Photovoltaic Power Generation Industry: Entering a New Phase with Distributed Photovoltaic Power as the Main Direction for Market Development
As the photovoltaic power generation industry experiences rapid growth, continuous technological innovation, and improvements in core component research and production efficiency, China’s photovoltaic power sector is gradually entering a new phase of grid parity. The installed capacity has significantly increased, continually setting historical records. In 2024, China’s newly installed photovoltaic capacity reached 277.17 GW, a year-on-year increase of 28%, while the cumulative installed capacity reached 885.7 GW, marking a 45.32% annual growth. Benefiting from policy support, advancements in photovoltaic technology, and rising demand, the new installed capacity of distributed photovoltaic systems has rapidly expanded, becoming a crucial force in the energy transition. It is anticipated that distributed photovoltaic power generation will see widespread application in homes, industries, and public facilities, establishing itself as a primary direction for the development of photovoltaic power. However, the “curtailment issues” resulting from the intermittent nature of photovoltaic generation are becoming increasingly prominent, prompting the need for energy storage systems as a key element for large-scale photovoltaic application 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 photovoltaic effect at semiconductor interfaces. It mainly comprises three components: solar panels (modules), controllers, and inverters, with core parts made up of electronic components. Solar cells can be connected in series and encapsulated to form large solar panel arrays, which, in conjunction with power controllers and other components, create photovoltaic power generation systems. According to the China Photovoltaic Power Generation Industry Status and Development Prospects Report (2025-2032), photovoltaic power generation is primarily categorized into three types: centralized photovoltaic power generation, distributed photovoltaic power generation, and Building-Integrated Photovoltaics (BIPV). Each type has its advantages, serving different scenarios and needs. Among these, distributed photovoltaic power generation has gained rapid growth due to its characteristic advantages of “local development and nearby utilization,” making it an indispensable part of China’s power supply system, now nearly on par with the development of centralized photovoltaic power plants.
2. Industry Transitioning to Grid Parity and Significant Increase in Installed Capacity
In recent years, the rapid development of the photovoltaic power generation industry, ongoing technological innovation, and intensified competition along the industry chain have resulted in enhanced research capabilities and production efficiency for core components such as photovoltaic modules and inverters, thereby reducing the costs of new photovoltaic projects. For instance, the total production cost of polysilicon has dropped below 60 RMB/kg, with leading companies achieving costs below 50 RMB/kg. By 2019, the cost of monocrystalline PERC modules had fallen to around 1.31 RMB/W, and the initial total investment cost of photovoltaic systems declined to approximately 4.55 RMB/W, leading to a levelized cost of electricity (LCOE) ranging from 0.28-0.5 RMB/kWh. By 2020, the initial total investment cost for photovoltaic systems was projected to decrease to around 4.30 RMB/W.
As of 2024, the LCOE for photovoltaic power generation in China has decreased to between 0.15-0.24 RMB/kWh. This indicates that China’s photovoltaic power sector is gradually entering a new phase of grid parity, transitioning from a subsidy-supported development model to a market-driven approach.
With guidance from national policies, advancements in technology, declining costs, and expanded application fields, the photovoltaic power generation market in China has achieved rapid development and significant increases in installed capacity, consistently setting historical records. In 2024, the newly installed photovoltaic capacity reached 277.17 GW, a year-on-year increase of 28%, while the cumulative installed capacity reached 885.7 GW, reflecting a 45.32% annual growth. It is expected that as national goals for carbon peaking and carbon neutrality are implemented, along with further reductions in photovoltaic generation costs, the photovoltaic power generation industry in China will continue to grow rapidly.
3. Distributed Photovoltaic Power Generation as the Main Direction
Distributed photovoltaic power generation refers to photovoltaic facilities constructed near user sites, characterized by self-consumption by users and surplus electricity fed into the grid, while balancing adjustments occur in the distribution system. This innovative approach advocates principles of nearby generation, grid connection, conversion, and utilization, making full use of local solar resources to replace and reduce fossil fuel consumption. It not only effectively increases energy output compared to similar-sized photovoltaic plants but also mitigates losses associated with voltage boosting and long-distance transportation. In the future, distributed photovoltaic systems are expected to be widely adopted in households, industries, and public infrastructure, playing a significant role in transforming the energy structure.
In recent years, driven by policy support, advancements in photovoltaic technology, and increasing demand, the newly installed capacity for distributed photovoltaic systems has surged. As of the end of 2024, the cumulative installed capacity of distributed photovoltaic power generation reached an impressive 374.78 GW, which is 121 times that of the end of 2013. This translates to 42% of the total installed capacity of photovoltaic power generation and accounts for 11% of the total power generation capacity nationwide. In terms of new installations, 118.18 GW of distributed photovoltaic capacity was added in 2024, representing 43% of the total new photovoltaic capacity that year. Furthermore, the distributed photovoltaic generation reached 346.2 billion kWh, constituting 41% of the total photovoltaic generation. This data underscores the fact that distributed photovoltaic generation has become an essential part of China’s electricity supply system, significantly contributing to the widespread use of clean energy and the achievement of carbon neutrality goals.
4. Integration of Solar and Storage as an Industry Trend
The term “solar-storage integration” refers to the inclusion of storage inverters, storage batteries, and other energy storage system devices within photovoltaic power systems. This effectively addresses the challenges posed by the intermittent and volatile nature of photovoltaic generation, resolving the conflict between the continuity of power generation and the intermittency of electricity consumption, enabling stable operation on the generation side, grid side, and user side. With the rapid growth in installed photovoltaic capacity, the “curtailment issue” stemming from the volatility of photovoltaic generation has become increasingly prominent, making the adoption of energy storage systems a key factor for the extensive application of photovoltaics and the transformation of energy structures.
In recent years, the cumulative installed capacity of the electrochemical energy storage industry in China has demonstrated rapid growth. By the end of 2023, the cumulative installed capacity of domestic electrochemical storage reached 25,005 MW/50,864 MWh. By 2024, this cumulative capacity is projected to reach approximately 27,554 MW/56,216 MWh. Among these, lithium-ion batteries continue to dominate the application of electrochemical energy storage technologies. As of the end of 2023, the total energy of operational lithium-ion battery projects reached 48.77 GWh, accounting for 95.89% of the total, followed by lead-acid/lead-carbon batteries and flow batteries, which accounted for 2.26% and 1.02%, respectively.
