Abstract
Designated as one of the seven “strategic emerging industries” in China’s 12th Five-Year-Plan (2011-2015), the solar photovoltaic (PV) industry has become the main focus of China’s renewable energy policies to combat climate change. A recent drastic regulation change has seen that the government’s focus on PV deployment methods was shifted from centralized large-scale PV generation (LSPV) to distributed PV generation (DPV). This research compares the different regulation tools used by the Chinese government in relation to the deployment of LSPV and DPV projects and assesses their respective development challenges as well as regulatory impacts.

I. Introduction

Designated as one of the seven “strategic emerging industries” in China’s 12th Five-Year-Plan (2011-2015), the solar photovoltaic (hereinafter referred to as “PV”) industry has become the main focus of China’s renewable energy policies to combat climate change. The Chinese PV deployment market consists of two main types of application: (1) centralized large-scale PV generation (hereinafter referred to as “LSPV”), and (2) distributed PV generation (hereinafter referred to as “DPV”). As defined by China’s National Energy Administration (hereinafter referred to as “NEA”), distributed generation is small-scale generation mainly for self-consumption, located near or at the point where the power is used (i.e. the opposite of centralized power generation). China’s biggest grid company, the State Grid has further defined on-grid DPV generation as PV electric generation that feeds into local distribution network that is less than 10KV, with an installation capacity less than 6MW.

While LSPV projects are usually connected to high-voltage transmission grid, on-grid DPV projects are connected to low/medium-voltage distribution grid. Typical examples of on-grid DPV projects are building-attached PV (hereinafter referred to as “BAPV”) projects such as rooftop installation, and building-integrated PV (hereinafter referred to as “BIPV”) projects such as installation as a part of building facades.

Although solar is only a small fraction of the renewable energy sector in China, scholarship on Chinese PV industry is abundant. Nevertheless, the vast majority of literature reviews the lex superior of policies and administrative measures taken by Chinese authorities. For example, a succinct summary of China’s governmental interventions in the PV industry is provided by Zhao et al. (2011), who classified the intervention methods into legislation, policies, financial incentives, and/or taxation. Other scholars such as Sun et al. (2014) and Liu & Shiroyama (2013) rightly commented that China’s PV policies focused mainly on the supply side while ignoring the importance of the consumer demands. Although Liu & Shiroyama (2013) have summarized the PV industry regulations with respect to three areas: (1) rural electrification; (2) large-scale PV generation; and (3) small-scale distributed PV generation, few scholars studied in details the industry chain and focused on the regulations and policies on the downstream PV deployment sector. This research therefore intends to fill the void by comparing the different policy tools used by the Chinese government in relation to the deployment of LSPV and DPV projects and assessing their respective regulation impacts as well as their development challenges.

The observations generated from this research will not only identify the evolution and milestones of China’s PV deployment market, but also help to predict future industry trends and potentially lay the groundwork for further regulation studies of the PV industry in China. In addition, this research might shed light on other questions such as whether the maturity of the PV industry reflects broader energy regulation trends in China; or whether the development of PV regulation is representative for other energy sectors.

This research lies within the field of “law and policies” and “law and industry development”. Due to its strategic position, the energy industry is heavily regulated and governed by various government policies and administrative orders. Laws and policies are hence so often intertwined in this industry that it is difficult to define one without reference to the other. Moreover, given the tradition of policy overriding legislation on energy regulation in China, law has played a relatively limited role in the country’s energy sector. The Renewable Energy Law enacted in 2006 and amended in 2009 so far is the only national legislation governing the solar PV industry. China continues to face challenges in improving its existing solar industry legal framework.

The rest of the paper is organized as follows: Part II provides a general PV regulation background; Part III elaborates on the rise and challenges for LSPV projects; Part IV lays out the existing DPV laws and policies together with the main challenges for developing DPV projects; Part V provides some regulation suggestions and concludes with a table comparing the key features of LSPV and DPV deployment laws and policies.