Photovoltaic Power Generation Industry: Entering a New Stage with Distributed Photovoltaic Power as the Main Development Direction
With the rapid development of the photovoltaic power generation industry, continuous technological innovations, and improvements in the research and development capabilities and production efficiency of core components, China’s photovoltaic power generation has gradually entered a new stage of grid parity. The installed capacity has significantly increased, reaching historical highs. In 2024, China’s newly installed photovoltaic capacity amounted to 277.17 GW, marking a year-on-year growth of 28%. The cumulative installed capacity reached 885.7 GW, with a year-on-year increase of 45.32%. Benefiting from policy support, advancements in photovoltaic technology, and rising demand, distributed photovoltaic installations have rapidly grown, becoming an essential force in the energy transition. It is anticipated that distributed photovoltaic power generation will see widespread application in households, industries, and public facilities, establishing itself as the primary direction for photovoltaic development. However, the increasing issue of “curtailment” due to the volatility of photovoltaic power generation highlights the necessity of energy storage systems, which are critical for the large-scale application of photovoltaics and the transformation of the energy structure.
1. Industry Definitions and Classifications
Photovoltaic power generation is a technology that directly converts light energy into electrical energy using the photoelectric effect at semiconductor interfaces. It consists primarily of three components: solar panels (modules), controllers, and inverters, with key parts made from electronic components. When solar cells are connected in series and encapsulated for protection, they form large-area solar panel modules. When combined with power controllers, they create photovoltaic power generation systems. According to the China Photovoltaic Industry Status Report, photovoltaic power generation is mainly categorized into three types: centralized photovoltaic power generation, distributed photovoltaic power generation, and building-integrated photovoltaics (BIPV). Each of these types has its advantages and is suitable for different scenarios and needs. Among them, distributed photovoltaic power generation, characterized by “local development and nearby usage,” has rapidly developed and has become an indispensable part of China’s power supply system, now nearly on par with centralized photovoltaic power stations.
2. Industry Enters a New Phase of Grid Parity with Significant Capacity Growth
In recent years, the photovoltaic power generation industry has experienced rapid growth, ongoing technological innovations, and increased competition within the industry chain. As a result, the research and development capabilities and production efficiency of core components such as photovoltaic modules and inverters have improved, leading to a continual reduction in the costs of new photovoltaic projects. For instance, the total production cost of polysilicon has fallen below 60 RMB/kg, with leading companies achieving costs below 50 RMB/kg. In 2019, the cost of monocrystalline PERC modules dropped to approximately 1.31 RMB/W, while the initial total investment cost of photovoltaic power generation systems fell to about 4.55 RMB/W, and the cost per kilowatt-hour decreased to 0.28-0.5 RMB/kWh. By 2020, the initial total investment cost of photovoltaic systems could further decline to around 4.30 RMB/W.
As of 2024, the levelized cost of electricity (LCOE) for photovoltaic power generation in China has decreased to 0.15-0.24 RMB/kWh. This indicates that the country has gradually entered a new phase of grid parity, transitioning from a subsidy-supported development model to one driven by market dynamics.
Guided by national policies, propelled by technological advancements, and driven by declining costs and expanding application areas, China’s photovoltaic power generation market has achieved rapid growth, consistently reaching historical highs. Data shows that in 2024, the newly installed capacity in photovoltaic power generation was 277.17 GW, a 28% increase year-on-year, while the cumulative capacity reached 885.7 GW, a 45.32% year-on-year growth, setting a new historical record. It is expected that with the implementation of national goals for carbon peaking and carbon neutrality, as well as further reductions in photovoltaic costs, the industry will continue to grow at a fast pace.
3. Distributed Photovoltaic Power Generation as the Main Direction
Distributed photovoltaic power generation refers to facilities built close to user locations, operating primarily for self-consumption with excess electricity fed into the grid, characterized by balancing adjustments in the distribution system. This innovative approach to power generation promotes localized electricity production, grid integration, conversion, and usage, effectively utilizing local solar resources to replace and reduce fossil fuel consumption. It not only enhances the electricity generation capacity of photovoltaic stations of similar sizes but also addresses electricity loss during transmission over long distances. It is projected that distributed photovoltaic systems will see extensive application in households, industries, and public facilities, becoming a vital force in energy structure transformation.
In recent years, due to favorable policies, advancements in technology, and growth in demand, China’s newly installed capacity for distributed photovoltaic power generation has accelerated. 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 the capacity 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 nation’s total power generation capacity. In terms of new installations, distributed photovoltaic power generation added 118.18 GW in 2024, making up 43% of the year’s new photovoltaic capacity. Additionally, distributed photovoltaic generation reached 346.2 billion kWh, contributing to 41% of the total photovoltaic generation. This data underscores the essential role of distributed photovoltaic power generation within China’s power supply system, significantly contributing to the widespread adoption of clean energy and the achievement of carbon neutrality goals.
4. “Integration of Solar and Storage” as an Industry Trend
The concept of “integration of solar and storage” involves incorporating energy storage inverters, batteries, and other storage system devices into photovoltaic power generation systems. This approach effectively addresses the intermittency, high volatility, and low controllability of photovoltaic power generation, resolving the conflict between the continuity of power generation and the intermittency of power consumption, ensuring stable operation on the generation side, grid side, and user side. As the installed capacity of photovoltaics continues to grow rapidly, the issues of energy curtailment due to the volatility of photovoltaic generation are becoming increasingly prominent. The implementation of storage systems will be crucial for large-scale photovoltaic applications and the transformation of the energy structure.
In recent years, the cumulative installed capacity of the electrochemical energy storage industry in China has shown 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 capacity is expected to rise to approximately 27,554 MW/56,216 MWh. Notably, lithium-ion batteries dominate the application of operational electrochemical storage technologies. As of the end of 2023, the total energy capacity 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, representing 2.26% and 1.02%, respectively.
