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Domestic photovoltaic industry enters honeymoon policy
The domestic photovoltaic industry, which has long been facing a challenging period, is now entering a favorable policy phase. Recently, the sector has seen a series of major supportive policies, bringing new hope to the market. On December 19th, the State Council's Executive Council reviewed and approved five key policies aimed at promoting the healthy development of the photovoltaic industry. This marked the first time that the State Council had dedicated an entire meeting to discussing the solar sector, signaling a significant shift in government support.
These five measures, known as the "Five National Policies for Photovoltaics," are specifically designed to address the existing challenges within the industry. Each policy targets a particular issue, offering tailored solutions that are expected to guide the sector toward sustainable and orderly growth. Industry experts believe these measures will serve as a foundational framework for future development.
The positive news quickly sparked a surge in both U.S. and Chinese stock markets, particularly in the solar sector. On the same day, Suntech Power saw a sharp rise of 17.76%, while Big Brand New Energy, LDK Solar, Alss Solar, and China Light & Power all climbed by more than 10%. Hanwha Solar, JA Solar, Trina Solar, Yingli, and Xi Huiguang Sunshine also recorded gains above 5%. The U.S. solar index surged 10.59% to 187.27 points. In China, the photovoltaic sector experienced a broad-based rally on the 20th, with Hairun PV hitting its daily limit. Yijing Optoelectronics, Tuoxin Energy, and Tianlong Optoelectronics each gained over 6%.
A major focus of the new policies is the active development of the domestic market. For years, the industry has been overly dependent on international markets, a problem that became even more evident under the "double reverse" conditions in Europe and the U.S. To address this, the "Five National Policies" emphasize expanding the domestic application of photovoltaics, encouraging distributed power generation, and promoting the installation of solar systems by households, businesses, and communities.
In addition, the policies call for improving support mechanisms, including setting sub-regional benchmark prices for photovoltaic power plants based on local resource conditions. They also advocate for implementing distributed power generation subsidies according to electricity subsidy policies, adjusting tariffs and subsidies in line with cost changes.
Wang Runchuan, a manager at JA Solar, noted that the current one-size-fits-all pricing model has led developers to focus mainly on projects in the west, where sunlight is abundant. With the introduction of sub-regional benchmarking, the on-grid tariff coverage would expand nationwide, creating more opportunities for solar projects across the country. He predicted that the eastern region would soon see a boom in power plant development.
For distributed photovoltaics, the State Council explicitly announced subsidies for electricity consumption. This approach is intended to prevent issues like fraud that occurred during earlier projects such as the "Golden Sun" initiative.
Moreover, the policies include improved financial support mechanisms from the central government, and photovoltaic power plants will now enjoy the same VAT preferential treatment as wind power. Currently, the VAT rate for solar energy is around 17%, compared to 8.5% for wind power. If the same tax benefits apply, it could effectively increase the on-grid tariff by 8 cents per kWh. For a 20 MW plant, this could boost annual revenue by about 8%, significantly boosting investor confidence.