IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v147y2020ics0301421520304596.html
   My bibliography  Save this article

Is it time to launch grid parity in the Chinese solar photovoltaic industry? Evidence from 335 cities

Author

Listed:
  • Zhang, M.M.
  • Zhang, C.
  • Liu, L.Y.
  • Zhou, D.Q.

Abstract

This study evaluates grid parity in the Chinese solar PV industry by calculating the unsubsidized unit profits (UUPs) of solar PV projects in 335 Chinese cities. Furthermore, the effects of technological advances and various electricity price mechanisms on grid parity are explored. We consider the differences between centralized grid-connected and distributed projects. Two-factor learning curves are used to forecast technological progress and two kinds of electricity price mechanisms—government-regulated and market-based—are also brought into analyses. The results indicate the infeasibility of implementing complete grid parity regardless of the type of project. However, centralized grid-connected projects in 5 cities and distributed projects in 129 cities could implement pilot grid parity. On the whole, centralized grid-connected project has a lower benefit performance than distributed projects. Resource Zone I, which consists of Ningxia Province and several western cities in Gansu, Xinjiang and Inner Mongolia, has the best benefit performance of three resource areas. Technological advances and variations in electricity prices under both mechanisms could improve the UUPs but raising them above zero in all cities would still be impossible. The market prices of electricity under market-based mechanisms may generally have greater impacts than do government-regulated mechanisms on the benefit performances throughout the whole nation.

Suggested Citation

  • Zhang, M.M. & Zhang, C. & Liu, L.Y. & Zhou, D.Q., 2020. "Is it time to launch grid parity in the Chinese solar photovoltaic industry? Evidence from 335 cities," Energy Policy, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520304596
    DOI: 10.1016/j.enpol.2020.111733
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520304596
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2020.111733?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fokaides, Paris A. & Kylili, Angeliki, 2014. "Towards grid parity in insular energy systems: The case of photovoltaics (PV) in Cyprus," Energy Policy, Elsevier, vol. 65(C), pages 223-228.
    2. Jinyue Yan & Ying Yang & Pietro Elia Campana & Jijiang He, 2019. "City-level analysis of subsidy-free solar photovoltaic electricity price, profits and grid parity in China," Nature Energy, Nature, vol. 4(8), pages 709-717, August.
    3. Hernández-Moro, J. & Martínez-Duart, J.M., 2012. "CSP electricity cost evolution and grid parities based on the IEA roadmaps," Energy Policy, Elsevier, vol. 41(C), pages 184-192.
    4. Comello, Stephen & Reichelstein, Stefan J. & Sahoo, Anshuman, 2018. "The Road ahead for Solar PV Power," Research Papers 3620, Stanford University, Graduate School of Business.
    5. Yao, Xilong & Liu, Yang & Qu, Shiyou, 2015. "When will wind energy achieve grid parity in China? – Connecting technological learning and climate finance," Applied Energy, Elsevier, vol. 160(C), pages 697-704.
    6. Zhang, M.M. & Zhou, D.Q. & Zhou, P. & Liu, G.Q., 2016. "Optimal feed-in tariff for solar photovoltaic power generation in China: A real options analysis," Energy Policy, Elsevier, vol. 97(C), pages 181-192.
    7. He, Yongxiu & Pang, Yuexia & Li, Xinmin & Zhang, Minhui, 2018. "Dynamic subsidy model of photovoltaic distributed generation in China," Renewable Energy, Elsevier, vol. 118(C), pages 555-564.
    8. Zhang, M.M. & Wang, Qunwei & Zhou, Dequn & Ding, H., 2019. "Evaluating uncertain investment decisions in low-carbon transition toward renewable energy," Applied Energy, Elsevier, vol. 240(C), pages 1049-1060.
    9. Yang, Chi-Jen, 2010. "Reconsidering solar grid parity," Energy Policy, Elsevier, vol. 38(7), pages 3270-3273, July.
    10. Fuss, Sabine & Szolgayova, Jana & Obersteiner, Michael & Gusti, Mykola, 2008. "Investment under market and climate policy uncertainty," Applied Energy, Elsevier, vol. 85(8), pages 708-721, August.
    11. Zhang, M.M. & Zhou, P. & Zhou, D.Q., 2016. "A real options model for renewable energy investment with application to solar photovoltaic power generation in China," Energy Economics, Elsevier, vol. 59(C), pages 213-226.
    12. Lund, Peter D., 2015. "Energy policy planning near grid parity using a price-driven technology penetration model," Technological Forecasting and Social Change, Elsevier, vol. 90(PB), pages 389-399.
    13. Nissen, Ulrich & Harfst, Nathanael, 2019. "Shortcomings of the traditional “levelized cost of energy” [LCOE] for the determination of grid parity," Energy, Elsevier, vol. 171(C), pages 1009-1016.
    14. Sun, Peng & Nie, Pu-yan, 2015. "A comparative study of feed-in tariff and renewable portfolio standard policy in renewable energy industry," Renewable Energy, Elsevier, vol. 74(C), pages 255-262.
    15. Gu Choi, Dong & Yong Park, Sang & Park, Nyun-Bae & Chul Hong, Jong, 2015. "Is the concept of ‘grid parity’ defined appropriately to evaluate the cost-competitiveness of renewable energy technologies?," Energy Policy, Elsevier, vol. 86(C), pages 718-728.
    16. Williges, Keith & Lilliestam, Johan & Patt, Anthony, 2010. "Making concentrated solar power competitive with coal: The costs of a European feed-in tariff," Energy Policy, Elsevier, vol. 38(6), pages 3089-3097, June.
    17. Pillot, Benjamin & de Siqueira, Sandro & Dias, João Batista, 2018. "Grid parity analysis of distributed PV generation using Monte Carlo approach: The Brazilian case," Renewable Energy, Elsevier, vol. 127(C), pages 974-988.
    18. Zhou, Wenji & Zhu, Bing & Chen, Dingjiang & Zhao, Fangxian & Fei, Weiyang, 2014. "How policy choice affects investment in low-carbon technology: The case of CO2 capture in indirect coal liquefaction in China," Energy, Elsevier, vol. 73(C), pages 670-679.
    19. Avril, S. & Mansilla, C. & Busson, M. & Lemaire, T., 2012. "Photovoltaic energy policy: Financial estimation and performance comparison of the public support in five representative countries," Energy Policy, Elsevier, vol. 51(C), pages 244-258.
    20. Wang, Ziyi & Wennersten, Ronald & Sun, Qie, 2017. "Outline of principles for building scenarios – Transition toward more sustainable energy systems," Applied Energy, Elsevier, vol. 185(P2), pages 1890-1898.
    21. Walters, Ryan & Walsh, Philip R., 2011. "Examining the financial performance of micro-generation wind projects and the subsidy effect of feed-in tariffs for urban locations in the United Kingdom," Energy Policy, Elsevier, vol. 39(9), pages 5167-5181, September.
    22. Zhang, Sufang & Andrews-Speed, Philip & Ji, Meiyun, 2014. "The erratic path of the low-carbon transition in China: Evolution of solar PV policy," Energy Policy, Elsevier, vol. 67(C), pages 903-912.
    23. Comello, Stephen & Reichelstein, Stefan & Sahoo, Anshuman, 2018. "The road ahead for solar PV power," Renewable and Sustainable Energy Reviews, Elsevier, vol. 92(C), pages 744-756.
    24. Tu, Qiang & Betz, Regina & Mo, Jianlei & Fan, Ying & Liu, Yu, 2019. "Achieving grid parity of wind power in China – Present levelized cost of electricity and future evolution," Applied Energy, Elsevier, vol. 250(C), pages 1053-1064.
    25. Hagerman, Shelly & Jaramillo, Paulina & Morgan, M. Granger, 2016. "Is rooftop solar PV at socket parity without subsidies?," Energy Policy, Elsevier, vol. 89(C), pages 84-94.
    26. Fan, Ying & Zhu, Lei, 2010. "A real options based model and its application to China's overseas oil investment decisions," Energy Economics, Elsevier, vol. 32(3), pages 627-637, May.
    27. Abadie, Luis M. & Chamorro, José M., 2008. "European CO2 prices and carbon capture investments," Energy Economics, Elsevier, vol. 30(6), pages 2992-3015, November.
    28. Vazquez, A. & Iglesias, G., 2016. "Grid parity in tidal stream energy projects: An assessment of financial, technological and economic LCOE input parameters," Technological Forecasting and Social Change, Elsevier, vol. 104(C), pages 89-101.
    29. Lund, P.D., 2011. "Boosting new renewable technologies towards grid parity – Economic and policy aspects," Renewable Energy, Elsevier, vol. 36(11), pages 2776-2784.
    30. Zou, Hongyang & Du, Huibin & Brown, Marilyn A. & Mao, Guozhu, 2017. "Large-scale PV power generation in China: A grid parity and techno-economic analysis," Energy, Elsevier, vol. 134(C), pages 256-268.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lu, Jintao & Rong, Dan & Lev, Benjamin & Liang, Mengshang & Zhang, Chong & Gao, Yangyang, 2023. "Constraints affecting the promotion of waste incineration power generation project in China: A perspective of improved technology acceptance model," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).
    2. Hengtian Wang & Xiaolong Yang & Xinxin Xu & Liu Fei, 2021. "Exploring Opportunities and Challenges of Solar PV Power under Carbon Peak Scenario in China: A PEST Analysis," Energies, MDPI, vol. 14(11), pages 1-28, May.
    3. Xiaohua Song & Yamin Huang & Yulin Zhang & Wen Zhang & Zeqi Ge, 2023. "An Appraisal on China’s Feed-In Tariff Policies for PV and Wind Power: Implementation Effects and Optimization," Sustainability, MDPI, vol. 15(6), pages 1-23, March.
    4. Zhang, Alex Hongliang & Sirin, Selahattin Murat & Fan, Conglai & Bu, Maoliang, 2022. "An analysis of the factors driving utility-scale solar PV investments in China: How effective was the feed-in tariff policy?," Energy Policy, Elsevier, vol. 167(C).
    5. Yang, Changhui & Jiang, Qi & Cui, Yangyu & He, Lijun, 2023. "Photovoltaic project investment based on the real options method: An analysis of the East China power grid region," Utilities Policy, Elsevier, vol. 80(C).
    6. Liu, Da & Jiang, Yan & Peng, Chuan & Jian, Jianhui & Zheng, Jing, 2024. "Can green certificates substitute for renewable electricity subsidies? A Chinese experience," Renewable Energy, Elsevier, vol. 222(C).
    7. Rong Wang & Sandra Hasanefendic & Elizabeth Von Hauff & Bart Bossink, 2023. "A System Dynamics Approach to Technological Learning Impact for the Cost Estimation of Solar Photovoltaics," Energies, MDPI, vol. 16(24), pages 1-17, December.
    8. Xin-gang, Zhao & Wei, Wang & Ling, Wu, 2021. "A dynamic analysis of research and development incentive on China's photovoltaic industry based on system dynamics model," Energy, Elsevier, vol. 233(C).
    9. Zhang, Xian & Wang, Jia-Xing & Cao, Zhe & Shen, Shuo & Meng, Shuo & Fan, Jing-Li, 2021. "What is driving the remarkable decline of wind and solar power curtailment in China? Evidence from China and four typical provinces," Renewable Energy, Elsevier, vol. 174(C), pages 31-42.
    10. Wang, Rong & Hasanefendic, Sandra & Von Hauff, Elizabeth & Bossink, Bart, 2022. "The cost of photovoltaics: Re-evaluating grid parity for PV systems in China," Renewable Energy, Elsevier, vol. 194(C), pages 469-481.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, M.M. & Wang, Qunwei & Zhou, Dequn & Ding, H., 2019. "Evaluating uncertain investment decisions in low-carbon transition toward renewable energy," Applied Energy, Elsevier, vol. 240(C), pages 1049-1060.
    2. Zhang, M.M. & Zhou, D.Q. & Zhou, P. & Chen, H.T., 2017. "Optimal design of subsidy to stimulate renewable energy investments: The case of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 873-883.
    3. Zhang, Mingming & Liu, Liyun & Wang, Qunwei & Zhou, Dequn, 2020. "Valuing investment decisions of renewable energy projects considering changing volatility," Energy Economics, Elsevier, vol. 92(C).
    4. Chen, Hao & Gao, Xin-Ya & Liu, Jian-Yu & Zhang, Qian & Yu, Shiwei & Kang, Jia-Ning & Yan, Rui & Wei, Yi-Ming, 2020. "The grid parity analysis of onshore wind power in China: A system cost perspective," Renewable Energy, Elsevier, vol. 148(C), pages 22-30.
    5. Zhang, Minhui & Zhang, Qin, 2020. "Grid parity analysis of distributed photovoltaic power generation in China," Energy, Elsevier, vol. 206(C).
    6. Zou, Hongyang & Du, Huibin & Brown, Marilyn A. & Mao, Guozhu, 2017. "Large-scale PV power generation in China: A grid parity and techno-economic analysis," Energy, Elsevier, vol. 134(C), pages 256-268.
    7. Tu, Qiang & Mo, Jianlei & Betz, Regina & Cui, Lianbiao & Fan, Ying & Liu, Yu, 2020. "Achieving grid parity of solar PV power in China- The role of Tradable Green Certificate," Energy Policy, Elsevier, vol. 144(C).
    8. Wang, Rong & Hasanefendic, Sandra & Von Hauff, Elizabeth & Bossink, Bart, 2022. "The cost of photovoltaics: Re-evaluating grid parity for PV systems in China," Renewable Energy, Elsevier, vol. 194(C), pages 469-481.
    9. Mingming Zhang & Dequn Zhou & Hao Ding & Jingliang Jin, 2016. "Biomass Power Generation Investment in China: A Real Options Evaluation," Sustainability, MDPI, vol. 8(6), pages 1-22, June.
    10. Xue, Liya & Liu, Junling & Lin, Xiaojing & Li, Mengyue & Kobashi, Takuro, 2024. "Assessing urban rooftop PV economics for regional deployment by integrating local socioeconomic, technological, and policy conditions," Applied Energy, Elsevier, vol. 353(PA).
    11. Zhang, M.M. & Zhou, P. & Zhou, D.Q., 2016. "A real options model for renewable energy investment with application to solar photovoltaic power generation in China," Energy Economics, Elsevier, vol. 59(C), pages 213-226.
    12. Pan, Yingjie & Yao, Xing & Wang, Xin & Zhu, Lei, 2019. "Policy uncertainties: What investment choice for solar panel producers?," Energy Economics, Elsevier, vol. 78(C), pages 454-467.
    13. Zhang, M.M. & Zhou, D.Q. & Zhou, P. & Liu, G.Q., 2016. "Optimal feed-in tariff for solar photovoltaic power generation in China: A real options analysis," Energy Policy, Elsevier, vol. 97(C), pages 181-192.
    14. Zhang, Libo & Chen, Changqi & Wang, Qunwei & Zhou, Dequn, 2021. "The impact of feed-in tariff reduction and renewable portfolio standard on the development of distributed photovoltaic generation in China," Energy, Elsevier, vol. 232(C).
    15. Orioli, Aldo & Di Gangi, Alessandra, 2017. "Six-years-long effects of the Italian policies for photovoltaics on the grid parity of grid-connected photovoltaic systems installed in urban contexts," Energy, Elsevier, vol. 130(C), pages 55-75.
    16. Zhou, Dequn & Chong, Zhaotian & Wang, Qunwei, 2020. "What is the future policy for photovoltaic power applications in China? Lessons from the past," Resources Policy, Elsevier, vol. 65(C).
    17. Xin-gang, Zhao & Pei-ling, Li & Ying, Zhou, 2020. "Which policy can promote renewable energy to achieve grid parity? Feed-in tariff vs. renewable portfolio standards," Renewable Energy, Elsevier, vol. 162(C), pages 322-333.
    18. Jungmin An & Dong-Kwan Kim & Jinyeong Lee & Sung-Kwan Joo, 2021. "Least Squares Monte Carlo Simulation-Based Decision-Making Method for Photovoltaic Investment in Korea," Sustainability, MDPI, vol. 13(19), pages 1-14, September.
    19. Marco Rogna, 2019. "A First-Phase Screening Device for Site Selection of Large-Scale Solar Plants with an Application to Italy," BEMPS - Bozen Economics & Management Paper Series BEMPS57, Faculty of Economics and Management at the Free University of Bozen.
    20. Sanghyun Sung & Wooyong Jung, 2019. "Economic Competitiveness Evaluation of the Energy Sources: Comparison between a Financial Model and Levelized Cost of Electricity Analysis," Energies, MDPI, vol. 12(21), pages 1-21, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:147:y:2020:i:c:s0301421520304596. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.