**Abstract**
From the end of 2012 to December 2013, in an effort to revitalize the domestic photovoltaic (PV) industry, the Chinese government introduced a series of policies, including "Several Opinions on Promoting the Healthy Development of the Photovoltaic Industry" and "Opinions on Supporting Distributed Photovoltaic Power Generation Financial Services." Additionally, the "Notice on the Interim Measures for the Management of Distributed Photovoltaic Power Generation Projects" was issued. These measures reflected the government’s strong interest in supporting the PV sector. While the policy framework appeared comprehensive, its implementation often fell short, with many policies criticized as being overly optimistic or unrealistic.
**Policy Financing Is Too “Loveâ€**
As a strategic emerging industry, the PV sector has long relied on government support during its early development stages. The state has provided subsidies, established operational rules, and helped companies with financing. This “nanny-style†approach, however, may have gone too far. With China's strong financial resources and a rapidly growing PV production capacity, the capital market should have been more than capable of supporting the industry. If the government’s assistance before 2013 was justified, then doing so again now seems excessive, potentially stifling private investment and reducing the motivation of commercial banks to engage.
Government intervention in bank lending practices, such as mandating longer loan terms or lower interest rates, could create uncertainty and risk for financial institutions. In reality, this kind of policy might discourage private capital from entering the market, which is essential for sustainable growth. Instead, clear and stable policies would encourage both private investors and banks to participate more actively.
Moreover, continuous government support can reduce the competitiveness of PV companies. If firms rely too much on subsidies, they may lose the incentive to innovate or operate efficiently. This undermines market forces and could lead to inefficiencies in the long run.
Another issue is that China’s PV subsidy policies have become a point of contention with European and American countries, which have imposed countervailing duties on Chinese PV products. As a major exporter, China’s PV industry faces challenges from both domestic policies and international trade barriers. This dual pressure has made it difficult for companies to thrive without significant external support.
**The Policy Is Very Full, But the Reality Is Very Thin**
Many policies appear promising on paper but fail to deliver in practice. For example, distributed PV was a key focus of government efforts. In 2013, the State Council launched several initiatives aimed at promoting the deployment of distributed PV systems. However, despite these efforts, progress remained slow. The target of building 12GW of PV projects in 2014—4GW from ground-mounted systems and 8GW from distributed ones—was seen as overly ambitious by industry experts.
The lack of real-world success raised concerns about the feasibility of these targets. Many feared that the allocated quotas for distributed PV would be oversubscribed, while ground-mounted projects would face limitations. This imbalance could negatively impact the overall recovery of the PV industry.
State-owned enterprises have dominated the distributed PV market, making it difficult for private companies to enter. Limited access to financing and unclear regulatory frameworks further hindered private participation. Industry insiders noted that the current policy environment was not favorable for small-scale players.
Additionally, the financial returns of distributed PV are relatively low. A typical system might save only 100,000 yuan per year, yet requires a significant upfront investment and carries risks related to maintenance and grid connection. Despite promises from the State Grid to support PV integration, past experiences have made developers skeptical.
Today, distributed PV still faces numerous challenges, including financing, rooftop availability, and grid connection issues. Even with well-designed policies, these problems require time and coordination to resolve.
Ultimately, the goal of government policy is to drive industry growth. However, if these policies are not effectively implemented, they remain just words on paper. The rapid introduction of policies in recent years suggests a sense of urgency, but the PV industry has not yet achieved stable and sustainable development. Overcapacity remains a problem, partly due to excessive policy-driven investment. Therefore, the government must carefully consider its approach and learn from global best practices, while tailoring policies to fit China’s unique conditions. A more realistic and market-oriented strategy is needed to ensure long-term success.
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