The disappearing “whole county promotion” is shifting towards distributed photovoltaics. Since October of last year, a series of significant policy adjustments, including the draft management measures, the formal guidelines (the “Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation”), and the comprehensive grid connection policy document No. 136, have fundamentally altered the trajectory of distributed photovoltaic development. By the end of 2024, China’s photovoltaic installed capacity reached a record 890 million kilowatts. Among this, the installed capacity of distributed photovoltaics was 370 million kilowatts, a staggering 121 times the amount at the end of 2013, accounting for 42% of the total photovoltaic power generation capacity, making it a formidable presence in the market.
Like any developmental journey, the growth of distributed photovoltaics has not been linear; it has faced many challenges and fluctuations. After achieving a remarkable 121-fold increase, the sector is now at a juncture where it needs to slow down and reflect. Interestingly, during this pivotal moment in history, the once aggressive “whole county promotion” approach has quietly faded away. In essence, “whole county promotion” serves as a perfect microcosm, encapsulating the history of distributed photovoltaic development: How did distributed photovoltaics emerge? What issues have arisen from this 121-fold growth? What adjustments are necessary? How should future development be redefined? In short, the vanishing “whole county promotion” reflects the past, present, and future of distributed photovoltaics.
In June 2021, the National Energy Administration announced the initiation of pilot work for the whole county promotion of distributed photovoltaics. Following the release of the pilot plan, the administration identified 676 pilot counties in September of the same year. The distributed photovoltaic market is characterized by its widespread, decentralized nature and small individual scale. The aim of these pilot projects was to mobilize local governments and enterprises, integrate underutilized rooftop resources, optimize distribution network investments, and reduce customer acquisition and operational costs for photovoltaic developers. Despite repeated assurances from the National Energy Administration that there would be no administrative mandates, expectations for “whole county promotion” surged. At that time, a report by Dongwu Securities even projected that if the entire country participated in the pilot program, the total potential for rooftop distributed photovoltaics could exceed 60 billion kilowatts—equivalent to 267 Three Gorges Power Stations. Consequently, “whole county promotion” quickly became a focal point of hope for a trillion-yuan market.
This approach also aligned perfectly with the local governments’ desire for large-scale initiatives. As a result, with proactive efforts from local authorities, various stakeholders rushed to participate. Major players, including the five largest state-owned power generation groups—China Energy Group, State Power Investment Corporation, Huaneng Group, Datang Group, and Huadian Group—as well as companies like China Three Gorges Corporation, China General Nuclear Power Group, China National Nuclear Corporation, China Resources Power, and State Power Investment Corporation all began to “stake their claims.” Soon, in 2021, the newly installed capacity for rooftop distributed photovoltaics surpassed that of centralized photovoltaic systems for the first time.
However, it became apparent that “whole county promotion” was a complex system involving multiple stakeholders, including local governments, state-owned enterprises, private companies, and residents. The intricate relationships and fierce competition among these interests led many projects to either stall or fail entirely. One of the submission requirements outlined in the pilot program was that the rooftop area of government buildings should have a photovoltaic installation capacity of no less than 50%, public buildings like schools and hospitals should have at least 40%, commercial and industrial buildings should meet a minimum of 30%, and rural residential rooftops should account for at least 20%. This guideline, commonly referred to as the “5432” model, was ambitious; however, the completion rate of “whole county promotion” projects remained disappointingly low.
By September 2023, researchers Qian Pingfan and Zhou Jianqi from the Development Research Center of the State Council published an article indicating that progress on the pilot projects had fallen short of expectations. They revealed that by the end of April 2023, the cumulative grid-connected capacity of the pilot areas for “whole county promotion” had reached 36.92 million kilowatts, fulfilling only 22% of the planned target, with many areas achieving less than 15%. Some regions reported completion rates as low as 6%. Since then, the momentum behind “whole county promotion” has gradually diminished. Although recent pilot plans have emerged in places like Yingde, Guangdong, it is evident that Yingde is merely using the “whole county promotion” label to promote household photovoltaic development, straying far from the original “5432” model.
The true reasons for the stagnation of “whole county promotion” have been the subject of various narratives. One version suggests that the funding required for these projects is substantial, compelling county-level governments to package the projects for development by state-owned enterprises. Initially, these enterprises showed little interest in the dispersed nature of distributed photovoltaics. However, when packaged together under “whole county promotion,” their interest was piqued. Yet, despite the aggregation, the development logic remained fundamentally different from centralized projects. State-owned enterprises soon discovered that, apart from expansive plots of land or water surfaces, their rigidity made them ill-suited for managing distributed projects effectively. As a result, many initiatives floundered in their hands.
This narrative has received some official acknowledgment. At a meeting of the China Photovoltaic Industry Association in July 2022, Gao Nan, a senior researcher with the New Energy and Renewable Energy Division of the National Energy Administration, pointed out that the “whole county promotion” initiative was at risk of being misinterpreted, as some localities and enterprises displayed behaviors such as “one county, one enterprise,” pausing approvals, and abusing the pilot label to exploit farmers, which undermined the original intent of the initiative. Today, however, if one continues to cling to such interpretations, it would be a significant disconnect from reality.
The issue is straightforward: while state-owned enterprises possess financial advantages, if their lack of flexibility in managing distributed projects is the only barrier to progress, they could simply outsource the “whole county promotion” projects to private companies. By leveraging the strengths of both state-owned and private enterprises, the projects could thrive instead of fading away. Therefore, the disappearance of “whole county promotion” is rooted in deeper issues. Consider this: if the distributed projects under “whole county promotion” were to reach capacities of several hundred million or even one billion kilowatts, what would the infrastructure capacity look like? The fundamental problem lies not in whether state-owned or private enterprises execute these projects; rather, it stems from a flawed conceptual design: the power system simply lacks the capacity to absorb such a massive influx of distributed photovoltaics.
On January 23, the National Energy Administration officially issued the “Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation.” Compared to the previous three optional models, general commercial distributed photovoltaics can now only choose between self-consumption and self-consumption surplus on-grid modes (the full-grid connection model has been removed). Large-scale commercial distributed photovoltaics can only opt for full self-consumption. The electricity generated by both general and large commercial distributed photovoltaics is indistinguishable from that produced by household photovoltaics—all of it is green energy. So, why is there a restriction on allowing full-grid connection or surplus power grid connection? The answer is simple: China’s power system currently cannot handle excessive distributed photovoltaics, necessitating a reevaluation of their positioning. The previous “whole county promotion” approach of seeking large-scale expansion is no longer suitable.
The core of distributed energy is to ensure localized consumption for healthy development, which requires a clear positioning. This must be considered within the broader context of China’s energy transition, particularly in tandem with the development of centralized photovoltaics. Academician Du Xiangwan of the Chinese Academy of Engineering has stated that in the era of new energy, the energy strategy for central and eastern China should prioritize local non-fossil energy sources for self-sufficiency, supplemented by “West-to-East Power Transmission” for any shortfalls. The primary challenge for local distributed photovoltaics in central and eastern China is addressing consumption issues.
The core policy direction of the new distributed photovoltaic management regulations is to return to the concept of “local consumption and local balance,” focusing more on self-use and less on grid connection. Under this policy framework, small micro-commercial enterprises and villas will become targets for industry competition. These projects present stable electricity demand, ensuring basic investment returns and will be the focus of development in the near future. Additionally, many distributed scenarios that are somewhat challenging to develop but capable of providing stable returns will be explored by the industry. Moreover, integrating storage with distributed photovoltaics will become increasingly important, as the desire for independent storage solutions will significantly rise. Storage can help address the instability of photovoltaic generation and stabilize market price fluctuations, ensuring investment returns. Storage will emerge as an ideal companion for distributed photovoltaics.
To promote localized consumption of distributed photovoltaics, some recently discussed options such as green electricity direct supply, wall-sharing electricity sales, dedicated power lines, and integrated source-grid-load-storage systems appear promising. This is because if self-consumption is the only option, many small commercial enterprises may be unable to install photovoltaics due to insufficient electricity loads. However, if green electricity direct supply is allowed, even businesses with low loads can supply green electricity to other enterprises within a 20-kilometer radius. In other words, permitting green electricity direct supply could unlock a new pathway for renewable energy consumption.
As proactive explorations and trials, these various schemes are worthy of encouragement. Overcoming the development bottleneck of distributed photovoltaics and transitioning towards localized consumption cannot rely on a single solution. Currently, there is no universally mature model for renewable energy consumption globally, requiring China to explore its unique path. In conclusion, the previous “whole county promotion” path of large-scale distributed photovoltaic development is no longer viable. The future of distributed photovoltaics hinges on the ability to focus on localized consumption as a fundamental strategy.
