Countdown to New Policy Sparks Rush for Distributed Photovoltaic Installations; Component Prices Have Increased for Nearly a Month
On March 11, a professional from a renewable energy company in the Yangtze River Delta shared a poster on their WeChat Moments with the slogan “Grid Connection Sprint: Every Second Counts” and “Countdown to 531.” This comes as there are only 79 days left until the comprehensive market entry of renewable energy pricing, referred to as the “531” deadline.
On February 9, the National Development and Reform Commission (NDRC) and the National Energy Administration jointly released a notice titled “Notice on Deepening Market-Oriented Reform of Renewable Energy Pricing to Promote High-Quality Development” (referred to as Document 136). This document states that, in principle, all renewable energy projects will enter the power market, with pricing determined through market transactions. A sustainable pricing settlement mechanism for renewable energy will be implemented, distinguishing between existing and new projects as of June 1, 2025, commonly known as the “531” market entry deadline. After this date, the pricing of electricity generated by new projects will be determined through competitive bidding.
In January, the National Energy Administration also issued the “Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation,” which clarified various consumption models for distributed photovoltaics. This policy, with a deadline of “430,” requires projects initiated after this date to choose between self-consumption or partial grid connection, eliminating the option for full grid connection sales.
In summary, both policies significantly impact the distributed photovoltaic sector, introducing uncertainties regarding project profitability. According to industry insiders, some distributed photovoltaic companies have begun to communicate lower installation fees to their channels and adjust their residential leasing settlement prices. Some companies have even halted new orders to avoid the risk of not connecting to the grid before the deadline.
“Currently, there is still a lot of confusion, and various departments are exploring the situation,” said a representative from a distributed photovoltaic company. “However, the most important thing right now is to seize the time.”
In the short term, both industry stakeholders and capital markets are concerned about potential fluctuations in electricity prices after the full market entry of renewable energy, which may affect project returns and the profitability of companies.
According to a representative from JinkoSolar (601778.SH), the specific details of the new policies are expected to be clarified by the end of 2025, but some major provinces may release their details as early as the first half of the year, particularly those with mature renewable energy development and market conditions.
These two deadlines have directly led to a surge in demand for distributed projects in the first half of this year. The JinkoSolar representative anticipated that instances of rushed installations would arise. For projects unable to complete installations in time, the company is inclined to carefully assess investment standards such as return rates until local guidelines are published, but it will continue to accept new orders.
This “installation rush” has also resulted in rising component prices, reversing the previously declining trend caused by oversupply in the industry. Currently, component prices have been increasing for nearly a month. Reports from various leading component manufacturers confirm this price increase. One leading component manufacturer indicated that the recent order prices for distributed components are generally above 0.75 yuan/W, with some orders exceeding 0.80 yuan/W.
Aixu Co., Ltd. (600732.SH) mentioned that its BC component prices have reached over 0.80 yuan/W, and under the rush for installation, there is still potential for price increases. Longi Green Energy (601012.SH) also reported that the average price of components currently exceeds 0.80 yuan/W, with a tight supply situation.
Reports indicate that some component prices are approaching 0.90 yuan/W, varying by region. In areas where electricity prices are higher, component quotes may also be slightly elevated. At the end of last year, component prices fell to historical lows, with procurement bids as low as 0.60-0.70 yuan/W. The China Photovoltaic Industry Association previously suggested a component cost price of 0.68 yuan/W to call for healthier industry practices.
On March 12, InfoLink Consulting released its latest price report, indicating that the average price for TOPCon bifacial double-glass components in China has reached 0.73 yuan/W, a 0.01 yuan increase from the previous week. The consultancy noted an uptick in orders during the policy window, particularly in the distributed market.
Additionally, upstream companies in the supply chain reported robust demand for distributed energy solutions, driving up prices for silicon wafers and cells. The China Nonferrous Metals Industry Association’s Silicon Branch mentioned on March 5 that the anticipated rush in March-April will likely lead to rising prices for downstream components and cells, which may continue to impact the silicon material sector.
However, price increases driven by policy changes are not expected to be sustainable in the long term. A leading component manufacturer noted that after the rush for installations subsides in the first half of the year, prices might face downward pressure in the third quarter. Nevertheless, with ongoing supply-side reforms in the industry, there is optimism about price trends for the fourth quarter and beyond.
Another industry insider commented that the current price increases are largely due to the temporary rush for installations, heavily influenced by policy changes. Whether prices will continue to rise depends on market growth in the latter half of the year; otherwise, the price increases may not be sustainable.
Ultimately, the sustainability of rising prices in the supply chain hinges on whether supply and demand conditions improve. Recently, Longi Green Energy’s CEO Li Zhengguo expressed similar thoughts in an interview, stating that a short-term rebound in prices does not necessarily indicate an overall improvement in the industry.
Wang Bohua, honorary chairman of the China Photovoltaic Industry Association, previously pointed out that the introduction of the electricity pricing reform and management measures for distributed photovoltaics has made revenue calculations for projects more complex, increasing the difficulty of investment decisions and the requirements for operating units, thereby raising uncertainty in investment expectations.
There is a time lag between the release of these two policies and the implementation of specific local measures, leading to a potential observation period for investors, which may affect installation rates. Last year, China’s newly installed photovoltaic capacity exceeded expectations at 277.57 GW, marking a 28.3% year-on-year growth. The structure and regional distribution of newly installed capacity also shifted significantly, with centralized installations regaining a share of 57%, while the share of residential installations dropped to 11%.
This year, the industry is experiencing some hesitation due to the management measures for distributed photovoltaics and the market-oriented reform of renewable energy pricing, contributing to uncertainties in installation expectations for 2025.
In the long run, these two policies are expected to foster healthy development in the photovoltaic sector. Niu Yanyan, president of Longi’s distributed business in China, noted that after the issuance of these two documents, the industry will need to undergo a period of exploration and adjustment before gradually returning to normal. “However, I am not pessimistic; the policies will make this market more orderly,” Niu stated. She believes that the introduction of market-oriented trading and restrictions on grid connections will promote the development of energy storage and virtual power plants, requiring more diversified development from industry partners, which will enhance company capabilities.
JinkoSolar also stated that the introduction of Document 136 clarifies the comprehensive market entry of renewable energy pricing while emphasizing the establishment of a sustainable pricing settlement mechanism, significantly stabilizing market and long-term development expectations for green energy operators. They noted that the new policies adjust categories, grid connection modes, filing, and development requirements for distributed photovoltaics, making the market’s boundary conditions clearer, allowing the market to return to a steady growth path.
From an investment perspective, despite facing cost fluctuation challenges, distributed photovoltaics maintain competitiveness in pricing due to their proximity to users and the absence of transmission and distribution costs. As the self-investment costs continue to decrease, both residential and commercial users will increasingly demand distributed photovoltaics.
Recently, Trina Solar (688599.SH) Chairman Gao Jifan publicly stated that market-oriented electricity trading represents a significant milestone for the photovoltaic industry on its path to becoming a primary energy source and presents a historic opportunity to fully unlock the value of energy storage.
JinkoSolar indicated that they are prepared for the new phase of comprehensive market entry for renewable energy, including resource management, asset management, and the integration of energy storage and power trading services, along with new business layouts such as power sales and virtual power plants.
