On July 31, the Ministry of Finance released a notice titled “Circular on the Implementation of Distributed Photovoltaic Power Generation in Accordance with Relevant Problems such as Electricity Subsidy Policy,†which outlines the implementation measures for distributed photovoltaic projects under the electricity subsidy policy. The document emphasizes a uniform subsidy system and encourages the development of large-scale demonstration zones.
The notice states that subsidies for distributed photovoltaic power generation are based on electricity output, with the funds being transferred directly to project units through grid companies. To qualify for the subsidy, projects must meet specific requirements: they must be properly registered, completed, and connected to the grid, meeting all necessary technical and procedural conditions.
Notably, projects that have already received funding from the Golden Sun Demonstration Program or the Solar Photovoltaic Building Application Financial Subsidy are not eligible for this new subsidy. Similarly, photovoltaic power plants with prices set by regulatory authorities do not fall under the distributed PV subsidy scope.
Projects that meet the criteria can apply to local grid companies, which will then forward their applications to relevant finance, price, and energy authorities. For projects within the State Grid and China Southern Power Grid’s service areas, provincial grid companies will collect and review the applications before submitting them to the national grid corporations. These corporations will then compile reports and submit them to the Ministry of Finance, National Development and Reform Commission, and National Energy Administration for final approval and publication of the subsidized projects.
Although the notice does not specify the exact subsidy rate, it mentions that the standard will consider factors such as grid-connected electricity prices, generation costs, and sales prices, and will be adjusted accordingly. The exact figure is expected to be announced after the National Development and Reform Commission releases the distributed on-grid tariff.
Industry insiders believe that the subsidy rate is likely to be around 0.42 yuan per kilowatt-hour, aligning with previous guidance from the National Energy Board to support the sustainable growth of the solar industry. This rate is also consistent with the cap of 0.45 yuan/kWh for demonstration projects.
Grid companies will use meter-reading cycles to calculate subsidies based on the amount of electricity generated, on-grid electricity, and self-consumed electricity for projects listed in the subsidy catalog. However, some industry experts have raised concerns about the fairness of a uniform subsidy rate across different regions and user types.
Meng Xianzhe, Deputy Director of the China Renewable Energy Society, explained that regional differentiation in electricity pricing could complicate operations, especially given limited market capacity and insufficient subsidies. He emphasized that current policy favors the development of large-scale demonstration zones.
According to the State Council's guidelines on promoting the healthy development of the photovoltaic industry, it encourages users to build distributed photovoltaic systems using the “self-generation for self-use, surplus power fed into the grid†model. Priority is given to industrial and commercial enterprises and industrial parks with higher electricity demand.
Meng Xianyu noted that both self-used and on-grid electricity receive the same subsidy. Self-use is priced at 0.42 yuan per degree, while on-grid electricity includes the coal-fired benchmark price plus an additional 0.42 yuan per degree.
In June, the National Energy Administration required provincial energy bureaus to submit plans for distributed photovoltaic demonstration zones by July 10. Although the approved list has yet to be announced, the initiative aims to accelerate project construction.
Regarding fund management, the notice specifies that the central government will allocate subsidies quarterly based on renewable energy income and projected generation. Grid companies will then pay the subsidies according to the electricity billing cycle. Procedures for other renewable energy sources, such as wind and biomass, have been simplified, with direct allocation to major grid companies.
While this change is seen as positive, some experts emphasize the need for stronger oversight. The next step is to monitor how effectively the State Grid and China Southern Power Grid implement these policies. Although the State Grid has issued guidelines on distributed power services, no similar action has been taken by China Southern Power Grid.
Overall, the notice marks a significant step in supporting the photovoltaic industry, but its success will depend on effective implementation and continued policy support.
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