Photovoltaic Power Generation Industry: Entering a New Phase
The rapid development of the photovoltaic power generation industry, ongoing technological innovations, and improvements in the research and production efficiency of core components have allowed China to enter a new stage of grid parity in photovoltaic power generation. This has resulted in a significant increase in installed capacity, reaching historic highs.
In 2024, China added 277.17 GW of new photovoltaic capacity, a year-on-year growth of 28%. The cumulative installed capacity reached 885.7 GW, marking a 45.32% increase compared to the previous year. Benefiting from policy support, advancements in photovoltaic technology, and growing demand, the new installed capacity of distributed photovoltaic systems has seen rapid growth, becoming a vital force in the energy transition. It is anticipated that distributed photovoltaic generation will be widely applied in homes, industries, and public facilities, emerging as the main direction for the development of photovoltaic energy. However, the intermittent nature of photovoltaic power generation has led to increasing issues related to energy waste, making energy storage systems a crucial element for large-scale photovoltaic applications and energy structure transformation.
1. Industry Definitions and Classifications
Photovoltaic power generation is a technology that converts light energy directly into electrical energy using the photovoltage effect at semiconductor interfaces. It primarily consists of three main components: solar panels (modules), controllers, and inverters, with the main parts composed of electronic components. Solar cells, when connected in series and protected by packaging, form large-area solar panel modules, which, together with power controllers and other components, create photovoltaic power generation systems. According to the report titled “In-depth Research on the Current Status and Development Prospects of China’s Photovoltaic Industry (2025-2032)”, photovoltaic power generation is mainly divided into three types: centralized photovoltaic power generation, distributed photovoltaic power generation, and building-integrated photovoltaics (BIPV). Each type of photovoltaic system has its advantages suited to different scenarios and needs. Among these, distributed photovoltaic generation has rapidly developed due to its advantages of “local development and nearby utilization,” becoming an indispensable part of the Chinese power supply system, with its growth rate now comparable to that of centralized photovoltaic power plants.
2. Industry Transition to Grid Parity and Significant Growth in Installed Capacity
In recent years, the photovoltaic power generation industry has experienced rapid growth, characterized by technological innovations and intensified competition across the supply chain. This progression has led to improved research and production efficiency of key components like photovoltaic modules and inverters, resulting in a continuous decline in costs for new photovoltaic projects. For instance, the production cost of polysilicon has dropped below 60 yuan/kg, with leading companies achieving costs below 50 yuan/kg. The cost of monocrystalline PERC components fell to around 1.31 yuan/W in 2019, while the initial total investment cost of photovoltaic systems decreased to approximately 4.55 yuan/W, and the cost per kilowatt-hour dropped to between 0.28 and 0.5 yuan. By 2020, the initial total investment cost of photovoltaic systems could further decline to around 4.30 yuan/W.
As of 2024, the levelized cost of electricity (LCOE) for photovoltaic energy in China has decreased to between 0.15 and 0.24 yuan/kWh. This indicates that the photovoltaic sector in China is gradually entering a new phase of grid parity, shifting from a subsidy-driven development model to a market-driven approach. With the support of national policies, technological advancements, declining costs, and expanded application areas, China’s photovoltaic market has achieved rapid development, continually setting new historic records in installed capacity.
Data shows that in 2024, the newly installed capacity reached 277.17 GW, an increase of 28% year-on-year, while cumulative installed capacity reached 885.7 GW, reflecting a 45.32% growth and setting a new historic high. With the implementation of national goals for carbon peaking and carbon neutrality, and further reductions in photovoltaic generation costs, the industry is expected to maintain rapid growth.
3. Distributed Photovoltaic Power Generation as the Main Direction
Distributed photovoltaic power generation refers to solar power facilities built close to user sites, characterized by self-consumption of generated power and feeding excess energy back to the grid, while balancing the distribution system. This innovative energy utilization model promotes local generation, grid connection, conversion, and usage, fully leveraging local solar resources to replace and reduce fossil energy consumption. This approach not only enhances electricity generation efficiency of photovoltaic stations of similar scales but also effectively addresses energy losses in transmission and long-distance delivery.
In recent years, driven by policies, technological advancements, and increasing demand, the new installed capacity of distributed photovoltaic systems in China has grown rapidly. By the end of 2024, the cumulative installed capacity of distributed photovoltaic generation reached an astonishing 374.78 GW, which is 121 times higher than at the end of 2013. This not only accounts for 42% of the total installed capacity of photovoltaic power generation but also represents 11% of the total installed capacity of electricity generation nationwide. In terms of new installations, distributed photovoltaic generation added 118.18 GW in 2024, making up 43% of the year’s new photovoltaic installations. Additionally, the total generation of distributed photovoltaic systems reached 346.2 billion kWh, accounting for 41% of the total photovoltaic power output. These figures indicate that distributed photovoltaic generation has become an integral part of China’s power supply system, playing a significant role in promoting the widespread application of clean energy and achieving carbon neutrality goals.
4. “Solar and Storage Integration” as an Industry Development Trend
“Solar and storage integration” involves adding storage inverters, storage batteries, and other energy storage systems to photovoltaic power generation systems. This effectively addresses the intermittent and fluctuating nature of solar energy generation and enhances the stability of electricity supply at the generation, grid, and user levels. As the installed capacity of photovoltaic systems grows rapidly, the challenges associated with energy waste due to the variability of solar generation have become increasingly prominent. Consequently, the implementation of energy storage systems will be a key factor in the large-scale application of photovoltaic energy and the transformation of energy structures.
In recent years, China’s electrochemical energy storage industry has shown rapid growth in cumulative installed capacity. By the end of 2023, the cumulative installed capacity of domestic electrochemical energy storage reached 25,005 MW/50,864 MWh. It is expected to grow to approximately 27,554 MW/56,216 MWh by 2024. Among these, lithium-ion batteries continue to dominate the applied technologies in operational electrochemical energy storage systems. As of the end of 2023, cumulative operational lithium-ion battery projects accounted for 48.77 GWh of total energy, representing 95.89% of the total, followed by lead-acid/lead-carbon batteries and flow batteries at 2.26% and 1.02%, respectively.
