Harnessing Solar in China

If you live in a neighborhood like mine in California, you may also be seeing solar panels popping up like dandelions after a spring shower. Not only are these glossy, blue-black panels environmentally friendly, but their costs are falling and state subsidies have also made them more affordable. This phenomenon is sweeping not only the U.S., but in China too. In fact, China is now the world’s largest solar market.

During a recent trip to China, I had the opportunity to learn first-hand how solar is being implemented. The National Development and Reform Commission of China (NDRC) has set aggressive targets for solar deployment this year: 8 gigawatts (GW) of “distributive solar” capacity in 2014, which includes rooftop systems and larger scale solar farms.

To put this figure into perspective, the total installed capacity in China by the end of 2012 was about 1,140 GW. This means that 8 GW would barely make a dent in terms of energy security. But for a country struggling with pollution from coal and rising urbanization, even baby steps can help. Not only is solar easy on the air, it can be installed high above crowded urban centers where the majority of the consumption is taking place. This makes solar an even more attractive option than other “green” alternatives like wind and geothermal—most of which is located in more remote, northern and western parts of the country.

In a small town an hour outside of Beijing, I visited a small scale solar project by Greenpeace’s Climate and Energy Group. The project offers a model of a small system to encourage adoption by households and enterprises. In theory, anyone with a rooftop solar system can sell the power back to the power grid, as well as receive a subsidy from the state. In practice, however, there are a few barriers to smooth implementation. First, China would need to roll out smart meters. So far, the typical meter can measure only one way flow—the consumption of electricity, but not production. An additional meter would have to be installed to measure the amount of electricity generated.

The lack of a smart meter means that—unlike my neighbor’s solar system which allows him to seamlessly consume his own generated electricity and sell additional capacity back to the grid—a Chinese household with a rooftop solar system cannot net out its consumption with its own production. In effect, the household ends up buying the electricity it consumes from the grid, even though it might concurrently be producing the same, or even higher, capacity. This would seem like a minor logistical hassle if it weren’t for the fact that one buys and sells at very different price points.

In fact, there are two prices: a wholesale price and a retail price, which costs about twice as much. Households are still charged the retail price for electricity consumed and receive the wholesale price for the electricity produced. To help make up for that difference, the government offers a subsidy.

However, in our research, we learned that there is still a difference in payment timing too. While the electricity bill is due monthly, the government is known to delay payments for power, often as long as several months to a year. The Greenpeace team explained that the government recognizes that it does not yet have the systems or protocols in place for efficient processing of payments, and is looking into ways to address these issues.

While the installation of solar modules can easily be done in China, there are still several wrinkles to be ironed out to before large-scale adoption is possible. As policy is streamlined and technology is upgraded, Beijing’s rooftops may start to look more and more like those in Berkeley.

© Matthews Asia


© Matthews Asia

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