The new domestic photovoltaic installed capacity exceeded expectations Jan-Feb [SMM analysis]

On March 25, national power industry statistics from the National Energy Administration showed that from January to February 2024, the newly installed domestic photovoltaic capacity was 36.72GW, an increase of 80.3% year-on-year. As of the end of February 2024, domestic cumulative installed solar power capacity was approximately 650 million kilowatts, a year-on-year increase of 56.9%. This shows the rapid development momentum of the photovoltaic industry.

At the end of 2023, the price of photovoltaic modules dropped to a low level, which significantly improved the economic attractiveness of centralized photovoltaic power stations and distributed photovoltaic projects, which in turn stimulated enthusiasm for market development, causing the installed capacity to exceed expectations, with an ultra-high grid connection volume of 53GW. The sharp drop in costs in 2023 has reduced the electricity cost of photovoltaic projects. A large number of centralized photovoltaic projects were launched before the end of the year, resulting in the overloading of ground power stations. These projects are expected to be connected to the grid in early 2024. This accounted for the growth of centralized installed capacity from January to February 2024, mainly concentrated in Qinghai, Xinjiang, Gansu and other provinces.

According to SMM, among the new installed capacity from January to February 2024, the proportion of distributed installed capacity may increase by nearly 60%. The decline in module costs and the impact of electricity price adjustments have significantly shortened the investment payback period for industrial and commercial photovoltaics in many places compared with the previous two years, and the rate of return has even nearly doubled. This year, local governments have given clear encouragement and support to the construction of such projects. As manufacturing companies clarify their goals for low-carbon green energy efficiency transformation, the demand for new energy power generation continues to grow, which is expected to further promote the development of distributed photovoltaics.

According to SMM analysis, it is expected that in 2024, China's newly installed photovoltaic capacity will achieve steady growth on the basis of last year, and the new capacity is expected to reach 230 to 240GW. The overall centralized development is steady, but due to land resource constraints, the installed capacity may shrink compared to last year. The proportion of distributed photovoltaics is expected to surpass centralized photovoltaics again this year and become the dominant force in the market. However, adjustments to electricity price policies affect the development of distributed photovoltaics. At the beginning of 2024, some provinces issued new time-of-use electricity price policies, exchanging electricity prices for consumption. The policy adjustment has compressed the profit margins of some distributed photovoltaic companies. Therefore, the timing of the introduction of the policy may affect whether there will be a rush to install distributed photovoltaics.