Hong Wei: Thoughts on Photovoltaic Guofa [24]

Hong Wei came across the "Several Opinions of the State Council on Promoting Healthy Development of the Photovoltaic Industry," commonly known as Guofa [24]. At the same time, he read an article stating that Germany would stop solar energy subsidies. This sparked some concerns about the previous policies, but the next article provided some clarity. Although Germany's new photovoltaic policy might not yet be worth too much attention until it is officially legislated, it is clear that the success or failure of its approach, including the suspension of subsidies, has been widely discussed. As a former leader in the global solar industry, Germany once aimed to completely eliminate PV subsidies by 2018 at the latest. Given that China is currently the world’s largest installer and is expected to lead in the coming years, it should take these developments more seriously, especially with the recent release of Guofa [24]. Guofa [24] presents a comprehensive view of the photovoltaic industry's development, addressing various key aspects. The solutions outlined are practical and well-structured. From what the author has seen, this document serves as a detailed national-level framework for industrial growth. It covers everything from the guiding principles to organizational leadership, which is far more thorough than most other similar documents the author has encountered. In fact, the author hasn’t come across any comparable outlines from mature photovoltaic markets abroad. This makes the author reflect on several key points: First, while appreciating the government’s strong support for the photovoltaic industry, the author is also trying to understand the careful and non-market-driven approach taken for industries that are not fully market-oriented. However, under the socialist market economy model, emphasizing market-oriented strategies is even more crucial. Second, according to Guofa [24], expanding the domestic market is presented as the main goal for supporting the struggling photovoltaic industry. But the author believes that while expanding the domestic market may be a temporary measure, it should not become the ultimate objective. Policies must not be mistaken for long-term goals. The real aim should be to build an internationally competitive photovoltaic industry, as stated in the document. Relying solely on the domestic market is unlikely to foster such competitiveness, as seen in the case of China's wind power industry, which, despite having the world’s largest market, still struggles globally. Third, the Guofa [24] document emphasizes demand-pull strategies. While demand-pull has been a common tool in market economies during economic crises for decades, it requires a fully marketized environment to work effectively. Otherwise, the results can be inconsistent. This reminds the author of the recent discussions around the "four trillion" stimulus package. Can relying solely on domestic demand truly develop a globally competitive photovoltaic industry? Germany’s experience offers a cautionary tale. The author has always believed that Germany’s photovoltaic policy was not successful. For the author, "success" means that the industry grows steadily without needing continued government support. However, what we’ve seen in Germany is a sharp decline in PV installations after subsidy cuts. In 2011, it was 7.5 GW, then 7.6 GW in 2012, and now expected to drop below 3 GW this year. Solar energy accounts for only 4% of total electricity generation in Germany. Meanwhile, many leading photovoltaic companies lack international competitiveness. Why did Germany decide to stop subsidies? According to the article, the photovoltaic industry had lost control. With a subsidy rate of 0.1836 euros per kWh, compared to just 0.047 euros for traditional energy, the German government has already spent over 216 billion euros on renewable energy subsidies, which will last for another 20 years. These figures suggest that industries dependent on subsidies and domestic markets may not be sustainable in the long run. The reality in Germany shows that while the game may seem appealing, the rules need to change.

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