Technology, cost, economic performance of distributed photovoltaic industry in China

Highlights: • We comprehensively analyzed the technology and cost performance of China's distributed PV. • We focused on the trend and decline path of China's distributed PV costs. • The LCOE of distributed PV in China is expected to achieve full parity in 2025. • Except 100% grid-connected mode, the IRR of distributed PV power plants in three areas is higher than 8% which has shown good economic benefits. -- Abstract: As subsidies continue to fall, the technology and cost performance of distributed photovoltaic (PV) determines the progress of its grid parity. Based on the discussion of technology and cost, this paper analyzed the economic performance of China's distributed PV industry by utilizing the two indicators of levelized cost of energy (LCOE) and internal rate of return (IRR). The results show that: firstly, the current external environment is generally conducive to the development of distributed PV, but there are still some constraints. Secondly, with the decrease of unit investment cost, distributed PV can achieve the goal of parity before 2025. Thirdly, distributed PV projects in the three types of solar energy resources all have high IRR, and the economic performance is better for the projects with high proportion of spontaneous self-use. At the end of the paper, policy recommendations are offered as references for the government.