Photovoltaic Power Generation Industry: Entering a New Stage with Distributed Photovoltaic Power Generation as the Main Direction of Market Development
Introduction: As the photovoltaic power generation industry progresses rapidly, with continuous technological innovations and improvements in core component development and production efficiency, China’s photovoltaic sector has entered a new phase of grid parity. The installed capacity has seen significant growth, reaching new historical highs. In 2024, China’s newly installed photovoltaic capacity was 277.17 GW, a year-on-year increase of 28%. The cumulative installed capacity reached 885.7 GW, a growth of 45.32% year-on-year. Benefiting from policy support, advancements in photovoltaic technology, and increasing demand, the growth of newly installed distributed photovoltaic capacity has been particularly rapid, positioning it as a vital force in the energy transition. In the future, distributed photovoltaic power generation is expected to see extensive application in residential, industrial, and public facility sectors, becoming the primary direction for photovoltaic development. However, the volatility of photovoltaic power generation has highlighted the “curtailment issue,” making energy storage systems crucial 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 converts light energy directly into electrical energy through the photovoltaic effect at semiconductor interfaces. It mainly consists of three components: solar panels (modules), controllers, and inverters, with electronic components forming the core parts. When solar cells are connected in series and encapsulated for protection, they form large-area solar panel modules, which, along with power controllers and other components, create photovoltaic systems. According to the report titled China Photovoltaic Power Generation Industry Status Deep Research and Development Prospects Forecast Report (2025-2032), photovoltaic power generation is primarily 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 and is suited to different scenarios and needs. Among them, distributed photovoltaic power generation, characterized by its “local development and nearby utilization,” has experienced rapid growth, becoming an indispensable part of China’s power supply system, now on par with centralized photovoltaic power stations.
2. Industry Has Entered the New Phase of Grid Parity, with Significant Capacity Growth
In recent years, with the rapid development of the photovoltaic power generation industry, continuous technological innovations, and intensified competition along the supply chain, the research and development capabilities and production efficiency of core components like photovoltaic modules and inverters have improved, leading to a decline in the costs of new photovoltaic projects. For instance, the full cost of polysilicon production has dropped below 60 CNY/kg, with leading companies reducing it to below 50 CNY/kg. By 2019, the cost of single-crystal PERC modules fell to approximately 1.31 CNY/W, while the initial total investment cost of photovoltaic systems dropped to around 4.55 CNY/W, with electricity costs ranging from 0.28 to 0.5 CNY/kWh. In 2020, the initial total investment cost for photovoltaic systems could further decrease to about 4.30 CNY/W.
In 2024, the levelized cost of electricity (LCOE) for photovoltaic power in China fell to between 0.15 and 0.24 CNY/kWh. This indicates that China’s photovoltaic power generation is gradually entering a new stage of grid parity, shifting from a subsidy-supported development model to a market-driven one.
Driven by national policies, technological advancements, declining costs, and an expanding application scope, China’s photovoltaic market has achieved rapid growth, continually setting new historical records. Data shows that in 2024, the new installed capacity for photovoltaic power was 277.17 GW, marking a 28% year-on-year increase, while the cumulative installed capacity reached 885.7 GW, showing an increase of 45.32% year-on-year, setting a new record. With the implementation of the national “carbon peak and carbon neutrality” initiatives and further reductions in photovoltaic costs, the industry is expected to maintain rapid growth.
3. Distributed Photovoltaic Power Generation as the Main Direction
Distributed photovoltaic power generation refers to facilities built near user locations, operating on the principle of self-consumption by users, with excess electricity fed into the grid. This innovative method promotes local generation, grid connection, conversion, and usage, making full use of local solar resources to replace and reduce fossil fuel consumption. It not only effectively increases the electricity output of photovoltaic power stations of similar scale but also addresses the losses associated with transmission over long distances. In the future, distributed photovoltaics are expected to be widely used in residential, industrial, and public facility sectors, becoming a significant force in the energy transition.
In recent years, driven by policy support, technological advancements, and increasing demand, the newly installed capacity for distributed photovoltaics has grown rapidly. By 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 not only accounts for 42% of the total installed capacity for photovoltaic power but also represents 11% of the nation’s total power generation capacity. In terms of new installations, distributed photovoltaic power added 118.18 GW in 2024, making up 43% of the year’s new photovoltaic installations. Furthermore, in 2024, the distributed photovoltaic generation reached 3,462 billion kWh, accounting for 41% of the total photovoltaic output. This data illustrates that distributed photovoltaic power generation has become an essential part of China’s power supply system, significantly contributing to the widespread application of clean energy and the achievement of carbon neutrality goals.
Moving forward, distributed photovoltaic power generation is anticipated to become the mainstream trend in photovoltaic development. For instance, in 2016, the National Development and Reform Commission and the National Energy Administration officially released the 13th Five-Year Plan for Power Development (2016-2020), which proposed an installed capacity of over 110 GW for solar power, with distributed photovoltaic power reaching over 60 GW, accounting for about 55%, highlighting the national policy focus on developing distributed photovoltaics. In June 2022, a joint document from nine departments, including the National Development and Reform Commission and the National Energy Administration, introduced the 14th Five-Year Renewable Energy Development Plan, which emphasized the development of the distributed photovoltaic market through two major initiatives: “Urban Rooftop Photovoltaic Action” and “Widespread Rooftop Solar Action.” The “Urban Rooftop Photovoltaic Action” aims to promote the growth of distributed photovoltaics on rooftops of municipal, industrial, and commercial buildings with ample usable roof space and favorable grid connection conditions. The “Widespread Rooftop Solar Action” focuses on utilizing rural rooftop resources and community spaces for distributed photovoltaic development, establishing a profit-sharing mechanism to strengthen poverty alleviation efforts and support rural revitalization. The application space for distributed photovoltaics continues to expand.
On January 23, 2025, the National Energy Administration released the Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation, which clarified project classification and allowed for the feed-in of surplus electricity from large commercial and industrial distributed photovoltaics. However, as the installed capacity of distributed photovoltaic power generation continues to grow rapidly, grid connection and consumption have become the primary constraints on development. There is an urgent need to adjust management strategies to promote coordinated development of generation, grid, load, and storage to facilitate the healthy and rapid advancement of the industry.
4. “Integration of Photovoltaics and Energy Storage” as an Industry Development Trend
The “integration of photovoltaics and energy storage” involves adding energy storage inverters, batteries, and other storage system equipment to photovoltaic power generation systems, effectively addressing the intermittent and volatile nature of photovoltaic power generation and reconciling the contradictions between continuous power generation and intermittent electricity consumption. This integration aims to ensure stable operations across generation, grid, and user sides. As photovoltaic installed capacity grows rapidly, the “curtailment issue” arising from the volatility of photovoltaic power generation is becoming increasingly prominent. The use of energy storage systems will be crucial for the large-scale application of photovoltaics 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. Data indicates that by the end of 2023, the cumulative installed capacity of electrochemical energy storage in China reached 25,005 MW/50,864 MWh. By 2024, this capacity is expected to increase to 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%, followed by lead-acid/lead-carbon batteries and flow batteries, with respective shares of 2.26% and 1.02%.
