China's Solar Shake-Up: Batteries Boom, Solar Woes
- China is dramatically changing its power system to boost battery profits and reduce solar payments. 20 provinces and regions have adopted electricity rate regimes that will likely affect solar's economic outlook. With improved economics, China is expected to triple energy storage installations this year. Meanwhile, Australia is pressing China to remove trade impediments concerning live lobster and red meat.
China is changing its power system to reduce payments to solar providers while boosting profits of storage systems, particularly batteries. At least 20 provinces and regions have adopted electricity rate regimes that reduce prices in the middle of the day and raise them in peak morning and evening hours. This shift will likely reduce revenue for solar during peak generation while making energy storage more profitable. China is expected to more than triple energy storage installations this year, thanks to improved economics. The effect of lower midday prices on the economics of solar remains to be seen. Australia will continue to press China to remove trade impediments affecting live lobster and red meat as relations between the two countries warm.
How will China's Power System Changes Impact Solar?
- The shift will reduce the peak revenue for solar and increase the profitability of energy storage systems.
- China is expected to triple energy storage installations in 2020 due to improved economics.
- The effect of reduced prices during midday on the economics of solar is yet to be seen.
- China is likely to invest in newer energy sources such as renewable energy sources, as it seeks to reduce its reliance on fossil fuels.
- The combination of reduced midday prices and increased investment in energy storage could lead to a decline in solar installations in China.
- The shift in the power system could also have an impact on the pricing of solar installations, making them more expensive.
- Increased energy storage could also lead to an increased demand for solar energy during off-peak hours, resulting in higher prices for solar energy during these times.
