In the first half of the year, the photovoltaic industry can be summarized in two words: rush installation!!

 

In 2025, the photovoltaic industry will once again experience a rush installation boom!

 

Recently, photovoltaic power plant developers have been accelerating the approval of grid connection projects, leading to a surge in orders for energy storage equipment. Furthermore, many photovoltaic component manufacturers have urgently notified distributors of "payment deadlines," preparing for price increases…

 

Looking back, the photovoltaic industry has experienced several "rush installation waves:"

 

1. The first "rush installation wave" in 2011:

In July 2011, China clarified for the first time that the electricity price for large-scale ground-based power stations in the Northwest region would be 1.15 yuan/kWh, setting a deadline of December 31, 2012, after which the electricity price would be reduced.

 

This policy strongly stimulated photovoltaic companies to complete grid connection before the policy deadline to secure high subsidies, thus creating China's first wave of concentrated rush installation in the photovoltaic industry and significantly boosting the year's newly installed capacity.

2. The "June 30" rush installation wave in 2016

In 2015, the National Development and Reform Commission issued the "Notice on Improving the Benchmark On-Grid Electricity Price Policy for Onshore Wind Power and Photovoltaic Power Generation," requiring that photovoltaic power generation projects that have been filed and included in the annual scale management before 2016 must be fully operational before June 30, 2016; otherwise, the benchmark on-grid electricity price will be reduced.

 

In order to complete photovoltaic investment projects before the subsidy reduction, developers rushed to install photovoltaic components, leading to a sharp increase in demand for raw materials and components. The annual target of 18.1 million kilowatts of newly built photovoltaic power plants nationwide was completed in the first half of the year.

3. The "May 31" rush installation wave in 2018

At the end of May 2018, a new policy for the photovoltaic industry was introduced, requiring the acceleration of the photovoltaic power generation subsidy reduction and a reduction in subsidy intensity. The introduction of the new policy means that with the decline in the cost of the photovoltaic industry, China's photovoltaic subsidy electricity prices will gradually decrease, and government fiscal subsidies will gradually withdraw from the photovoltaic industry.

 

Due to the significant reduction in subsidies, developers once again experienced a rush installation boom in order to complete the construction of photovoltaic power plants before the subsidy reduction.

 

From the past photovoltaic "rush installation waves," all were closely related to policy adjustments, subsidy reductions, and changes in market demand. This year is no exception.

 

At the beginning of 2025, the National Development and Reform Commission and the National Energy Administration successively issued two major policies—the "Notice on Deepening the Market-Oriented Reform of New Energy On-Grid Electricity Prices to Promote the High-Quality Development of New Energy" and the "Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation." The "transition period" set in the two policies directly ignited the fuse for the rush installation in the photovoltaic industry.

 

The implementation of the two major policies ignited the "fuse" for the rush installation of photovoltaics.

 

01

After 12 years, China's distributed photovoltaics welcomes a new version of management measures.
On January 17, the National Energy Administration officially issued the "Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation" (hereinafter referred to as the "Management Measures"), which made adjustments to the development and construction rules of distributed photovoltaic projects in many aspects.
 

 

Compared with the old and new policies, there are several key changes:
1. Grid connection mode In the past, distributed photovoltaic power generation projects could choose either "self-generation and self-use, surplus electricity to the grid" or "full amount to the grid."
The new policy stipulates that general industrial and commercial distributed photovoltaics are prohibited from using the full amount to the grid, and can only choose the mode of all self-generation and self-use or self-generation and self-use surplus electricity to the grid;
Large-scale industrial and commercial distributed photovoltaics should generally choose the mode of all self-generation and self-use. Only in regions with continuous operation of the electricity spot market can the self-generation and self-use surplus electricity to the grid mode be used to participate in the spot market.
This change has a significant impact on the investment model and return on investment calculation of industrial and commercial distributed photovoltaics, prompting enterprises to re-evaluate the feasibility of projects.
2. Filing requirements The new policy clarifies the principle of "who invests, who files."
Household distributed photovoltaic power generation projects for natural persons can be filed by the power grid enterprise in a centralized manner or by natural persons themselves.
Non-household, general industrial and commercial, and large-scale industrial and commercial distributed photovoltaic power generation projects for non-natural persons shall be filed uniformly by the investment entity.
It is especially emphasized that projects invested and developed by non-natural persons cannot be filed in the name of natural persons. However, those that have already been filed by natural persons before the issuance of the measures may not need to change the filing entity.
3. Scope of application Distributed photovoltaic power generation is divided into four types: household for natural persons, non-household for natural persons, general industrial and commercial, and large-scale industrial and commercial.
 

 

After the release of the document, grid connection before May 1 became key.

According to the regulations, if the project has completed the filing before the release of the new management measures and can be connected to the grid and put into operation before May 1, 2025, it will continue to be implemented according to the original policy. This means that in terms of grid connection mode, subsidies, and subsequent filing procedures, the old policy regulations can be used, reducing project uncertainty.

Therefore, a large number of distributed photovoltaic projects have recently been operating at full capacity, striving to achieve concentrated grid connection before May 1, thus forming this year's "April 30" rush installation wave.
Especially those originally planned to use the full amount to the grid mode If large-scale industrial and commercial projects fail to connect to the grid before May 1, it will lead to the inability to put all the power generation to the grid, and the company's own power consumption cannot be fully absorbed, then the investment return rate of the project will be greatly reduced.
 

02

The new energy price reform "boots landed," and the era of "neither guaranteeing quantity nor price" has arrived!

In addition to "April 30," there's also "May 31"!

 

Unlike the "May 31" rush installation boom in 2018, which was caused by a significant reduction in subsidies, this year's "May 31" rush installation boom is driven by the implementation of new energy reform policies.

 

On February 9, 2025, the National Development and Reform Commission and the National Energy Administration jointly issued the "Notice on Deepening the Market-Oriented Reform of New Energy On-Grid Electricity Prices to Promote the High-Quality Development of New Energy" (hereinafter referred to as "Document No. 136"), which clearly proposes that the on-grid electricity of new energy projects shall be principally fully integrated into the electricity market, and the on-grid electricity price shall be formed through market transactions.

 

Document No. 136's most striking and controversial aspect is the introduction of a mechanism-based electricity price model.

 

The so-called "mechanism-based electricity price" is a floor price calculated by local governments based on project costs, average industry profits, etc., serving as a benchmark price for price difference settlement.

 

As is well known, renewable energy projects are inherently volatile and reliant on weather conditions. To guarantee the income of renewable energy projects after entering the market and to achieve the national carbon reduction targets, a price difference settlement mechanism has been established outside the market for renewable energy electricity participating in power market transactions, providing a "buffer" for power generation enterprises and preventing a cliff-like drop in electricity prices that could trigger systemic risks in the industry.

 

 

In short, the mechanism-based electricity price follows a "more refund, less supplement" logic: When the market electricity price is higher than the mechanism-based electricity price, enterprises must return the excess to the power grid ("more refund"); when the market electricity price is lower than the mechanism-based electricity price, the power grid supplements the difference to the enterprise ("less supplement").

 

For example, the mechanism-based electricity price for a certain photovoltaic project is 0.35 yuan/kWh. If the market electricity price falls to 0.3 yuan/kWh in a given month, the power grid needs to supplement the difference of 0.05 yuan/kWh, and the enterprise will still receive 0.35 yuan/kWh; if the market electricity price rises to 0.4 yuan/kWh, the enterprise needs to return 0.05 yuan/kWh to the power grid, and the final income will still be settled at 0.35 yuan/kWh.

 

However, there is a significant difference between existing and new projects in the implementation of the mechanism-based electricity price. Document No. 136 clearly uses June 1, 2025 as a node to implement a "new and old division" for renewable energy projects, promoting differentiated market entry for existing and new projects, including:

 

Projects put into operation before June 1, 2025—gradual transition

 

(1) Electricity volume: Local authorities will properly connect the existing relevant electricity volume policies with protective measures. Within the scope of the volume, the proportion of electricity subject to the mechanism will be determined independently each year, but it cannot exceed the previous year's proportion.

 

(2) Mechanism-based electricity price: The electricity price for existing projects will be implemented according to the current policy and will not exceed the local benchmark price for coal-fired power generation.

 

(3) Implementation period: The guarantee period for existing projects will remain consistent with the current policy, while concentrated solar power and competitive offshore wind power projects will be implemented according to local regulations.

 

 

It is evident that the new policy provides a relatively smooth transition for existing projects: In terms of electricity prices, existing projects still enjoy the bottom-line guarantee of a fixed electricity price; in terms of market entry electricity volume, the proportion is gradually increasing until full marketization.

 

Projects put into operation from June 1 onwards—facing challenges directly

 

(1) Electricity volume: The newly added electricity volume included in the mechanism each year will be determined by local authorities based on the completion of the national annual non-hydro renewable energy power consumption responsibility weight and factors such as user affordability. Regions that achieve the consumption target can reduce the scale in the following year, while those that fail to achieve the target need to increase it.

 

(2) Mechanism-based electricity price: Adopting market-based bidding mechanism. Provincial-level relevant departments will organize projects to voluntarily participate in bidding each year. In the initial stage, bidding will be organized by technology type, and the final price will be determined by the highest bid of the selected projects (not exceeding the bidding upper limit). The bidding upper limit will be set by the provincial-level departments based on cost, supply and demand, and user affordability. A lower limit may be set initially to avoid vicious competition.

 

(3) Implementation period: It is determined based on the average payback period for similar projects.

 

 

Comparison of the composition of renewable energy power plant income under the old and new systems

 

Summary: For new renewable energy projects put into operation on or after June 1, in principle, all electricity needs to enter market transactions, and income is completely linked to market fluctuations, with local governments only providing limited support through price difference settlement.

 

However, it is not easy for new projects to enjoy the mechanism-based electricity price:

 

On the one hand, they need to obtain qualification through a provincial-level bidding process. This requires enterprises to lower their mechanism-based electricity price bids in the bidding to increase their chances of winning the bid, but excessively low bids may lead to compressed future income space.

On the other hand, local regulations are ambiguous and risky. The bidding upper and lower limits, consumption weights, and other details are determined by local authorities, and regional differences may lead to project income "exploding regionally," making investment decisions extremely uncertain for enterprises.

 

In addition, according to Document No. 136, part of the grid-connected electricity of new distributed photovoltaic projects will also enter the power market to share system adjustment costs.

 

Overall, with June 1 as the dividing point, the transition period for existing projects is relatively smooth, while new projects need to face the challenges of marketization. Against this backdrop, the "531" rush to install has become inevitable.

 

A head of a leading photovoltaic company frankly stated: "Connecting to the grid now can at least lock in some income under the old rules; once the new policy is implemented, the electricity price may be halved, and the investment model will have to be completely revised."

 

"430" + "531" In the first half of 2025, the two words for the photovoltaic industry are: rush to install!

 

 

A financing business personnel from a state-owned enterprise revealed that they have recently started receiving a large number of fully grid-connected photovoltaic projects, with everyone scrambling to put projects into operation before the policy window closes to avoid risks.

 

It is understood that many companies are participating in the "rush to install" simply to avoid complex income calculations and market bidding rules. "It is safer, simpler, and more reliable to complete grid connection before June 1."

 

It is worth noting that the surge in rush installation demand has also pushed up upstream equipment prices.

 

According to several photovoltaic component distributors, major photovoltaic component manufacturers are currently preparing to raise prices, with an expected increase of 2-3 fen/W. In this regard, some leading companies have confirmed the situation, while others have clearly stated that there are currently no price adjustment plans, and the industry is generally adopting a wait-and-see attitude.

 

Some distributors also said that they have recently received notices from leading photovoltaic manufacturers requiring distributors to review their order contracts. If all payments are not settled before Wednesday (February 12), the existing purchase contracts will be invalidated.

 

In fact, before the Spring Festival, the market had already anticipated the implementation of the policy, and Trina Solar's photovoltaic components had already seen an increase of 0.03 yuan per watt before the festival.

 

The rising price of components undoubtedly squeezes the profit margins of developers. However, this also forces companies to accelerate their decision-making process and join the rush to install.

Short-term trends and long-term outlook of the photovoltaic industry under the rush to install
 

 

Looking ahead, in the short term, this rush to install is expected to lead to a sharp increase in installations in the first half of 2025, and this trend will inevitably lead to supply chain fluctuations and local grid connection pressure.

 

On the one hand, it is foreseeable that key equipment such as components and inverters may face a phased price increase due to surging demand. However, given the current global overcapacity, this increase is expected to be limited.

 

Therefore, photovoltaic companies need to closely monitor market dynamics and rationally plan their procurement strategies to cope with potential cost pressures.

 

On the other hand, with a large number of new energy projects being connected to the grid in a short period of time, the pressure on local grid connection will undoubtedly increase significantly. We understand that Shaanxi, Hebei, and other places have already taken measures to optimize priority power generation plans, but they still need to actively address the challenges of peak regulation capabilities. We also remind photovoltaic developers to strengthen communication and coordination with grid companies.

 

 

In the long run, new market mechanisms may accelerate the reshuffling of the photovoltaic industry and promote industry transformation and upgrading.

 

Specifically, first, the industry concentration is expected to further improve. In the rush to install, small and medium-sized developers may face greater pressure due to their lack of market bargaining power, and may even exit the market. In contrast, leading companies will further integrate resources, improve market share, and increase industry concentration based on their financial and technological advantages.

 

At the same time, the business model of the photovoltaic market is expected to become more diversified. Especially in the distributed generation field, new business models such as aggregator models, virtual power plants, and over-the-wall electricity sales are expected to accelerate their implementation, bringing new growth points to the industry.