Grid connection

Dong's installation uses solar power to generate electricity, some of which can be sold on to the national network. [Photo by Wang Huan / for China Daily]

Dong's initiative was made possible by State Grid Corp, which allowed the distributed photovoltaic solar power to be connected to the national grid free of charge via a regulation that took effect in November, in a bid to support the renewable-energy industry.

According to the regulation, State Grid will subsidize distributed PV solar electricity producers who connect their services to customers. The move is part of an attempt to help Chinese producers of PV panels, who are under pressure from anti-dumping investigations by both the United States and the European Commission. The EC recently imposed anti-dumping taxes of 11.8 percent on Chinese-made solar panels and the tariff will be extended to 47.8 percent from August 6.

Connection to the grid costs at least 4.2 million yuan for a PV solar project of 1 million watts, according to Wang Sicheng, a researcher at the Energy Research Institute of the National Development and Reform Commission.

The connection cost is much lower for private individuals and varies according to location. Ren Kai, who in November became the first person in China to apply for a grid connection, said the practice is unlikely to save the industry unless more favorable policies can be introduced to attract more participants.

In addition to providing the daily power requirement for his home in the Shunyi district of Beijing, Ren sells his extra electricity to State Grid at a price of 1 yuan per kWh. "I can recoup my investment within eight years. After that, the return rate is expected to be 9.3 percent, much higher than a bank interest rate," he said.

However, individuals do not enjoy the same government subsidies as companies, according to State Grid's regulations.

"Besides, although the State Grid allows distributed PV plants to be connected, they set the limit for total installed capacity at just six megawatts. Distributed PV plants are novel and should be developed step by step. Currently, both the State Grid and customers like me are 'water testers' whose experience will be invaluable for future participants when the policy is introduced on a larger scale," said Ren.

He admitted that the incentives for distributed PV plants in China still lag behind many other countries.

The electricity generated by distributed PV plants accounts for less than 1 percent of China's total PV generation, compared with around 70 percent in Germany and 80 percent in the US.

"There is great market potential for household PV systems," said Ren, who previously worked as a sales representative for a PV panel manufacturer, but has now registered his own company providing all-inclusive services for companies and families interested in generating their own electricity.

Ren's team designs, installs and adapts the equipment according to the customer's house. The team can also help with the paperwork required by local grid companies.

"I receive a lot of inquiries from all over the country every day, but the number of people who follow through and decide to make a deal is far lower than the number of inquiries," he said.

To promote the company, Ren is working on a distributed PV project for a Lama temple in Qinghai province, charging only the cost price.