Hong Wei: Thoughts on the opinions of Guofa Photovoltaic

Hong Wei: Thoughts on the opinions of Guofa Photovoltaic
While reading the "Several Opinions of the State Council on Promoting the Healthy Development of the Photovoltaic Industry" (known as Guofa [24]), I came across an article titled "Germany Will Stop Solar Energy Subsidies." This made me a bit concerned, as it seemed to reflect a growing global trend. The article offered some explanations, but it also raised important questions about the sustainability of photovoltaic policies. Although Germany’s proposed photovoltaic policy hasn’t yet reached final legislation, the debate over its success or failure—especially regarding subsidy cuts—has been intense. As the former leader in the global solar industry, Germany now plans to completely phase out PV subsidies by 2018 at the latest. In contrast, China, which is currently the world’s largest market and expected to remain so for years to come, needs to think more deeply about its own strategy, especially with the release of Guofa [24]. Guofa [24] is a comprehensive document that addresses various aspects of the photovoltaic industry's development. It outlines clear goals and strategies, and while the feasibility of its solutions is evident, it stands out for its level of detail. I haven't encountered any other national-level industrial development documents with such thoroughness. From the “guidance ideology” to the “basic principles” and “organizational leadership,” this document sets a high standard. It seems to exceed what is typically seen in similar policy frameworks from more mature markets. Based on this, I have several reflections: First, while I appreciate the government’s attention to the photovoltaic sector, I also wonder about its approach to managing a non-fully marketized industry within China’s socialist market economy. Emphasizing market-oriented thinking is even more crucial in this context. Second, the document clearly states that expanding the domestic market is central to supporting the industry. However, I believe that while this may be a temporary measure, it should not become the ultimate goal. Our long-term objective must be to build an internationally competitive photovoltaic industry, as stated in Guofa [24]. Relying solely on the domestic market risks creating companies that lack global competitiveness. Third, the focus on demand-side policies in Guofa [24] is notable. While demand-pull strategies have been used successfully in many developed economies, they require a fully marketized environment. Otherwise, the results can be unpredictable. This brings to mind recent discussions about the "four trillion" stimulus package. Can we truly develop a globally competitive industry by relying only on domestic demand? Germany’s experience offers a cautionary tale. I’ve always believed that Germany’s photovoltaic policy has not been successful. For me, true success would mean that the industry no longer needs subsidies and continues to grow steadily. But in reality, after the reduction in subsidies, German PV installations dropped significantly—from 7.5 GW in 2011 to 7.6 GW in 2012, and less than 3 GW expected this year. Solar power accounts for just 4% of total electricity generation. Moreover, many German solar companies are no longer competitive on the global stage. Why did Germany decide to stop subsidies? The article claims that the industry had lost control. With subsidies at 0.1836 euros per kWh in 2012—far higher than the 0.047 euros per kWh for conventional energy—the government spent 216 billion euros on renewable energy subsidies alone, with payments set to continue for another 20 years. These figures suggest that industries reliant on subsidies and domestic markets may not be sustainable in the long run. Hong Wei

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