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Introduction
Research background
Human activities are a major source of greenhouse gas (GHG) emissions, significantly contributing to global climate change (IPCC, 2014) The IPCC Fourth Assessment Report (AR4) highlights a very likely link between rising GHG levels and climate change impacts (IPCC, 2007) There is a worldwide consensus that urgent reductions in GHG emissions are essential to mitigate the most severe effects of climate change (UNEP, 2016).
The building sector accounts for 32% of global energy consumption, highlighting significant potential for energy conservation and increased use of renewable energy sources (UNEP, 2016; Lucon et al., 2014) To address this, various renewable energy technologies such as ground-source heat pumps, solar water heating, and solar photovoltaic (PV) systems have been developed to reduce greenhouse gas emissions from building energy use (Zhang et al., 2015a).
Among these technologies, PV is one of the most viable renewable energy applications at present A
Photovoltaic (PV) systems applied to buildings enable the harnessing of solar energy to generate clean electricity for internal use or to sell excess power to the public grid, offering both environmental benefits and economic opportunities Recent advancements in PV technology have outpaced other renewable energy sources, driven by significant reductions in material costs, increased government support, and a plentiful supply of PV products (Biyik et al., 2017; Yuan et al., 2014; Zhang et al., 2015a; Zhao et al., 2015a; Nemet et al., 2017) Promoting building-integrated PV applications is essential for sustainability, benefiting both energy-rich developed nations and rapidly growing energy markets in developing countries like China.
China, as the world's leading PV producer, enjoys significant advantages in deploying and developing building PV applications This position boosts the widespread adoption of photovoltaic technology, supporting China's renewable energy growth and sustainability goals The large-scale production capacity and strong market presence facilitate cost-effective solutions, making building PV applications more accessible and beneficial across the country.
China's energy consumption patterns are influenced by various factors, including the increasing adoption of photovoltaic (PV) applications The relatively low price of PV technology has boosted its popularity within the country, making it a key component of China's renewable energy strategy The following sections explore the current status of PV application in China and examine how two major policy-related factors significantly impact the growth and development of PV deployment nationwide.
1.1.1 Energy consumption of buildings in urban areas of China
China's energy structure primarily relies on fossil fuels, especially coal, which significantly contributes to greenhouse gas emissions (Chandran Govindaraju and Tang, 2013) In 2015, China accounted for 28% of global CO2 emissions from fuel combustion, making it the largest emitter worldwide, followed by the United States (15%), the European Union (10%), and India (6%) (IEA, 2017).
China has taken responsibility to mitigate the global climate issues According to the Paris
Agreement (2015), China will reduce carbon intensity by 60%-65% compared to 2005 by 2030
The Chinese government has set clear objectives for sustainable development, including transforming the energy sector to achieve 20% renewable energy consumption by 2030 Amid the global fight against climate change, China faces critical environmental challenges such as worsening air pollution caused by fossil fuels, leading to social health concerns and significant economic losses (Yang et al., 2010) In response to international and domestic pressures, China is prioritizing a clean energy transition and shifting focus from rapid GDP growth to sustainable development practices.
The building sector in China plays a crucial role in reducing carbon emissions through energy conservation, supporting the country’s sustainability objectives Currently, it accounts for 20% of China's total energy consumption, with an annual growth rate of 7.7% between 1998 and 2012 Rapid urbanization and rising living standards have led to significant increases in energy use in urban buildings, a trend that is expected to continue in the coming years.
Since 2000, China has experienced rapid urbanization and a booming real estate sector, with 54% of the population living in urban areas and an annual growth rate of 2.4% (UN, 2014) Economic development has improved living standards, encouraging urban residents to invest more in quality built environments (Li et al., 2007; Cai et al., 2009) However, without enhanced energy efficiency measures and increased use of renewable energy sources, the overuse of energy in China's building sector risks leading to severe environmental and social issues.
1.1.2 PV applications in buildings in urban areas of China
Grid-connected distributed photovoltaic (PV) systems are widely used in urban areas due to their ability to operate without costly storage batteries and their capacity to feed surplus electricity back into the public grid, generating additional revenue They enhance the security of urban electricity supplies by serving as decentralized power sources, reducing reliance on centralized systems These systems require minimal space, making them highly suitable for densely populated cities, and can be integrated into various building types Building-attached PV (BAPV) systems are typically installed on rooftops with different attachment methods that impact performance and costs, while building-integrated PV (BIPV) systems can replace traditional building elements like roofs and facades, serving dual functions and offering aesthetic and functional benefits in urban environments.
BIPVs are regarded as one of the most promising photovoltaic (PV) applications for the future due to their multiple benefits Despite their potential, BIPVs currently represent only about 12% of all PV systems, as noted by Zhang et al (2015b) This indicates significant growth opportunities for BIPVs within the renewable energy sector.
6 buildings in China The low adoption indicates a lack of understanding of the additional benefits of BIPV compared with BAPV
China has been the world’s largest producer of photovoltaic (PV) products since 2007, yet the adoption of PV in the building sector remains in its early stages compared to countries like Germany and Spain Since 2009, the Chinese government has implemented comprehensive policies and regulations to promote the integration of PV systems into the built environment By 2013, the focus shifted toward supporting distributed PV systems, such as Building-Applied Photovoltaics (BAPVs) and Building-Integrated Photovoltaics (BIPVs), particularly those under 20MW Additionally, a national feed-in tariff (FIT) scheme was introduced, offering a 20-year subsidy to encourage the widespread adoption of distributed PV systems in China.
Government support plays a key role in the deployment of building PV systems, especially in China
Understanding government decisions and strategic goals is essential when developing photovoltaic (PV) systems In China, the Five-Year Plan serves as the official blueprint for national development from 2016 to 2020, offering vital guidance on energy efficiency and emissions reduction efforts.
Key initiatives to advance photovoltaic (PV) applications include China's 13th Five-Year Plan for Building Energy Efficiency and Green Building, and the 13th Five-Year Plan for the Development of Solar Energy These strategic plans focus on promoting sustainable energy growth by enhancing building efficiency and expanding solar energy deployment By aligning with these national policies, the PV industry benefits from targeted support and clear development goals, fostering innovation and increasing the adoption of clean energy solutions.
The 13th Five-Year Plan emphasizes focusing on building energy efficiency and green buildings tailored to specific climate zones Leading cities in eastern regions, provincial capitals, and key cities in central and western regions are expected to take the lead in promoting green building initiatives Building photovoltaic (PV) applications are prioritized as a core component of renewable energy integration in buildings, with new solar PV installations in Chinese cities expected to exceed 10 GW Additionally, market-oriented resource allocation should be strategically targeted rather than evenly distributed to maximize sustainability and efficiency in the development of green buildings.
7 mechanism into consideration, the objectives of improving building energy efficiency and the development of green building mainly depend on the administrative and financial support of the government
Research questions
The research questions and sub-questions of this study are as follows:
Understanding the financial implications of various distributed PV technologies in commercial buildings across China requires analyzing factors such as geographic location and policy influences Geographic location significantly impacts the financial viability of PV systems, as solar resource availability varies throughout different regions, affecting energy output and return on investment Additionally, policy changes play a crucial role in shaping the financial feasibility of PV technologies, with government incentives, tariffs, and regulatory frameworks either enhancing or limiting economic benefits As policies evolve, they directly influence the cost-effectiveness and adoption rates of diverse PV systems across China's diverse climatic and regulatory landscapes.
Research aim and objectives
Through exploring and answering the research questions, this research aims to:
Understand the financial implications for different distributed PV technologies in commercial buildings across China with policy changes
1.3.1 Specific objectives of this research
I To identify different kinds of distributed PV applications available for use in commercial buildings in China and globally
II To improve both investors and policy-makers’ understanding of the financial value of distributed PV projects across different geographic conditions in China
III To identify impacts of national subsidy on financial value outcomes of PV applications and explore implications for national and local renewable energy incentives
IV To identify impacts of electricity price on financial value outcomes of PV applications and explore implications for national and local renewable energy incentives.
Research scope
This study focuses on the application of building PV systems in China's commercial building sector, emphasizing high self-consumption ratios Building PV systems are categorized into building-attached PV and building-integrated PV, both of which are covered in this research These systems can be installed on various building types to enhance energy performance, with a specific focus on commercial buildings in China Importantly, all electricity generated by the PV systems is fully consumed by the respective buildings, promoting energy efficiency and sustainability.
Research significance
The research findings are of benefit to all stakeholders of building PV applications in at least five areas
First of all, the research identifies the status of building PV development in China, improving knowledge about building PV applications, especially the adoption of BIPVs
Secondly, the research develops a program that can calculate energy generation and evaluate economic performance for different kinds of building PV systems
This research offers valuable insights for investors by identifying the most suitable building PV types and prime urban locations in China for solar investment It highlights the popularity of specific building PV configurations and considers the impact of urban environmental factors, aiding informed decision-making in photovoltaic project investments.
The research offers valuable policy insights for state and local governments to boost the economic performance of building PV applications, thereby promoting sustainable growth in China's building photovoltaic market.
This research demonstrates the economic feasibility of building photovoltaic (PV) systems, providing valuable insights for similar studies in cities with comparable climate conditions or similar policy challenges These findings can inform future projects and encourage the adoption of solar energy technologies in comparable urban environments.
Thesis outline
The thesis is structured as follows:
Chapter 1 introduces the research background, research questions, research aim and objectives
Chapter 2 is the literature review The literature review provides the theoretical background of the thesis In this chapter, PV cell and PV technology applied in buildings are explored and explained Through the review, Objective I of the study is addressed Policies regarding PV generation are identified with special focus on the Chinese context Meanwhile, the
13 geographic conditions in China are explained in detail, providing the essential background information for the study
Chapter 3 presents the methodology used in the study to approach all the research objectives, consisting of the literature review, case study, cost-benefit analysis and MATLAB programming The research ethics approval and research timeline are also included
Chapter 4 presents the results and discussion of the economic performance of different building PV applications in the selected cities under the current policy conditions
Chapter 5 investigates the impact of national subsidy on the economic viability of different
Chapter 6 analyses the impact of tariff growth rate on the financial feasibility of different PV systems across China
Chapter 7 is the conclusion of the thesis The major outcomes of the study are summarized The limitations of the study are discussed The implications are provided, along with suggestions on further research in this field.
Summary
This chapter introduces the research background, focusing on building energy consumption and the current status of photovoltaic (PV) applications in China It examines the influence of policy-related variables on the adoption of building PV systems, highlighting their significance for sustainable development The research questions are clearly defined to guide the study, followed by the development of specific objectives and research aims The scope and significance of the research are outlined, emphasizing its contribution to advancing renewable energy integration in China The chapter concludes with an overview of the thesis structure, providing a comprehensive framework for the study.
Literature review
Introduction
This chapter is divided into four parts Section 2.2 offers an overview of different types of photovoltaic (PV) cells, various categories of PV systems used in buildings, and the current state of building PV applications in China Section 2.3 discusses key policies supporting distributed PV applications, including government incentives and electricity pricing strategies in China Section 2.4 examines China's geographic conditions, highlighting 12 representative cities from different regions and providing detailed policy analyses for each Finally, Section 2.5 summarizes the main points covered in the chapter.
PV cells, systems and applications in building
Photovoltaic (PV) cells, also called solar cells, are the fundamental building blocks of a PV power system Advancements in PV technology have led to the development of various types of solar cells, enhancing the efficiency and adaptability of solar energy solutions.
Generally, PV cells can be divided into three categories: wafer-based crystalline (monocrystalline and polycrystalline silicon), compound semiconductor (thin-film) and innovative (IEA-PSPV, 2016a)
Wafer-based crystalline photovoltaic (PV) is the first generation of solar technology, making it the most mature and widely adopted in the solar energy industry With a long-standing history, this type of PV accounts for approximately 94% of the total solar market, highlighting its dominance and proven reliability in renewable energy solutions As a key player in solar technology, wafer-based crystalline PV continues to lead in efficiency and market share within the solar industry.
Polycrystalline silicon (PV) products comprise approximately 70% of the market, while monocrystalline silicon accounts for around 24% (Fraunhofer, 2017) The rapid growth of China’s photovoltaic manufacturing industry has significantly increased the market share of crystalline silicon over recent years (Płaczek-Popko, 2017) One key advantage of silicon-based PV technology is its high conversion efficiency, with current monocrystalline silicon solar cells achieving efficiencies between 16% and 25% (IEA-PSPV, 2016a).
Though polycrystalline silicon products are less efficient (around 14%-18%), they are still popular because of the lower cost compared with monocrystalline silicon (IEA-PSPV, 2016a)
Thin-film photovoltaic (PV) cells are considered as the second generation of solar technology, made by coating semiconductor materials with a thickness of just a few micrometers onto backing substrates like plastic or glass (Płaczek-Popko, 2017; IEA-PSPV, 2016a) These cells are more cost-effective than traditional crystalline silicon cells, though they typically have lower conversion efficiencies; however, recent advancements have led to significant efficiency improvements Notably, the average commercial efficiency of CdTe thin-film modules increased from 9% to 16% over the past decade, with laboratory efficiencies reaching up to 21% for CIGS and CdTe cells (Fraunhofer, 2017; Green et al., 2016) Despite these technological gains, the market share of thin-film PV products has declined from less than 10% in 2015 to around 6% in 2016, reflecting evolving market dynamics (ITRPV, 2016; Fraunhofer).
As photovoltaic (PV) technology advances, innovative third-generation PV materials such as organic, dye-sensitized, quantum dot, and perovskite solar cells have emerged, offering promising potential for improved efficiency and versatility However, most of these cutting-edge products are still in developmental stages and are not yet mature enough for commercial deployment, which is why they are not included in this research.
A PV system is an energy solution that converts solar energy into electricity, supporting sustainable power generation According to Raugei and Frankl (2009), there are four main types of photovoltaic systems based on their installation methods: grid-connected centralized, grid-connected distributed, off-grid non-domestic, and off-grid domestic systems These variations cater to different energy needs and installation contexts, making PV technology versatile and adaptable for both residential and industrial applications.
Off-grid systems are primarily utilized in remote locations with limited or no access to electricity, making photovoltaic (PV) systems the main energy source These systems often depend on batteries to store solar energy, ensuring a reliable power supply in areas where traditional grid connectivity is unavailable Properly designed off-grid setups are essential for providing sustainable and independent energy solutions in isolated environments.
Storage is the key feature that distinguishes off-grid systems, with batteries storing excess energy for use during low-light periods (Raugei and Frankl, 2009) These systems are versatile, serving not only residential households but also non-domestic applications such as rural telecommunications and meteorological stations (Zhang et al., 2015a).
Grid-connected photovoltaic (PV) systems are integrated with the public electricity grid, allowing them to operate in parallel and supply excess energy back to the grid An essential component of these systems is the inverter, which converts the generated electricity from direct current (DC) to alternating current (AC) for use in the grid Since the grid functions as a virtual storage system, batteries are generally unnecessary, as the grid supplies energy when the PV system cannot meet demand These systems represent the majority of installed PV systems worldwide, with over 99% of annual PV installations in 2013 being grid-connected in key IEA countries.
Grid-connected centralized systems are large-scale power plants that generate renewable electricity for public infrastructure, but their distance from demand centers causes significant transmission and distribution losses (Zhang et al., 2015a) In contrast, grid-connected distributed systems are installed near or at the demand sites, reducing transmission losses and improving efficiency despite their smaller scale (Rigter and Vidican, 2010) These distributed systems enable self-consumption of generated power, while surplus energy can be fed into the public grid, offering economic benefits to owners Additionally, they enhance the security and reliability of electricity supply, particularly in urban areas (Liu et al., 2010).
Typically, buildings are connected to the public electricity grid in most urban areas Grid-connected
PV systems are specially configured with the distribution system to supply energy for buildings’
Building photovoltaic (PV) systems can generate excess energy beyond a building’s requirements, allowing them to sell surplus power to the public electricity grid and earn financial credits (Shukla et al., 2016b) These systems can be installed on or integrated into various types of buildings, which are typically classified into two categories: Building Attached PV Systems (BAPVs) and Building Integrated PV Systems (BIPVs) (IEA-PSPV, 2016a).
Building-integrated photovoltaic systems (BAPVs) are primarily installed on rooftops to host photovoltaic arrays, providing an efficient way to generate renewable energy According to Peng et al (2011), BAPVs serve as an add-on component that produces free electricity to meet a building’s energy needs, without compromising the building’s structural functions Similar to conventional PV systems, BAPVs utilize various attachment methods, each impacting system performance and cost differently, as noted by Barkaszi and Dunlop (2001).
BIPVs can replace traditional building elements like roofs and facades, serving a dual function of energy generation and structural component (Jelle et al., 2012) They also play a key role in enhancing the architectural and aesthetic appeal of buildings (Peng et al., 2011) As one of the most promising future photovoltaic applications, BIPVs are available in diverse product types that can be categorized by cell type, application, and market name, as illustrated in Biyik et al (2017)’s schematic diagram (Figure 2.1).
Figure 2.1 The Categorization of BIPV (source: Biyik et al (2017))
BIPV foil products are lightweight, flexible thin-film photovoltaic (PV) cells designed specifically for roof applications, offering ease of installation and adaptability (Shukla et al., 2016a) However, their low efficiency and high resistance pose limitations due to the inherent disadvantages of thin-film technology (Jelle and Breivik, 2012) In contrast, BIPV tile products serve as modern substitutes for traditional roof tiles, integrating various photovoltaic cells, including crystalline and thin-film types, to combine energy generation with aesthetic appeal (Jelle et al., 2012).
BIPV (Building-Integrated Photovoltaics) modules and solar cell glazing products are versatile solutions applicable to both building facades and roofs, enhancing aesthetic appeal while generating solar energy (Jelle et al., 2012; Shukla et al., 2016a) These BIPV products can integrate additional functionalities such as weatherproofing, thermal insulation, and other building elements to improve overall building performance Like traditional PV modules, the classification of BIPVs and BAPVs depends on the manufacturer's mounting specifications, leading to potential uncertainty in their application (Peng et al., 2011) Solar cell glazing products can serve as replacements for traditional windows, glazed curtain walls, and roofs, offering dual functionality of aesthetics and energy generation Manufacturers offer a diverse range of product options, varying in PV cell types, colors, and transparency levels; crystalline cells typically provide higher efficiency but lower transparency, whereas thin-film products tend to be more transparent but less efficient (Jelle and Breivik, 2012).
Government policies regarding solar PV power generation
2.3.1 Incentives in the global context
Government support mechanisms are essential for the development and deployment of renewable energy sources like solar PV power, with numerous incentive policies established globally to promote solar energy By 2010, over 85 countries had implemented specific policies for renewable energy development, reflecting a global commitment to sustainability (Jacobs and Sovacool, 2012) These policies primarily fall into two categories—price-based and quantity-based support—and can be further classified as investment-focused or generation-focused, as outlined by the IEA (2008) Many countries employ a combination of support instruments tailored to their unique conditions, enhancing their renewable energy markets While research often emphasizes optimal policy design within individual countries, learning from successful international examples such as Germany offers valuable insights for effective renewable energy policy development (Zhang and He, 2013).
Table 2.1 Overview of government support mechanisms for solar PV generation (source: Jacobs and Sovacool (2012))
Support mechanisms Price-based support Quantity-based support Investment focused Research and development Tender mechanism
Investment subsidies Tax incentives Soft loans Generation focused Feed-in tariffs (FIT) Tender mechanism
(Tradable green certificate scheme/ Renewable portfolio standard)
Germany's solar PV development roadmap began with public R&D initiatives and investment subsidies, such as the 1989 1000 Solar Roof Program which offered 60-70% cost coverage but had limited market success In 1999, the Red-Green coalition introduced the 100,000-Roof Program to boost the PV market and bridge the gap before the adoption of a new FIT law, offering preferential support to private investors, self-employed individuals, and small to medium-sized enterprises Investment subsidies from this program gradually phased out by 2003, with the FIT covering investment costs during that period, marking a significant step in Germany’s solar energy policy evolution.
The FIT scheme is a generation-focused policy mechanism designed to promote renewable energy technologies such as solar PV and wind power, with Germany pioneering its adoption as the first European country in the early 1990s Since 1997, nearly all new PV projects in Europe have been developed under the FIT scheme, highlighting its widespread influence (del Río and Mir-Artigues, 2012) The initial German Feed-in Law established a framework that included fixed tariff payments and a purchase obligation for grid operators (Jacobs and Sovacool, 2012) Subsequently, the 2000 Renewable Energy Source Act reformed and refined the FIT system, which Germany continues to adjust periodically, making it a leading example of effective FIT policy implementation.
As of 2019, Germany has emerged as one of the world's leading photovoltaic (PV) markets, driven by its robust Feed-in Tariff (FIT) scheme and access to low-interest loans from state banks The country's solar energy sector benefits from a strong presence of experienced PV companies and high public awareness of solar power, which collectively accelerate the growth of solar PV generation across Germany.
The promotion of solar PV generation begins with investment subsidies, similar to Germany's approach, followed by the development and refinement of national Feed-in Tariff (FIT) schemes This research emphasizes the economic performance of distributed photovoltaic (PV) applications in buildings, highlighting the significant impact of government incentive policies Key policies include initial investment subsidy programs, the national FIT scheme, free grid-connection services, and tax incentives, all of which directly enhance the economic viability of distributed PV projects.
The rooftop subsidy program and Golden Sun demonstration program
In 2009, China launched two key programs to support the transition of its photovoltaic (PV) industry, which heavily relied on imports from the USA and EU These initiatives aimed to boost domestic manufacturing and reduce dependence on foreign technology, especially as international trade tensions hindered the industry's growth This urgent response by the Chinese government was crucial to developing a robust domestic PV market and ensuring sustainable growth within the sector.
The rooftop subsidy program launched in March 2009 aimed to promote photovoltaic (PV) installations on buildings rather than ground-mounted solar plants It provided upfront financial support of RMB 15/W for rooftop solar systems and RMB 20/W for Building-Integrated Photovoltaic (BIPV) systems, targeting projects with capacities exceeding 50 kW This initiative gradually integrated into the broader Golden Sun demonstration program, advancing China's solar energy development and renewable energy policies.
The Golden Sun demonstration program was launched in July 2009 and was terminated in 2013 This program provided financial support to over 500 MW PV projects The projects with PV capacity over
The Golden Sun demonstration project authorized 300 kW installations, offering subsidies based on grid connection type Off-grid projects could receive up to 70% of the total cost coverage, while on-grid projects were eligible for subsidies covering 50% of the construction expenses The program also promoted self-consumption of solar energy, allowing system owners to sell any surplus electricity back to the public grid at the prevailing local coal-generated electricity price, fostering renewable energy adoption and supporting grid integration.
Table 2.2 provides a summary of key policies regarding the two programs from beginning to end Important information about the two programs is shown in Table 2.3 and Table 2.4 Between 2009
Between 2011 and 2012, a total of 551.2 MW of photovoltaic (PV) building projects, including Building-Integrated Photovoltaics (BIPV) and Building-Applied Photovoltaics (BAPV), were developed with support from related government initiatives However, these projects experienced a significant decline in subsidies over time, which impacted the growth and investment in PV building solutions.
Table 2.2 Relevant policies regarding investment subsidy policies (source: Zhang et al (2015a) & Author)
2009.03 Opinions on Accelerating the Implementation of Solar PV Building Applications
2009.03 Interim Measure for the Administration of
Financial Subsidies for Solar PV Applications
2009.07 Notice on the Implementation of the Golden
Management of the Golden Sun Demonstration Projects and the Building Solar Energy
2012.01 Notice on Implementing the Golden Sun
2012.11 Declaration on Organizing the Applications of
Golden Sun Demonstration Projects and BIPV Projects
2013.06 Notice on Bringing the Subsidies of Golden Sun
2013.12 Notice on Liquidation of the Golden Sun program and PV Building Application Demonstration Project in 2012
Table 2.3 Solar PV building Projects in China from 2009 to 2012 (source: Zhang and He (2013))
Table 2.2.4 Golden Sun demonstration program (source: Zhang and He (2013))
The Golden Sun program faced significant criticism due to allegations of subsidy fraud, construction delays, and poor-quality products (Ceweeklycn, 2013) Lack of ongoing oversight contributed to government losses from fraudulent projects, exposing the drawbacks of the upfront construction subsidy model This approach failed to incentivize investors to prioritize clean energy generation, as immediate financial gains were more appealing, leading to concerns about the long-term profitability and sustainability of PV projects.
The Chinese government shifted its subsidy approach to focus on the amount of electricity generated, enabling investors to focus on optimal PV system operation and earn returns through power generation This transition led to the adoption of a feed-in tariff (FIT) scheme, which is considered more cost-effective for distributed PV projects than investment subsidies As a result, the FIT scheme encourages higher energy production and better economic efficiency in China's solar energy sector (Zhao et al., 2015b; Jian, 2013).
The Feed-in Tariff (FIT) scheme has gained global acceptance due to its proven advantages over alternative policies like net metering, low-interest loans, and fiscal incentives (Zhang and He, 2013) After extensive market testing, many countries have successfully developed and operated mature FIT schemes, providing valuable experiences that developing nations such as China can learn from The evolution and adjustments of China’s FIT scheme are detailed in Table 2.5, highlighting its ongoing development and refinement.
Table 2.5 Relevant policies regarding the FIT policies (source: Zhang et al (2015a) & Author)
2011.07 Notice on improving FIT for solar PV NEA
2013.08 Notice on Playing the Role of the Price Lever to Promote the Healthy
2014.09 Notice on Further Implementation of Policies Relevant to Distributed
2015.12 Notice on Perfecting the Benchmark Tariff Policy of Onshore Wind
2016.12 Notice on Adjusting the FIT of Onshore Wind Power and Photovoltaic
2017.12 Notice on the price policy of photovoltaic power generation projects in
In July 2011, China’s National Development and Reform Commission (NDRC) launched the country’s first national Feed-in Tariff (FIT) scheme, setting differentiated prices based on project conditions The scheme primarily applies to projects approved before July 1, 2011, and completed before the end of that year, establishing a framework to promote renewable energy development across China.
In December 2011, the feed-in tariff for solar projects was set at RMB 1.15/kWh, with projects that couldn't be completed before December 31, 2011, eligible for this rate nationwide except in Tibet, where the tariff remained RMB 1.15/kWh The Chinese government established a unified benchmark price by considering factors such as average investment costs, operational expenses, and solar plant bidding prices, ensuring a standardized and supportive environment for solar energy development across the country.
Over the past six years, the FIT scheme has evolved significantly from its initial simple and vague structure Key developments include dividing China into three solar resource regions, classifying PV installation types, and adjusting tariff levels to promote growth In 2013, the NDRC implemented major reforms to the national FIT framework, establishing a solid foundation for future modifications These changes also differentiated between centralized and distributed generation systems, enhancing the scheme’s effectiveness and clarity.
Geographic conditions in China
China's vast size results in diverse geographic conditions and regional policies that vary across the country Understanding these regional climate differences and policy variations is essential for comprehensive insight To illustrate this, twelve key cities have been selected for detailed policy analysis, highlighting how geographic and climatic factors influence regional governance and development strategies in China.
2.4.1 Geographic conditions in China and typical cities
This study considers two key geographic factors: solar resource distribution and climate zones Solar resource availability significantly impacts the energy output of building photovoltaic (PV) systems, while climate demarcations influence the building's energy consumption patterns Understanding these conditions is essential for optimizing PV system performance and enhancing energy efficiency in buildings.
Solar resource distribution in China
Solar irradiation conditions in the country vary regionally, with the western regions generally receiving more sunlight than the eastern areas Additionally, southern regions tend to have higher solar exposure compared to northern areas, and highland areas often experience better solar irradiation than flatlands.
2011, CNREC, 2014) A detailed solar irradiation distribution is shown in Figure 2.4 and Table 2.10 The western and northern areas of China are in the richest solar energy regions (Level I-V), while
China’s highly urbanized and population-concentrated cities, such as Shanghai and Shenzhen, are primarily located in areas with lower solar resources (Level VI-VIII), highlighting a mismatch between solar radiation availability and energy demand The country’s electricity consumption centers in the eastern and southern regions, where solar irradiation is less abundant, yet distributed photovoltaic (PV) projects are predominantly implemented in these areas despite lower solar resource levels This discrepancy underscores the challenge of aligning solar energy development with regional energy needs in China.
Figure 2.4 Solar irradiation distribution map (source:NREL (2012))
Table 2.10 Solar irradiation distribution zones and typical cities
Building climate demarcation in China
China's Building Climate Demarcation (GB50352-2005) identifies seven major climate zones for building design, which significantly influence local building codes, energy performance, and electricity demand According to these zones, specific ceiling values for commercial office building energy consumption are outlined in the Standard for Energy Consumption of Buildings (GB/T 51161-2016), with exclusions for winter heating energy in severe cold and cold regions due to centralized heating systems These climate-specific standards ensure optimized energy efficiency tailored to regional conditions.
Figure 2.5 Building climate zones in China (Source: GB50352-2005) Table 2.11 Building climate zones and typical cities
Zone Climatic zone Major Cities
III hot summer & cold winter Shanghai,
IV hot summer & warm winter
VI severe cold & cold Lhasa
VII severe cold & cold Urumqi
Table 2.12 Energy consumption of typical commercial office building in different climate zones (source: GB/T 51161-
Hot summer and cold winter
Hot summer and warm winter
80 kWh/m 2 /year 110 kWh/m 2 /year 100 kWh/m 2 /year
Note: energy for heating in winter is excluded
A matrix based on two geographic conditions was developed to facilitate city selection in this study The criteria included selecting one city from each identified zone within the matrix, prioritizing highly urbanized and densely populated areas such as provincial capitals or key provincial cities Additionally, cities with high GDP and energy consumption, along with those receiving specific local subsidies, were considered Building on Guo et al (2017), who examined the relationship between per capita carbon emissions and GDP per capita across 31 major cities in all five climate zones, this research specifically targets cities with high per capita carbon emissions under similar economic conditions, to better understand emissions patterns and drivers.
Figure 2.6 GDP per capita and carbon emission per capita of 31 cities in 2014 (source: Guo et al (2017))
The study includes 12 carefully selected cities, representing a comprehensive range of climatic and solar conditions across China, as detailed in Table 2.13 These cities are categorized by building climate zones and arranged based on solar irradiation levels in descending order By encompassing the majority of climatic and solar variations in China, this selection ensures that the research findings are applicable and relevant to most urban areas throughout the country.
Table 2.13 Matrix of climate zone and solar resource level and the selected cities
Different provinces and cities in China have unique electricity prices and growth rates, necessitating the use of local data to ensure accuracy in our study Local commercial electricity prices are obtained from official sources such as city or province development and reform commissions and national grid companies Electricity pricing policies vary across regions; most cities maintain fixed prices for commercial and industrial consumption, while cities like Taiyuan and Tianjin implement time-of-use (TOU) pricing Shanghai features the most complex pricing mechanism, which varies based on both seasonal changes and time of day.
Based on existing literature (Wang and Zhang, 2016), the local electricity growth rates are determined, focusing on the compounded annual growth rate of commercial electricity prices across provinces from 2006 to 2011 During this period, Hohhot and Chengdu experienced negative growth rates, primarily due to national policy adjustments impacting electricity pricing.
In 2017, the national subsidy for distributed photovoltaic (PV) systems was set at RMB 0.42/kWh for a duration of 20 years and applied across all Chinese cities Many provinces and cities, primarily in southeastern China, offer additional local subsidies to promote PV adoption, although these regional incentives frequently change Currently, Guangzhou and Shanghai are the only cities providing such local subsidies, with Guangzhou offering a one-time payment upon successful system operation.
The PV system's cost is estimated at RMB 0.2 per watt, with the Shanghai government providing a 5-year subsidy based on electricity generation, offering RMB 0.25 per kWh for commercial and industrial buildings This research considers various factors, including electricity prices, growth rates, and subsidies, as summarized in Table 2.14, to analyze system performance and economic viability.
Table 2.14 Summary of city information
Local Electricity Price RMB/kWh
Local Electricity Price Growth Rate
Urumqi Fixed price 0.5850 0.59% For self-consumed
Part 20-year subsidy: RMB 0.42/kWh (in 2017) RMB 0.37/kWh (in 2018)
Guangzhou Fixed price 0.8983 2.04% One-off subsidy:
7.51% For industrial and commercial building 5-year subsidy:
Summary
This chapter provides the theoretical foundation of the research, starting with an overview of building PV technologies, from basic PV cells to advanced applications in buildings, highlighting the significant potential for promoting Building-Integrated Photovoltaics (BIPVs) in China's commercial sector It reviews the current status of building PV adoption in China, emphasizing the promising opportunities for expanding PV integration in urban environments The chapter also covers key policies supporting distributed PV applications, including government incentives and electricity pricing policies, which influence PV deployment Additionally, it examines China's geographic conditions, such as solar irradiation and climate variations, with a detailed analysis of 12 representative cities across different regions, considering local policy environments to provide comprehensive insights into the regional disparities affecting PV implementation.