wang sicheng - financing mechanisms for solar pv distribution in china
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Financing Mechanisms for Solar PVDistribution in China
Wang Sicheng Energy Research Institute, NDRC
June 7, 2012 Manila
Strategies for FinancingSmall-Scale Solar Power Plants
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Sectors of PV Utilization
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Rural Electrification
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Industry&
Commun.
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Solar Products
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PV Buildings
BIPV&BAPV
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LS-PV in Gobi - Desert
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The largest PV power plant in the world, 2011-10-29
200MW PV Power Plant by Yellow-River Hydropower
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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.
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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.
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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.
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Solar Home Systems
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13/20Centralized PV Station for Villages
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14/20The Tibetan Kids and PV Plant
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Who will finance battery replacement forcentralized PV stations?
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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 .
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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
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Incentive Policies for Grid-Tied RE
22 Billion Yuan per Year 10 Billion Yuan per Year
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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..)
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