The countdown to new policies has triggered a surge in the installation of distributed solar power systems, with module prices rising for nearly a month.
On March 11, a poster shared by a representative from a renewable energy company in the Yangtze River Delta featured the phrases, “Net connection sprint, every second counts” and “Countdown to 531.” With just 79 days remaining until the full market entry of renewable energy tariffs, the industry is on high alert.
On February 9, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) jointly issued a notice titled “Notice on Deepening the Market-Oriented Reform of Renewable Energy Feed-in Tariffs to Promote High-Quality Development of Renewable Energy” (referred to as Document No. 136). This document states that, in principle, all electricity generated from renewable energy projects will enter the power market, with the feed-in tariff determined through market transactions. A key date is set for June 1, 2025, which marks the differentiation between existing and new projects, commonly referred to as the “531” full market entry date. After this date, the electricity generated will be priced based on market competition.
In January, the NEA also released the “Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation“, which further clarified the consumption models for various types of distributed solar power. This policy uses the “430” timeframe; projects initiated after this date must choose between self-consumption or partial grid connection, eliminating the option for full grid sales. In summary, both policies significantly impact distributed solar power, introducing considerable uncertainty regarding future project returns.
According to industry sources, the new policies have led some distributed solar companies and platforms to communicate changes, including a reduction in installation fees and adjustments to household leasing settlement prices. Some terminal companies have even stopped accepting new orders to avoid potential delays in connecting to the grid before the deadline, while also restricting contract signing dates. One industry representative expressed, “Currently, there is a sense of confusion; various departments are exploring their options and harboring concerns about the future. The most important thing now is making the most of our time.“
In the short term, both the industry and the capital market are anxious about the potential impact of the full market entry of renewable energy on electricity prices, which could affect project returns and the profitability of the sector. A representative from JinkoSolar (601778.SH) mentioned in an interview that clearer policy details from various regions are expected by the end of 2025, but some major provinces may release guidelines as early as the first half of the year, particularly those with mature renewable energy development and electricity market conditions.
These two key timelines have directly contributed to the phenomenon of a “rush to install” distributed projects in the first half of this year. A JinkoSolar representative noted that a surge in installations is anticipated. For projects unable to connect in time, the company plans to cautiously assess return rates and investment standards until local guidelines are released, but there is no intention to stop accepting new orders.
This “installation rush” has also led to a significant increase in module prices, reversing the previous downward trend caused by oversupply in the industry. Modules have experienced price hikes for almost a month, with multiple major manufacturers confirming the increase. A leading module manufacturer reported that recent orders for distributed modules are priced at over 0.75 yuan/W, with some even reaching 0.80 yuan/W. Aiko Solar (600732.SH) stated that their BC module prices exceed 0.80 yuan/W, indicating ongoing upward pressure on prices due to the rush. Longi Green Energy (601012.SH) also confirmed that the average price of modules is currently over 0.80 yuan/W, with supply tightening. Some quotes even approach 0.90 yuan/W, depending on regional factors that support higher electricity prices.
At the end of last year, module prices had fallen to historic lows, with collective procurement bids dropping to between 0.60 and 0.70 yuan/W. The China Photovoltaic Industry Association previously suggested a cost price of 0.68 yuan/W to encourage companies to avoid excessive competition and promote healthy industry growth.
As of March 12, the renewable energy analysis firm InfoLink Consulting reported that the average price of TOPCon bifacial double-glass modules in China reached 0.73 yuan/W, reflecting a 0.01 yuan increase from the previous week. The firm noted that during the policy window, a rush to install was evident, particularly in the distributed market, resulting in a noticeable increase in order rates between March and April. Furthermore, upstream companies indicated that robust demand for distributed terminals is driving prices of silicon wafers and cells higher. The Silicon Branch of the China Nonferrous Metals Industry Association, in its analysis on March 5, noted expectations for a rush in March-April, which would push downstream module and cell prices up and potentially extend to the silicon material sector, predicting a slight increase in the average silicon material market price this month.
However, the price increases driven by policy changes in the industry may not be sustainable long-term. Industry insiders have pointed out that after the rush in the first half of the year, there may be pressure on prices in the third quarter, but optimism for price trends in the fourth quarter and the following year remains, especially with ongoing supply-side reforms in the industry. Another insider cautioned that the price increases are largely a result of temporary demand surges influenced by policy changes. Whether this price trend continues will depend on market growth in the second half of the year; otherwise, the increases are unlikely to be sustainable.
Overall, the sustainability of price increases in the industry remains contingent upon improvements in supply and demand dynamics. One leading module manufacturer remarked that recent price recovery has been minimal, primarily reflecting a simple correction amid supply-demand imbalances. With domestic policy changes, the next two to three months may be impacted by installation rushes. Recently, Longi Green Energy’s president Li Zhenguo shared similar sentiments during an interview, emphasizing that a short-term rebound in prices does not indicate an overall improvement in the industry.
Former honorary chairman of the China Photovoltaic Industry Association Wang Bohua previously indicated that the introduction of the electricity price reform and the distributed management measures has made the income estimation for projects more complex, effectively raising the difficulty of investment decisions and the requirements for operational units, thereby increasing uncertainty regarding investment expectations. There is a time lag between the announcement of these two policies and the implementation of specific measures in various regions, which may lead to a wait-and-see approach from investors, further affecting installations.
Last year, China’s newly installed photovoltaic capacity exceeded expectations, reaching 277.57 GW, a year-on-year increase of 28.3%. The structure and regional distribution of newly installed capacity also changed significantly. Last year, centralized systems surpassed distributed systems again, with a share of 57%; commercial and industrial installations became the primary type of new distributed installations, while residential systems dropped to 11%. This year, due to the management measures for distributed photovoltaic power generation and the market-oriented reform of renewable energy tariffs, coupled with the time lag in implementing these policies across provinces, there exists a certain level of cautious sentiment in the industry, increasing the uncertainty surrounding installation expectations for 2025.
In the long term, these two policies are expected to foster healthy development within the photovoltaic industry. Niu Yanyan, president of Longi’s distributed business in China, remarked that after the issuance of these two documents, the industry will experience an adjustment and exploration period before gradually returning to normalcy. “However, I am not pessimistic; these policies will create a more orderly market.” Niu added that the introduction of electricity market trading and grid connection restrictions will promote the development of energy storage and virtual power plants, requiring a more diversified approach from ecological partners in the industry, significantly enhancing the capabilities of enterprises.
JinkoSolar also responded to the news, stating that the introduction of Document No. 136 not only clarifies the comprehensive market entry of renewable energy tariffs but also emphasizes the establishment of a sustainable pricing settlement mechanism for renewable energy, which greatly stabilizes market expectations for long-term development among green power operators. They noted that the new policies have made adjustments and new requirements regarding the classification, grid connection modes, registration, and development of distributed solar power, making market boundary conditions clearer and allowing the market to return to a stable growth trajectory.
From an investment perspective, despite facing challenges from cost fluctuations, distributed solar power maintains a competitive edge due to its proximity to owners and lack of transmission and distribution costs, ensuring the investment return rate of individual projects remains advantageous. As self-investment costs continue to decrease, demand for distributed solar power is expected to grow among both residential and commercial users.
Recently, Trina Solar (688599.SH) Chairman Gao Jifan publicly stated that market-oriented electricity trading marks a “coming of age” for the photovoltaic industry, serving as a significant opportunity to fully unleash the value of energy storage and catalyze the development of energy storage solutions.
JinkoSolar indicated that in preparation for the new phase of comprehensive market entry for renewable energy, the company is ready to engage in various emerging business layouts, from resource and asset management to integrating energy storage and electricity trading services.
