In recent weeks, the National Development and Reform Commission announced new subsidy rates for distributed photovoltaic (PV) systems, marking a turning point for an industry that had been struggling for two years. This development has sparked renewed optimism across the domestic solar sector. At the 5th China (Wuxi) International New Energy Conference in Wuxi, Jiangsu, Xu Xianghua, vice president of the Eleventh Design Institute of Information Industry Electronics, highlighted how investment in photovoltaic power stations has surged since the fourth quarter. As a result, many local PV module manufacturers have seen a sharp increase in demand, signaling a clear sign of recovery.
With international markets shrinking, the domestic electricity price subsidy policy has become the key driver for making the entire PV industry profitable. According to Xu, the national subsidy rate of 0.42 yuan per kilowatt-hour far exceeded industry expectations. Given the current average cost of around 1 yuan per kWh for solar power generation, this policy is expected to significantly boost the competitiveness of the sector.
Moreover, local governments such as those in Wuxi, Jiangsu, and Zhejiang have introduced additional subsidies ranging from 0.1 to 0.3 yuan per kWh. This has encouraged even companies that were previously skeptical about profitability to re-enter the market. For instance, a newly launched distributed power project in Wuxi New District is projected to achieve profitability within 7 to 8 years.
According to a recent analysis by Solarzoom, a leading market research firm, the surge in interest in PV projects has led to near-full capacity utilization among top-tier manufacturers. Some companies have already booked orders through the end of the year, while others have locked in contracts for the first quarter of next year. The demand for components in November and December has already outpaced supply, creating a noticeable capacity gap.
Xu also pointed out that compared to previous subsidy models that focused on modules, this new policy will provide support based on actual power generation. This shift means investors will place greater emphasis on project quality, which will benefit large-scale domestic PV traders first. Looking ahead, Xu believes that as technological advancements continue, the potential market for solar power will grow steadily, driving long-term high growth for the entire industry.
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