electricity quantity to power grids". The income comes from the on-grid price, while the cost includes device expense, maintenance, depreciation, etc.
Business Case
Market Size and Environment
> 25%
New distributed PV capacity in China from 2022-2025 will be 176GW. (12)
From 2016 to 2021, the installed capacity of new domestic distributed photovoltaics increased from 4.24GW to 29GW, with the cumulative installed capacity increasing from 10.32GW to 107GW. The five-year cumulative CAGR is 60%. (12)
During the 13th Five-Year Plan period, China's total installed capacity of distributed PV power station was 72.3GW. The amount is expected to be about 26GW in 2021, and will increase to 40GW in 2022, with a year-on-year growth rate of over 50%. The total installed capacity is expected to exceed 250GW during the 14th Five-Year Plan period, with an average annual increase of over 50GW. (25)
Indicative Return
5% - 10%
> 25%
IRR of BAPV for industrial and commercial in 87%/63% of the provinces and municipalities is not less than 6%. IRR of distributed PV for households in 90%/76% of the provinces and municipalities is estimated to be lower than 6%. (12)
In 2020, the gross margin of Zhejiang Sunoren Solar Technology's photovoltaic power generation business was 61.24%. (7) (13) In 2020, the gross margin of Jinko Power Technology's photovoltaic power generation operation business was 55.11%. (10)
Jiangsu Linyang Energy Co., Ltd.: The company operates various types of distributed PV power stations (over 1.6GW), and has accumulated rich experience in the R&D, development, construction, and operation of PV power stations. In 2020, the gross margin of its photovoltaic business was 41.52%. (11)
Investment Timeframe
Medium Term (5–10 years)
Zhejiang Sunoren Solar Technology Co., Ltd.: The total investment of the 100MW distributed PV power generation project in Haining, Zhejiang Province, is 650 million yuan, with a construction period of 2 years and a payback period of 7.50 years. (7)
The total investment of Tongxiang Kelian New Energy's 30MW distributed PV power generation project is 190 million yuan, with a construction period of one year and a payback period of 7.83 years. The project is expected to be completed, accepted, and commissioned in the second year. (13)
Jinko Power Technology: The company's total investment of the 100MW agriculture-complementary comprehensive utilization demonstration project in Sanpai Town, Qingyuan City is 340 million yuan, with a payback period of 10.44 years (after-tax). The project is expected to be completed in 6 months. (13)
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - Requires Subsidy
Impact Case
Sustainable Development Need
Land use and consumption problems are two important bottlenecks that restrict the development of PV power generation.
Gender & Marginalisation
We should ensure that no one is left behind during the low-carbon transformation and bring green development opportunities to everyone, not just the high-profile technical personnel, which is a tough challenge facing development.
Expected Development Outcome
Distributed PV power generation can be locally developed and consumed. Green power can be used for self, and surplus electricity can be incorporated into the power networks. Distributed PV power stations usually use idle roof resources, which can solve the land shortage problem.
Gender & Marginalisation
Distributed PV built in rural areas can create jobs and promote equal opportunities of green growth.Targeting registered households that are unable to work, construction of photovoltaic poverty alleviation projects can cover 2.8 million households, and will gain 3,000 yuan per year.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
The share of non-fossil energy in China's primary energy consumption reached 15.9% in 2020. (16)
The "14th Five-year Plan" stated that the share of non-fossil fuel in China's total energy consumption should be increased to around 20%. (17)
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
The annual energy production and revenue of distributed PV power generation projects might be affected by the natural environment, technology, and devices.(9)
Impact Risks
Damage to the internal device and safety threats to the buildings and surrounding personnel would be incurred if the system is of low quality. (3)
The utilization rate of renewable energy in rural areas can be increased significantly because of the PV promotion, but the problem of attribution of construction costs exists.
Impact Classification
What
The result is likely to be positive, long-term, and large-scale. Idle resources can be reutilized; corporate carbon emissions can be reduced and the strain on power load can be relieved.
Risk
Damage to the internal device and safety threats to the buildings and surrounding personnel would be incurred if the system is of low quality. (8)
Impact Thesis
Distributed PV systems can reutilize idle resources; corporate carbon emissions can be reduced, and the strain on power load can be relieved. Meanwhile, people can access cheap green electricity.
Enabling Environment
Policy Environment
Promote the construction of distributed photovoltaic power generation and application projects, regulate the management of PV projects. (17)
We should optimize the energy industrial structure and consumption structure, give priority to the development of renewable energy, promote the safe and efficient development of nuclear power, and increase the proportion of non-fossil energy. (20)
Financial Environment
CDB sets up a special loan of 500 billion yuan in total (RMB equivalent, foreign exchange included) for "carbon peaking and carbon neutral", of which 100 billion yuan would be issued in 2021 to help build a clean, low-carbon, safe and efficient energy system. (22)
"Notice on Encouraging the Intensified Financial Support to Promote the Sound and Orderly Development of Wind Power and Photovoltaic Power Industries" helps companies maintain development momentum by coordinating policy support in energy, finance, and other related fields. (19)
The "Carbon-reduction Supporting Tool" by PBOC: support the development of key areas like clean energy, energy conservation and environmental protection and carbon emission reduction technologies while levering more social funds to realize carbon reduction.
Regulatory Environment
The rooftop areas of the party and government buildings suitable for PV power project installation: no less than 50%; that of the public buildings such as schools, hospitals, and villagers' committees: no less than 30%; that of the rural houses should: no less than 20%. (15)
The average photoelectric conversion efficiency of polycrystalline silicon modules and monocrystalline silicon modules (bifacial modules calculated by front efficiency) should not be less than 17% and 19.6%, respectively. (21)
Companies in industrial parks should use clean production transformation, utilize waste heat and pressure resources, promote cogeneration of heat and power distributed energy and photovoltaic storage integration systems. (18)
Marketplace Participants
Private Sector
Zhejiang Chint Electrics Co., Ltd., Zhejiang Sunoren Solar Technology Co., Ltd., National Energy Investment Group Co., Ltd., China Huadian Group Corporation, State Power Investment Ronghe Investment Co., Ltd.
Government
Shaanxi and Jiangxi, and other provinces, as the leading ones, have published notice regarding the development of pilot projects of distributed photovoltaic power stations.（23）
Multilaterals
Since 2010, the World Bank has invested USD 2 billion in off-grid PV projects, benefiting 4.2 million people. (26)
Target Locations
China: Shaanxi
China: Shandong
China: Gansu
China: Ningxia
China: Guizhou
References
- (1) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030
- (2) IRENA, 2019, Renewable energy: a gender perspective. https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective
- (3) CQVIP, Renewable energy power generation through solar photovoltaic-recyclable and clean energy
- (4) National Energy Administration, 2020, Guiding Opinions on Energy-related Work in 2021, http://www.nea.gov.cn/2021-04/22/c_139898478.htm
- (5) China Central Television Business Channel, https://mp.weixin.qq.com/s/2ORooQlg9MDlzsbHGH5xww
- (6) Solarbe Global, https://news.solarbe.com/202107/30/342436.html
- (7) Zhejiang Sunoren Solar Technology Co., Ltd., 2021, 2021 Third Quarter Results http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gfbj0833677&stockCode=603105&announcementId=1211371898&announcementTime=2021-10-26 (http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gfbj0833677&stockCode=603105&announcementId=1211371898&announcementTime=2021-10-26 ) Zhejiang Sunoren Solar Technology Co., Ltd., 2021, 2020 Annual Report http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gfbj0833677&stockCode=603105&announcementId=1209729457&announcementTime=2021-04-20 (http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gfbj0833677&stockCode=603105&announcementId=1209729457&announcementTime=2021-04-20 ) Zhejiang Sunoren Solar Technology Co., Ltd., 2021, 2021 Semi-Annual Report http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gfbj0833677&stockCode=603105&announcementId=1210826687&announcementTime=2021-08-24
- (8) Xinjiang Water Conservancy and Hydropower Survey Design & Research Institute, 2020, A pilot study on the problems and solutions for the large-scale development of distributed photovoltaic projects, https://kns.cnki.net/kcms/detail/detail.aspx?dbcode=CJFD&dbname=CJFDLAST2020&filename=HNSL202004040&uniplatform=NZKPT&v=RlSuUeaBNRXsnR4fWNTScfNu3AW143Ci7KV5GB7o7WNrOX9LMNkXcM_ed5ZkD79x
- (9) School of Economics and Management, North China University of Technology, 2019, Risk Analysis of Distributed Photovoltaic Power Generation Investment in China, https://kns.cnki.net/kcms/detail/detail.aspx?dbcode=CJFD&dbname=CJFDLAST2019&filename=TYNZ201910001&uniplatform=NZKPT&v=A-DWY8lxtSMV5SzaJgTvv7I-qKGtcwzWMBeu_GJur4yX3z8qdDKjbxXc12_ZWQym
- (10) Jinko Power Technology Co., Ltd., 2021, 2020 Annual Report, http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=9900038390&stockCode=601778&announcementId=1209842601&announcementTime=2021-04-28
- (11) Jiangsu Linyang Energy Co., Ltd., 2021, 2020 Annual Report, http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=9900021223&stockCode=601222&announcementId=1209771602&announcementTime=2021-04-23
- (12) Huatai Securities, 2022, Distributed PV: The Next Blue Ocean Market, http://finance.sina.com.cn/stock/stockzmt/2022-02-16/doc-ikyamrna0999864.shtml
- (13) Zhejiang Sunoren Solar Technology Co., Ltd., 2018, IPO Prospectus, http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=gfbj0833677&stockCode=603105&announcementId=1205093117&announcementTime=2018-06-26
- (14) Jinko Power Technology Co., Ltd., 2021, Memorandum for Convertible Bonds, http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=9900038390&stockCode=601778&announcementId=1209740579&announcementTime=2021-04-21 Jinko Power Technology Co., Ltd., 2021, Announcement on the Signing of Cooperation Framework Agreement between the Parent Company and its Wholly-owned Subsidiary, http://www.cninfo.com.cn/new/disclosure/detail?plate=sse&orgId=9900038390&stockCode=601778&announcementId=1211586593&announcementTime=2021-11-16
- (15) National Energy Administration, 2021, The Request for the Pilot Program of Rooftop Distributed Photovoltaic Development at the County Level (City, District), http://www.chic.org.cn/home/index/detail?id=1100 National Energy Administration, 2021, Notice on Announcing the List of the Counties (City, District) for the Pilot Program of Rooftop Distributed Photovoltaic Development, http://zfxxgk.nea.gov.cn/2021-09/08/c_1310186582.htm
- (16) General Office of the State Council, 2014, Program of Action for the Energy Development Strategy (2014-2020), http://www.gov.cn/xinwen/2014-11/19/content_2780748.htm
- (17) Xinhua News Agency, The Outline for the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the Year 2035, http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm
- (18) National Development and Reform Commission, 2021, Notice on Issuing the 14th Five Year Plan for Circular Economy Development, http://www.gov.cn/zhengce/zhengceku/2021-07/07/content_5623077.htm
- (19) National Development and Reform Commission, 2021, Notice on Encouraging the Intensified Financial Support to Promote the Sound and Orderly Development of Wind Power and Photovoltaic Power Industries, https://www.ndrc.gov.cn/xxgk/zcfb/tz/202103/t20210312_1269410.html?code=&state=123
- (20) National Energy Administration, 2020 "the Energy Law of the People's Republic of China (Exposure Draft), http://www.nea.gov.cn/2020-04/10/c_138963212.htm
- (21) Ministry of Industry and Information Technology, 2021, Standard Conditions for the Photovoltaic Manufacturing Industry (2021), https://www.miit.gov.cn/jgsj/dzs/wjfb/art/2021/art_f4ad5ce6359a457395cfe931c69bd777.html
- (22) China Development Bank, 2021, Work Plan to Support Energy Sector to Achieve the Strategic Goal of Carbon Peaking and Carbon Neutrality, http://www.cdb.com.cn/xwzx/zcfb/202112/t20211214_9457.html
- (23) Shannxi Provincial Development and Reform Commission, 2021, Notice on the Pilot Programs of Rooftop Distributed Photovoltaic at County Level (City, District), http://sndrc.shaanxi.gov.cn/fgwj/2021nwj/euIJBj.htm Jiangxi Provincial Development and Reform Commission, 2021, Notice on the Pilot Programs of Household Distributed Photovoltaic, https://guangfu.bjx.com.cn/news/20210615/1158077.shtml
- (24) National Development and Reform Commission, 2021 Renewable Energy On-grid Power Price Policy, http://www.gov.cn/zhengce/zhengceku/2021-06/11/content_5617297.htm(http://www.gov.cn/zhengce/zhengceku/2021-06/11/content_5617297.htm)
- (25) Nationwide Energy Information Platform, 2022, The inflection point for distributed PV industry growth rate has arrived, https://baijiahao.baidu.com/s?id=1721117172902098482&wfr=spider&for=pc
- (26) Financing the Sustainable Development Goals - The Contributions of the Multilateral Development Banks, https://www.isdb.org/sites/default/files/media/documents/2022-02/MDBs%20Report%20on%20SDGs_vf.pdf