Article

Exploring Opportunities and Challenges of Solar PV Power

under Carbon Peak Scenario in China: A PEST Analysis
Hengtian Wang 1, Xiaolong Yang 1,2,*, Xinxin Xu 1 and Liu Fei 3,*

1 School of Economics and Management, North China Electric Power University, Beijing 102206, China;
wht23@126.com (H.W.); Xinxin.Xu@ncepu.edu.cn (X.X.)
2 School of Economics and Management, Northeast Electric Power University, Jilin 132012, China

3 China Energy Conservation and Environmental Protection Group (CECEP), Beijing 100082, China

* Correspondence: yangxiaolong@neepu.edu.cn (X.Y.); liufei@cecep.cn (L.F.)

Abstract: China has experienced rapid social and economic development in the past 40 years. How-
ever, excessive consumption of fossil fuel energy has caused an energy shortage and led to severe
environmental pollution. To achieve sustainable development, China is striving to transform its
growth mode. Adopting renewable energy (RE) including solar photovoltaic (PV) power is an ef-
fective measure. How to promote the further development of solar PV power under the scenario of
China’s aspirational target of carbon peak by 2030 and 20% RE ratio in the energy mix remains a
theme that need to be addressed. This paper analyzes the potential opportunities and challenges
confronting solar PV power in China. The analysis covers the dimensions of political, economic,
social, and technological (PEST). The results revealed a significant prospect for the further deploy-
ment of solar PV power in the coming decades. The aggressive estimated installed capacity of solar
PV power is expected to reach 80+ GW annually. To successfully achieve the goal of 80+ GW, barriers
that hinder the further development of solar PV power have to be eliminated. Suggestions for poli-
Citation: Wang, H.; Yang, X.; Xu, X.; cymakers include maintaining enforceability and continuity of policies, favorable financial sup-
Fei, L. Exploring Opportunities and ports, mandatory RE quotas for all parties, and supporting fundamental R&D. Suggestions for the
Challenges of Solar PV Power under solar PV industry include full utilization of integrated applications, set up an after-sales service
Carbon Peak Scenario in China: A
network, collaborative innovation among the industry chain, and engaging in storage and hydrogen
PEST Analysis. Energies 2021, 14,
technology. The findings are greatly beneficial for policymakers and the solar PV industry.
3061. https://doi.org/10.3390/
en14113061
Keywords: carbon peak; renewable energy; solar PV power; China; PEST analysis; incentive policy

Academic Editors: Tapas Mallick,

Aritra Ghosh and Rohit Bhakar

Received: 29 April 2021 1. Introduction

Accepted: 24 May 2021 China has experienced rapid social and economic development since it launched the
Published: 25 May 2021 reform and opening-up policy. The average GDP growth rate was approximately 9% dur-
ing 1978–2018 [1] and obtained a positive growth in 2020 (1.8%) even in the face of the
Publisher’s Note: MDPI stays neu-
tremendous challenges caused by the COVID-19 pandemic [2]. However, China’s devel-
tral with regard to jurisdictional
opment achievement was on an extensive mode, and relied on the demographic dividend,
claims in published maps and institu-
factors input, and resource consumption. The rapid economic development has increased
tional affiliations.
the demand for energy consumption, which has caused a gap between energy supply and
demand. Simultaneously, massive consumption of conventional fossil fuel energy has led
to severe environmental pollution and climate change and threatens sustainable develop-
Copyright: © 2021 by the authors. Li-
ment prospects and public health [3]. China has realized this consequence and has tried
censee MDPI, Basel, Switzerland.
to push the top five state-owned enterprises (SOE) of generation companies to enhance
This article is an open access article their energy efficiency, a cleaner use of coal, and the adoption of RE resources in the en-
distributed under the terms and con- ergy mix [4]. The most innovative methodology is the integration of medium and high
ditions of the Creative Commons At- temperature solar thermal with coal power generation systems, which was proven to help
tribution (CC BY) license (http://crea- increase the coal-to-electricity efficiency and lower the coal consumption amount to 203.5
tivecommons.org/licenses/by/4.0/). g/kWh [5]. China’s 12th [6] and 13th Five-Year Plan for Energy Development [7] have

Energies 2021, 14, 3061. https://doi.org/10.3390/en14113061 www.mdpi.com/journal/energies

Energies 2021, 14, 3061 2 of 28

made specific energy development strategies for the following five years. Tactics include:
improving energy efficiency, introducing new technologies, increasing R&D investment,
and exploiting RE. As one of the most burgeoning RE resources, solar PV power enjoys
intrinsic characteristics such as inexhaustibility, safety, and environmental-friendliness
[8], which has the potential to fulfill the total energy demand globally [9]. Although the
cost has been historically relatively high, driven by technology advancement and reduced
costs, it has become an affordable RE resource [10]. Many countries that are dedicated to
meeting increasing energy demand or devoting themselves to sustainable development
have noticed this encouraging trend and have set short-term and long-term goals for the
development of solar PV power.
Solar PV power has experienced remarkable development in the past decade and has
become the third-largest source of RE. Alongside wind power (733.28 GW), solar PV
power (713.97 GW) has become a vital RE resource, second to hydropower (1739.88 GW),
and has made significant contributions in meeting the increasing energy demand and in
sustainable development globally [11]. Although the challenges and uncertainties that re-
sulted in an economic slowdown due to the adverse effect of the COVID-19 pandemic,
solar PV power has shown its tenacious vitality and gained positive growth. The newly
installed capacity reached 126.84 GW (cumulative 713.97 GW) in 2020, a 29.27% growth
compared with 2019. Among them, China accounted for the largest share of 49 GW (cu-
mulative 254.35 GW), followed by the United States of America (USA), where the newly
installed capacity was 14.89 GW (cumulative 75.57 GW). Vietmam performed beyond es-
timation and achieved an incremental installed volume of 11 GW (cumulative 16.50 GW).
The European Union (EU) still experienced high growth that restarted from 2018, and the
newly installed capacity was 18.78 GW (cumulative 152.92 GW). However, India encoun-
tered a sharp decline, and the newly installed capacity was merely 4.12 GW (cumulative
39.21 GW) compared with an incremental volume of 7.74 GW in 2019 [11] because India
imposed extra customs duties on imported solar PV panels, which eroded the ever-robust
solar PV market [12]. Upon review of the development of solar PV power globally, sys-
tematical incentive policies have been identified as the key factors that have triggered and
accelerated the deployment progress. Each country’s approach is characterized by its cus-
tomized policies [13]. Germany has taken the lead in formulating Political frameworks by
revising the Renewable Energy Law in 2000 (EEG-2000) that guaranteed the rapid devel-
opment of the solar PV power industry [14]. Germany has been a pioneer in the adoption
of solar PV power for nearly ten years. The USA has implemented policies focused on
Economic respects. National and state-level policies including the tax-refund scheme, soft
loans, and other financial supports have made the USA ranked in the top three in the solar
PV field [15]. The Fukushima nuclear accident in 2011 was a landmark Social event, which
reignited Japanese enthusiasm about RE resources. The Japanese prefer solar to wind for
eco-environmental reasons, and solar PV power is much more expensive. High feed-in
tariff (FIT) rates (42 JPY/kWh), lower interest costs, and 100% acquisition of electricity
generated by solar PV power plants by the grid companies have ensured a continuous
motivation to develop solar PV power. Today, electricity generated by solar PV power
plays a significant role in the Japanese energy mix [16]. India has heartened the develop-
ment of solar PV power from Political and Economic views by promulgating the National
Solar Mission strategy and has issued favorable FIT rates, long-term power purchase
agreements (PPAs), and taxation preferences [17,18]. All these measures have activated
India’s solar PV market, and the peak installation volume even reached 10 GW in 2018.
As a latecomer in the field of solar PV power, China has realized the great significance
and potential of solar PV power and has formulated comprehensive support for solar PV
power from the perspectives of Political, Economic, and Technological factors. China en-
acted its Renewable Energy Law in 2006 and has issued favorable FIT rates [19,20]. In
addition, China has granted taxation preferences and fiscal subsidies for R&D for the solar
PV industry supply chain [21,22].
Energies 2021, 14, 3061 3 of 28

China has officially pledged to reach a carbon peak by 2030 and carbon neutrality by
2060 [23]. Measures to achieve carbon peak and sustainable development include enhanc-
ing energy efficiency, introducing new technologies, and the adoption of REs. Given that
coal-fired electricity contributes the greatest portion to carbon emissions, the deployment
of REs as alternative energy sources is a direct and effective way to reduce carbon emis-
sions. Among all REs, solar PV power is one of the most accessible and affordable sources,
and will eventually play a vital role. BP Energy Outlook also projected that to achieve zero
carbon emissions, wind and solar PV power’s total capacity will reach 20,000 GW by 2050.
The average installed capacity of solar PV power could attain 550 GW annually (wind
power,350 GW). Electricity generated by wind and solar PV will account for more than
60% of the total energy supply [24]. In the era of grid-parity, along with China’s 2030 car-
bon peak ambition, it is essential to conduct a holistic analysis of solar PV power from a
macro view. This will help to identify potential opportunities and challenges confronting
solar PV power, hence assisting China in achieving its aspirational carbon peak target, but
also benefitting the development of solar PV power worldwide.

2. Literature Review
With the development of solar PV power in China, various studies have been con-
ducted and they can be classified in terms of Political, Economic, Social, and Technolog-
ical aspects.
Since the Policy is the critical engine to spur the development of solar PV power [13],
most of the literature is related to policies. Zhao Rui Rui et al. [25] discussed the opportu-
nities and potential challenges in developing solar PV power in China. They assessed
China’s “Golden Sun” project, which had received installation subsidies from the Ministry
of Finance. Sufang Zhang and Yongxiu He [19] conducted an excellent comprehensive
review of China’s incentive policies in the pre-FIT period. They analyzed the solar PV
industry status, application types, and other support schemes. The Brightness and Town-
ship Electrification Program, the Rooftop Program, Golden Sun Demonstration Program,
and the Solar PV Concession Program were all discussed. Finally, they found that the na-
tional FIT scheme was the underlying element to activate the solar PV power. They also
recommended that the government adopt differentiated FIT based on regional resource
differences. After China initiated the FIT scheme, the Chinese solar PV market witnessed
explosive expansion, but fiscal burdens increased simultaneously. Researchers have sug-
gested that tariff levels should be adjusted more frequently, and a tight quota combined
with the deployment of ultra-high voltage (UHV) transmission lines should be continued
to the provinces with harsh light abandoned phenomenon [20]. Motivated by the succes-
sive incentive policies, solar PV power has reached grid-party level in China and world-
wide [26]. In the post-grid-parity era, new policy approaches are needed to avoid the “pol-
icy valley of death”, and cross-sectoral policy support and management are required to
handle tremendous coordination to accommodate the interest of a broader range of stake-
holders [27].
Economic benefits are crucial for investors to evaluate the chance to participate in the
solar PV field. FIT schemes are considered as best practice to supplement the solar PV
power’s defects on economic returns [28,29]. Experts have explored the performance and
economic viability of solar PV systems in different areas in a vast country, where the re-
sults demonstrated that climatic differences lead to variations in economic returns [30]. In
compliance with this theory, China has issued a three-tiered FIT scheme. Ouyang and Li
[31] deemed the high cost of RE as the main restriction element that impeded large-scale
deployment in China. They discovered that the FIT with a 5% discount rate could cover
the levelized cost of electricity (LCOE) of wind and solar PV power, but that it was not
sufficient for biomass. Their suggestions are to solve the financing problem of RE projects
and that FIT should be dynamically adjusted based on the LCOE benchmark. MM Zhang
et al. [32] proposed an accurate optional model for evaluating RE investment by synthe-
sizing uncertain factors. The result revealed that the current environment might not be
Energies 2021, 14, 3061 4 of 28

favorable enough to attract immediate investment unless the government increases the
FIT rates. Scholar Dirk Kayser organized a structured interview with 69 solar PV partici-
pants and identified severe cash-flow uncertainties, unreliable supply chains, and a weak
regulatory environment in China. There are prominent risk factors that inhibit the sus-
tainable development of solar PV power, and solid institutional responses are most urgent
[33]. Though there are risks for large-scale solar PV power projects, residential systems
with both central and local governments’ subsidies, self-consumption, and access to the
grid for surplus electricity enjoy satisfactory economic profitability [34]. The post-FIT pe-
riod where the LCOE can achieve grid parity level demonstrates that subsidies are dis-
pensable and that the market mechanism will play an important role [35].
Whenever the Social sector is concerned, only a small number of studies have been
undertaken. Research sponsored by the National Natural Science Foundation of China
(NSFC) explored why solar PV integrated agricultural greenhouses were always un-
derutilization, even they brought considerable social benefits. Additional social benefits
include creating new jobs, raising taxes, and avoiding CO2 emissions. The crop price was
eventually found to be the sensitive influencing factor. They suggested that solar PV ag-
riculture companies should pay more attention to crop planting to enhance the compre-
hensive benefits of the integrated project [36]. Consumer choice behavior is crucial to sup-
port the development of RE and low-carbon development. Liu Yong et al. [37] have com-
bined system dynamics with an agent-based model (SD-AB) to explore influencing factors
associated with consumer choice behavior. They found that consumers’ willingness to pay
for RE and low-carbon products depended on the delivery speed, consumer patience, and
degree of satisfaction, but not the low-carbon awareness. Liu Yong and Mengya Zhang
[38] launched a questionnaire to investigate the stereotypes and prejudice about solar PV
power among the public in China and found that most of the public have realized the
positive aspects of cleanliness, sustainability, and abundance. Still, a portion of the sam-
pled population held prejudice or misunderstandings on solar PV power being more ex-
pensive than coal or restricted by region, or hard to store.
Technology is an earthshaking factor that drives cost down and improves produc-
tivity. Early research focused on solar PV power technology in China was conducted by
Mr. Yuwen Zhao [39], who examined the R&D activities about solar PV cells, solar sys-
tems, and application types of solar PV kits. He put forward that a quality control system
should be established, and that international cooperation was a shortcut to introduce solar
PV technology to China. Lei Xiaoping et al. [40] examined technological collaboration in
the solar PV industry from three levels (city, national, and international) and pointed out
that international cooperation on patents had strengthened the technological capability of
China’s solar PV industry. Still, China only has a small number of patents and should be
more active in technical innovation. Interaction of the solar PV industry’s endeavors and
government support will surely enhance the technical innovation performance [41]. Solar
PV power has experienced rapid development in China, and challenges for the state grid
have emerged that need to be solved immediately. Scholars have finalized various re-
searches whose findings have helped to improve the solar PV power plants’ yield perfor-
mance and strengthen the coordination between solar PV power and the grids [42,43]. In
the past five years, scholars have tried to combine solar PV power with other energy
sources and have researched solar energy coupling with wind energy and hydropower
[44,45] and proven the feasibility from a technical standpoint. On-grid solar PV power
plants integrated with battery storage systems could alleviate the transmission burdens
of the grids, and off-grid solar PV systems with batteries can guarantee the electricity sup-
ply [46,47]. With the emergence of electric vehicles (EVs), scholars from the Netherlands
have evaluated the feasibility of solar PV power charging stations in China and the USA.
by adopting a simulation model. They found it to be a feasible solution in the commercial
center or office parking lots during working hours. The study was conducted from the
technical, economic, and environmental perspectives [48].
Energies 2021, 14, 3061 5 of 28

The existing studies have made remarkable contributions to the development of solar
PV power in China. However, almost all of them focused on an individual aspect or sev-
eral aspects. Few studies have conducted holistic research covering the four elements of
Political, Economic, Social, and Technological. Furthermore, after years of development,
China’s solar PV industry has been globally ranking first in terms of the industry produc-
tion capacity, annual incremental installation volume, and cumulative installation scale.
Nevertheless, facing the grid-parity era and carbon peak scenario, it is exceptionally ur-
gent to undertake a rigorous macro analysis of solar PV power in China from a holistic
point of view. Inspired by the former academic achievements of [49], we adopted the PEST
analysis as the tool. Hopefully, this study supplements the gaps in existing research and
provides a macro-environmental analysis for the development of solar PV power in
China. A better understanding of the PEST confronting solar PV power can help the gov-
ernment to formulate appropriate policies, and enterprises can formulate proper devel-
opment strategies. Eventually, it will ensure the sustainable development of the solar PV
industry and assist China in achieving its carbon peak by 2030.

3. Research Methodology
3.1. A Brief Introduction to PEST
PEST (political, economic, social, technological) analysis is a theoretical macro exter-
nal environment analysis tool that helps a company or industry to scan the external busi-
ness environment [50]. Its primary connotation is to put the organization under the macro
environment including political, economic, social, technological, and other related factors.
It is also identified as STEP (social, technological, economic, political) or PESTLE (political,
economic, social, technological, legal, environmental). The purpose of PEST analysis is to
conduct a comprehensive understanding of an organization or industry’s external envi-
ronment to formulate the development strategy. The framework and main contents of the
PEST analysis are shown in Figure 1.

Political
Government policy, political
stability or instability,
bureaucracy, corruption,
competition regulation,
foreign trade policy, tax
policy, trade restrictions and
etc.

Economic
Social
Economic trends, growth
rates, industry growth,
international trade &
Company/ Population demographics,
religion, language&education
exchange rates, labor costs, , family size/structure,
taxation, inflation, interest Industry lifestyle trends, etc.
rates, availability of credit,
monetary policies, raw
material costs, etc.

Technological
Technology infrastructure,
research and innovation,
technology incentives,
emerging
technologies,technical
potential,etc.

Figure 1. Framework and main contents of PEST analysis. Source: PEST analysis financial definition of
PEST analysis (thefreedictionary.com (accessed on 16 May 2021)).
Energies 2021, 14, 3061 6 of 28

3.2. Application of PEST Analysis

PEST analysis is an effective macro-environment analysis tool that can effectively an-
alyze an enterprise or industry’s external macro business environment. Since its inception,
it has been widely used to analyze the external business environments of various enter-
prises or industries, which has contributed excellent guidance for strategy formulation
and has achieved satisfactory results. Professor Nigel Martin Healey [51] conducted a po-
litical, economic, social, and technological analysis on business opportunities and chal-
lenges for western European investors in eastern Europe. He discovered that the con-
sumer electronics and service sectors had the highest growth potential, but joint ventures
were the best to tap those markets. Patel and Prajapati [52] took the PEST analysis to ex-
amine India’s two-wheeler automobile industry to determine why this industry had ex-
perienced a sales decline in 2012–2013. Inflationary conditions, firm interest rates, and ris-
ing petrol prices were found to impact consumption squeeze directly. BARABÁS [53] took
PEST and Porter’s Five Forces analysis to investigate the bank’s marketing environment
in Romania and summarized that marketing activity dramatically depends on the extent
of being familiar with the social philosophy and understanding of the market’s environ-
mental mechanism. Russian scholar Kolomiets et al. [54] combined PEST analysis and
SWOT analysis to characterize the university’s internationalization of the education sys-
tem and highlighted proposals to establish a cognitive map of its international activities.
Alava Ramona Parraga et al. [55] introduced neuromorphic cognitive maps to conduct a
quantitative analysis to calculate the aggregated total centrality values of each PEST factor
based on static analysis for the food industry, and made a significant contribution for the
PEST analysis. Facing the rapidly oncoming aging society trend, Chinese scholars Qiong,
Si, and Qinghua [56] analyzed the smart wearable devices industry for older people based
on the industrial chain theory and PEST analysis, promising market potential for this in-
dustry was found. Suggestions such as investment in R&D, integration of supply chain,
and value-added services were made. Motivated by the sustainable development and en-
ergy goals of the EU, deep renovation of buildings in Denmark and Sweden is trending.
Mainali, Mahapatra, and Pardalis [57] launched a market analysis covering the political,
economic, social, and technical dimensions based on systematic literature review and in-
terviews with 49 stakeholders. Technology advancement for renovation, enforcement of
artisans’ quality assurance systems, and appropriate energy/carbon pricing mechanisms
could accelerate the renovation process. Experts further introduced PEST analysis to eval-
uate the development of RE resources. Igliński. B et al. [49] adopted PEST analysis to eval-
uate the RE resources in Łódzkie voivodeship and Poland, and pointed out that macro-
economic factors were the most favorable and the technological ones the least.

3.3. Research Design

The research framework of the PEST analysis for exploring potential opportunities
and challenges of solar PV power under carbon peak scenario in China was formulated
based on work in [54,58]. It is composed of four steps, and the research flow is shown in
Figure 2.
In step 1, the generic framework was formulated to determine the purpose of this
study, which was to explore the potential opportunities and challenges for the further
development of solar PV power in China from the Political, Economic, Social, and Tech-
nological dimensions (PEST). In Step 2, a list of PEST factors that affect the further devel-
opment of solar PV power in China was derived from government reports, the Chinese
Energy White Paper [59], the literature review, official websites, and consultations with
44 experts. Profiles of the 44 experts are shown in Table 1, and the main questions for the
consultations are shown in Table 2. The consultations were carried out from February 2021
to April 2021, among which 31 consultations were finalized by face-to-face interviews at
the 16th Jinan Solar PV Expo (26 March 2021 to 28 March 2021). The other 13 consultations
Energies 2021, 14, 3061 7 of 28

were carried out through teleconference or online questionnaire surveys. Each consulta-
tion lasted for 50–60 min. The objective of this study and definitions of PEST factors were
well communicated with the respondents for basic knowledge, and free discussion was
encouraged. Based on the information obtained from the government reports, Chinese
Energy White Paper, literature review, official websites, and record of consultations, the
PEST factors affecting the opportunities and challenges for the development of solar PV
power in China were initially identified. In Step 3, the four authors and another five ex-
perts held a meeting to assess the reliability of the factors. The most important factors
were extracted, and neglected aspects such as the impact of COVID-19 were supple-
mented. The final list of PEST factors was obtained after the evaluation process, and the
PEST matrix was established. In step 4, recommendations and suggestions to accelerate
the development of solar PV power in China were put forward at both government and
industry levels.

Figure 2. Research flow of the PEST analysis.

Table 1. Profiles of the consultations.

N Source of Experts No. of People Professional Background

1 Government officials 5 Three municipal directors, two county directors
2 Solar PV companies 14 Nine sales managers, five technical managers
3 EPC companies 7 Four commercial managers, three project managers
Five development managers, three project managers, one
4 SOE investors 9
chief engineer
5 Private investors 4 Three development managers, one financial manager
6 State grid 2 One municipal director, one headquarter planning officer
7 Solar PV association 3 Solar PV industry analysts
Note: 1. Engineering, Procurement, Construction (EPC).
Energies 2021, 14, 3061 8 of 28

Table 2. Main questions for consultations.

Code Question Detailed Explanation

What are the opportunities for solar PV power un- Are the policies favorable for the development of solar
PO
der the current political environment in China? PV power from both macro and industry perspectives?
What are the opportunities for solar PV power un- Is the economic environment favorable for the develop-
EO
der the current economic environment in China? ment of solar PV power? Detailed reasons?
What are the opportunities for solar PV power un- Is the social environment positive for the development of
SO
der the current social environment in China? solar PV power? In which aspects?
What are the opportunities for solar PV power un-
Is the technological status positive for the development
TO der the current technological environment in
of solar PV power? Please state the detailed aspects?
China?
What are the challenges for solar PV power under What are the challenges existing in current policies that
PC
the current political environment in China? unfavorable for the development of solar PV power?
What are the challenges for solar PV power under What are the challenges in current economic aspects that
EC
the current economic environment in China? unfavorable for the development of solar PV power?
What are the challenges for solar PV power under What are the challenges from the social environment that
SC
the current social environment in China? prevent the development of solar PV power?
What are the challenges for solar PV power under Are there any technical challenges that may restrict the
TC
the current technological environment in China? development of solar PV power?
What do you think the average annual installation A: 40–50 GW B: 50–60 GW
F1
volume in the coming ten years (2021–2030)? C: 70–80 GW D: >80 GW
What suggestions do you have to achieve higher in- Please write three pieces of suggestion for government
F2
stallation volume? policymakers and the solar PV industry.

4. Opportunities Analysis Using PEST

The PEST analysis matrix was established based on information derived from gov-
ernment reports, Chinese Energy White Paper, literature review, official websites, and
consultations with 44 experts. The established opportunities matrix of the PEST analysis
for further development of solar PV power in China is shown in Table 3. In Section 4, these
factors will be proceeded with detailed discussions.

Table 3. The opportunities matrix of the PEST analysis for further development of solar PV power
in China.

Factors Opportunities Analysis

PO1: Background of developing strategic emerging industries
(SEIs)
Political
PO2: An inevitable measure to achieve carbon peak
PO3: Benefits brought by free trade policy
EO1: Development cornerstone from the vibrant domestic econ-
Economic omy
EO2: Grid-parity cost level and potential to decline
SO1: Public awareness of sustainable development
SO2: Disseminating carbon peak mission by the government
Social
SO3: Continuous improving higher education and talent training
system
TO1: Tremendous technical potential for all-round deployment
Technological TO2: State investment in R&D under innovation-driven scenario
TO3: Accumulated and continuous improving technical ability
A: 40–50 GW (13%) B: 50–60 GW (21%)
Expected Volume
C: 70–80 GW (39%) D: >80 GW (27%)
Energies 2021, 14, 3061 9 of 28

4.1. Political Opportunities (PO) Analysis

The industrial policy is formulated by the state, with the aims of adjusting the indus-
try structure, guiding the industry direction, and enabling healthy and sustainable devel-
opment of the national economy [60]. Evidence has demonstrated that effective policy fa-
cilitated the development of solar PV power in the Philippines rather than Indonesia [61].
Underlying policy opportunities for solar PV power in China include the following.

4.1.1. Background of Developing Strategic Emerging Industries (SEIs) (PO1)

In order to promote the upgrading process of China’s industry structure, transform
the previous economic development mode, nurture competitiveness in the international
market and achieve sustainable development, the Chinese central government promul-
gated the decree of the Decision of the State Council on Cultivating and Accelerating De-
velopment of Strategic Emergency Industries in 2010 [62]. Together with six other indus-
tries (Figure 3), solar PV power has been identified as a strategic emerging industry. This
ensures that the solar PV power industry will be entitled to more government support
including R&D subsidies, fiscal support, preferential taxation, and financing opportuni-
ties [63].

Energy-saving &
environmetl
Protection Industry

New Energy Information

Automobile Industry Technolgy Industry

SEIs

New Material
Bio-industry
Industry

High-tech Equipment
Renewable & New
Manufactuing
Energy industry
industry

Figure 3. Diagram of China’s Seven Strategic Emerging Industries. Source: Organized by the au-
thor and source from [62].

4.1.2. An Inevitable Measure to Achieve Carbon Peak (PO2)

For the past 40 years, conventional fossil fuel energy has accounted for more than
80% of China’s energy mix. Extensive consumption of fossil fuel energy has led to a for-
midable conflict between socioeconomic development and environmental pollution as it
undermines the living surroundings and threatens the sustainable development of the
economy [64]. To coordinate the contradiction between the economy and environment,
Energies 2021, 14, 3061 10 of 28

China has set specific targets to optimize the energy mix. Moreover, China submitted its
NDC (National Determined Contribution) under The Paris Agreement in 2016 [65]. By the
end of 2019, RE accounted for 15.17% of China’s energy mix, a colossal advancement com-
pared with 9.7% in 2012 [59]. Motivated by the aspirational target of carbon peak by 2030,
a shift of the current RE proportion from 15.9% (2020) to 20% (2030) is essential. China is
now restricting the development of coal power, cautiously developing nuclear power, and
encouraging the development of REs including wind power, solar PV power, hydro-
power, and biomass power. The overall target for wind power and solar PV power is to
reach 1200 GW by 2030. Since solar PV power enjoys the instinctive characteristics of in-
exhaustibleness, environmental-friendliness, and its cost has plummeted dramatically to
grid parity level [27], it is acknowledged as the most promising RE resource. The esti-
mated annual incremental installed volume will reach approximately 80+ GW in the com-
ing ten years. Figure 4 illustrates the current energy mix and estimated optimized energy
mix in 2030.

Energy Mix (%)

57.70
18.90
2019 8.10
15.17
0.13

50.00
18.00
2030 11.50
20.00
0.50

0 5 10 15 20 25 30 35 40 45 50 55 60

Coal Oil Gas RE Others

Figure 4. China’s energy mix by 2019 and estimated energy mix by 2030. Source: National Bureau
of Statistics of China data.stats.gov.cn/english/easyquery.htm?cn=C01 (accessed on 20 April 2021).

4.1.3. Benefits Brought by Free Trade Policy (PO3)

China’s opening-up policy has encouraged Chinese companies to participate in the
import and export trade. Imports are conducive to introducing advanced equipment and
technology to improve the industry’s technical capability. At the same time, exports are
indispensable in making full utilization of the production capacity and reducing produc-
tion costs. China’s solar PV industry has always been an export-oriented one. According
to statistics, China’s solar PV products have been exported to more than 200 countries and
regions in 2020, with a total exported volume of 98 GW, making outstanding contributions
to the global development of RE and environmental protection. The Chinese government
has consistently emphasized that the door to the outside world will be opened wider and
wider, which will undoubtedly provide more market opportunities for China’s solar PV
industry. Figure 5 summarizes the export volume of solar PV products in the past five
years.
Energies 2021, 14, 3061 11 of 28

Exported Solar Products (GW)

160
150.00
140
124.72

Volume(GW)
120

100 98.96 100.00

80 83.77
75.07 78.82
66.80
60
53.79
40 41.30
31.53
20 21.30
2016 2017 2018 2019 2020 2021

Export Solar Products (GW) Production Volume (GW)

Figure 5. Export volume of solar PV products in 2016–2020. Source: China Photovoltaic Industry
Association (CPIA) [66].

4.2. Economic Opportunities (EO) Analysis

4.2.1. Development Cornerstone Guaranteed by the Vibrant Domestic Economy (EO1)
According to the theory of industrial economics and the theory of endogenous
growth, the development of any industry depends upon the national economic status,
macro policy, technical advancement, and factor input. Economic growth will lead to the
accumulation of productive resources, and the state will increase inputs in education, tal-
ent training, and infrastructure construction. In a word, the development status of a na-
tional economy is the cornerstone for developing solar PV power. The study by [13] re-
vealed that countries that are the top ten leading countries were mainly developed coun-
tries except for China, since only developed countries or fast-developing countries can
afford the onerous fiscal burdens brought by incentive policies. China has experienced
rapid development in the past 40 years and is now a vibrant engine for the world’s econ-
omy. Its average annual growth rate far exceeds the average growth rate of the global
economy (Figure 6), and the fast-growing economy has ensured sufficient fiscal revenue
for the government. Therefore, the government can carry out infrastructure construction,
mature the education, and pay for the stimulus policies associated with solar PV power.
It is foreseeable that China’s economy will maintain an optimistic growth trend in the next
few decades. Additionally, investment in overcapacity and technology backward indus-
tries is strictly prohibited. However, investment in SEIs such as RE is encouraged. Hence
China’s investment in RE will continue to increase.

Figure 6. Real GDP growth rate of China compared with the G20. Source: OECD [2,67].
Energies 2021, 14, 3061 12 of 28

4.2.2. Grid-Parity Cost Level and Potential to Decline (EO2)

Although solar PV power has the characteristics of inexhaustible, clean, and zero
emissions [8], the required initial investment per kWh is too heavy, leading to a higher
LCOE. Therefore, it cannot compete with conventional fossil fuel energy, so the develop-
ment pace of solar PV power has been relatively slow. The experience of Germany, Japan,
the USA, and China shows that financial subsidies (direct subsidy for installation, FIT,
etc.) and a series of incentive policies are the keys to promoting the commercial applica-
tion of solar photovoltaic power generation. Fortunately, thanks to the rapid technology
advancement, economics of scale, and increasingly competitive supply chains, the LCOE
of solar PV power has experienced a dramatic decline of 82% to USD 0.068/kWh. The
LCOE of solar PV power is undercutting the cheapest and least sustainable of the existing
coal-fired power plants [26]. An auction held in April 2021 in Saudi Arabic conveyed fan-
tastic news that the proposed LCOE by a shortlist firm was a mere USD 0.0162/kWh [68].
Although it is not applicable universally, the result shows the attractive cost trends in 2021
and beyond. The LCOE is based on the traditional Equation (1) shown below. When the
factors of the LCOE equation are fragmented, solar PV panels are found to contribute
more than 30% to the total cost. The cost trend of solar PV panels and solar PV projects is
shown in Figure 7.
n

 C X（1+IRR）
i =0
i
-i

LCOE= n (1)
 Ei X(1 + IRR)−i
i =0

where:
Ci stands for the cost in the year i .
Ci = Year i Fixed asset investment + Year i O & M cost—Depreciation (2)
Ei stands for electricity generated in Year i

Price Trend (USD/W)

3.20
2.99
2.80
Unit Price:（USD/W）

2.40 2.35
2.00

1.60 1.71
1.44
1.20 1.28 1.23
0.99 0.94 0.95
0.80 0.80 0.88
0.73 0.68 0.65 0.69
0.53 0.50 0.47
0.40 0.42 0.33 0.29 0.24 0.21 0.23
0.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Solar Panel Solar System

Figure 7. Price trend of solar panels and solar systems. Source: [69].

4.3. Social Opportunities (SO) Analysis

The social environment is the foundation of any industry. Social influencing factors
include population demographics, religion, language and education, family size/struc-
ture, lifestyle trends, etc. Currently, the social factors favorable for the development of
solar PV power include at least three categories.
Energies 2021, 14, 3061 13 of 28

4.3.1. Public Awareness of Sustainable Development (SO1)

The extensive economic development mode is highly dependent on conventional fos-
sil fuel energy. Inordinate and brutal consumption of fossil fuel energy has caused severe
environmental pollution, posing severe threats and harm to public health. Studies have
proven that ambient tiny particulate matter (PM2.5) has a significant and well-docu-
mented burden on disease. Improvements in ambient air quality can reduce attributable
mortality from PM2.5. Significant improvements in air quality are most urgent to substan-
tially reduce mortality from PM2.5 in more polluted China and India [70]. A study span-
ning 27 years showed that lung cancer is the second ranked disease that causes death re-
sulting from ambient particulate matter pollution. The number of deaths from lung cancer
increased from 240,000 in 1990 to 692,000 in 2017 in China [71]. The phenomenon of high
concentrations of PM2.5 caused by environmental pollution has aroused the public’s keen
attention. Many people have also actively participated in environmental protection activ-
ities and begun to practice a low-carbon, environmentally-friendly lifestyle. According to
the statistics from the National Energy Administration (NEA), by the end of 2020, a total
of 78.31 GW of commercial and industrial and rooftops solar systems had been installed,
demonstrating the public’s tremendous enthusiasm for solar PV power.

4.3.2. Disseminating Carbon Peak Mission by the Government (SO2)

Since the Chinese government has realized energy security and environmental is-
sues, it has launched various activities including energy-saving plans, energy efficiency
improvement programs, and boosting RE deployment. Starting from the 7th Five-Year
Development Plan, energy development plans have been drawn up as critical separate
parts. Notably, the 12th and the 13th Five-Year Energy Development Plan have set out the
specific targets for all kinds of REs. Still, the publicity has been insufficient, and the public
has relatively little sense. At the Global Climate Ambition Summit in September 2020,
Chinese President Xi Jinping officially announced for the first time the ambitious goal of
achieving a carbon peak by 2030 and carbon neutrality by 2060 [23]. The Chinese govern-
ment has begun to promote the carbon peak and carbon neutrality objectives vigorously.
At the National Meetings held in March 2021, carbon peak and carbon neutrality targets
were explicitly arranged. The Chinese media have carried out unprecedented intensity in-
depth reports. CCTV, the most predominant media mouthpiece in China, has continu-
ously held several columns to publicize carbon peak and carbon neutrality [72–74]. As the
most promising REs, wind power and solar PV power are attracting extensive attention.
There is no doubt that wind power and solar PV power will transform from a supplemen-
tary role to a protagonist in the energy mix under the strong advocacy of the government.

4.3.3. Continuous Improving Higher Education and Talent Training System (SO3)
The solar PV industry is a typical dual-capital and technology-intensive industry.
Recognizing the solar PV industry from the entire supply chain, upstream includes pol-
ysilicon production and wafer slicing. The midstream contains solar cell manufacturing
and solar module insulation, while the downstream focuses on system construction and
operation and maintenance (O&M). The entire solar PV power industry integrates various
disciplines and knowledge such as physics, chemistry, power, intelligent manufacturing,
information technology, and big data. Therefore, the solar PV power industry has fastid-
ious requirements for the technical and management of talent. Simultaneously, with the
advancement of the complete automation production process, ordinary blue-collar em-
ployees in the workshops are required to master specific skills. Since China implemented
its education reform in 1997, the state’s investment in education has continued to grow.
Education investment exceeded 5% of GDP in 2020, and nearly eight million college stu-
dents graduate each year. On the other hand, China has established a multi-level training
system to nurture skilled workers vigorously [75]. All these achievements in education
Energies 2021, 14, 3061 14 of 28

have provided a primary guarantee for China’s rapid development and have cultivated
thousands of talents for the solar PV industry.

4.4. Technological Opportunities (TO) Analysis

4.4.1. Tremendous Technical Potential for All-Round Deployment (TO1)
Solar PV power generation is based on the principle of the photovoltaic effect. The
effect interprets that sunlight can be converted into direct current (DC) electricity through
silicon-based semiconductors. According to application purposes, the DC electricity is
converted into an alternating one through inverters [76]. Hence, the intensity of solar ra-
diation is a precondition for developing solar PV power in any country or region. The
Global Solar Atlas (version 2.0) shows that China’s annual solar radiation ranges from 968
kWh/m2 to 2117 kWh/m2, and the average radiation intensity is greater than 1485 kWh/m2
[77]. The potential theoretical yield performance of the PV array may become better when
coupling ArcGIS and TRNSYS [78]. Figure 8 demonstrates the solar radiation resource
across the whole of China. We can conclude that, except for Chongqing and Sichuan, most
other regions are suitable for solar PV power. Furthermore, China has complex and di-
verse topographical conditions due to its vast territory. The northern areas, which are rich
in land resources, are suitable for developing large-scale mounted ground solar PV power
stations. Small and medium-sized grid-connected projects are prevalent in central areas
such as Hebei and Shandong. In coastal provinces of Zhejiang and Jiangsu, the integration
of fishery or agriculture to solar PV power is a terrific choice [79,80]. In the remote moun-
tainous areas of Yunnan and Sichuan, self-consumption off-grid solar PV power systems
are a perfect alternative [81].

Figure 8. Solar radiation of China. Source: Global Solar Atlas 2.0, Solar Resource Data: SolarGIS. ©
, The World Bank.
2021
Energies 2021, 14, 3061 15 of 28

4.4.2. State Investment in R&D under Innovation-Driven Development Scenario (TO2)

In 1988, China’s leader put forward the thesis that science and technology are the
primary productive forces for the first time. In 2006, the dictate of National Medium and
Long-Term Science and Technology Development Plan was issued with the ambitious
goal of building an innovative country [82]. Since then, the Chinese central government
has increased its investment in R&D activities to an excellent standard. Universities and
scientific research institutions have been offered more R&D supports, and enterprises en-
gaged in R&D activities have been granted preferential policies such as R&D deductions
and taxation preference. The Global Innovation Index (GII) published by the World Intel-
lectual Property Organization (WIPO) revealed that China ranked 14th among the 131 eco-
nomics participating in the assessment. It shows that China’s national innovation capabil-
ity has been dramatically improved, and it has gradually entered the ranks of innovative
countries [83]. The state’s support for R&D activities has enhanced the R&D capabilities
of universities and scientific research institutions in fundamental science and technology,
while enterprises have concentrated on R&D activities for applied technologies. The two
parts complement each other and effectively improve the innovation capability of China’s
solar PV power industry.

4.4.3. Accumulated and Continuously Improving Technical Ability (TO3)

Fierce competition has triggered the process of technological innovation. Major play-
ers in the solar PV industry had increased their investment in the R&D field to supply
differential solar PV products with unique technical advantages and low cost. The water-
shed significance is the Top Runner Project promulgated by the NEA of China in 2015.
This program aimed to reduce costs through technological advancement and set rigorous
technical standards for the participating companies. To occupy the leading position of
technology and obtain potential orders from the domestic market, companies have carried
out a full range of innovative activities for the entire industry chain. According to the
statistics, the average R&D investment in China’s solar PV industry accounts for 3.29% of
turnover, and R&D personnel accounts for 5.76% of the total number of employees, which
is much higher than the proportion of China’s R&D expenditure in GDP (2.19%). In 2016,
China’s solar PV industry’s technology in crystalline silicon reached the world’s leading
position, and its production capacity, installation volume, and technical capability
reached the world’s first position. In 2019, China’s solar PV industry broke the industry’s
highest conversion efficiency record six times (Figure 9). It is foreseeable that in the post-
grid-parity era, for further optimization of cost and survival, China’s solar PV industry
will still maintain its enthusiasm for high intensity of investment in R&D.

Figure 9. World record of conversion efficiency broken by Chinese solar PV companies (2013–
2019). Source: Nation Renewable Energy Laboratory: https://www.nrel.gov/pv/cell-efficiency.html
(accessed on 23 April 2021).
Energies 2021, 14, 3061 16 of 28

5. Challenges Analysis Using PEST

The road ahead for the further development of solar PV power is bright, but some
challenges cannot be ignored. Based on the information derived from the same channel as
Section 4, The established challenges matrix of PEST analysis for the further development
of solar PV power in China is shown in Table 4. In Section 5, these factors will proceed
with detailed discussions.

Table 4. The challenges matrix of PEST for further development of solar PV power in China.

Factors Challenges Analysis

PC1: Uncertainties of policy
Political PC2: Fragmented and backward policies
PC3: Invisible and unforeseen policies of local government
EC1: Additional grid access cost and rising land costs
Economic EC2: Unexpected cost inflation of solar PV supply chain
EC3: Potential emerging unexpected taxes and fees
SC1: Prejudices and misunderstanding of partial Public
Social SC2: Barriers impeding promotion in urban areas
SC3: Underlying impact of the COVID-19
TC1: Challenges caused by solar PV power’s characteristics
Technological TC2: Possibility of being supplanted by disruptive technologies
TC3: Lack of technical standard for emerging modes and recycling

5.1. Political Challenges (PC) Analysis

5.1.1. Uncertainties of Policy (PC1)
It has been repeatedly proven that incentive policies are vital for starting up and ac-
celerating the development of solar PV power. Because of the high initial investment
amount of solar PV power generation, investors will accomplish investment returns in the
next 20 or 25 years by operating the ready-established fixed assets after the initial invest-
ment is finalized. Therefore, the certainty of policy is fatal to the expectation of long-term
returns. It is related to whether investors can obtain the expected stable returns and affects
investor confidence in reinvesting. Before 2020, almost all solar PV power stations that
had been built in China relied on the supplement of FIT to achieve economic return [19,20].
The subsidy under the FIT scheme was ultimately collected from energy end-users as re-
newable surcharges by state-owned grid utilities and then distributed to project owners
to cover the tariff gap between the FIT rate and the coal-fired electricity [84]. However,
the unexpected development rhythm has caused a colossal gap between the collected and
required surcharge. The estimated delinquent amount was approximately CNY 350 bil-
lions by the end of 2020. Arrears in FIT payment contribute to in-conformity between a
perfect income statement and embarrassed cash flow, which leave the developer in a grim
situation. Private project investors have to sell their projects to SOEs to survive. Another
phenomenon that has attracted attention is the preferential taxation policy. Chinese gov-
ernment has issued a preferential value-added tax policy twice [85,86]. However, each
policy covers only three years—participants of solar PV power appeal for a permanent
solution such as in wind power and hydropower.

5.1.2. Fragmented and Backward Policies (PC2)

Solar PV power generation is a complex system of work. Many government regula-
tors are involved in the entire process of project development, construction, and O&M,
for example, the Development and Reform Commission, Environmental Protection De-
partment, Mineral Resources Department, Land Resources Bureau, Urban Planning De-
partment, Forestry Bureau, Military Commission, Cultural Relics Administration, etc.
Energies 2021, 14, 3061 17 of 28

Since the direct administrative department of solar PV power generation is the Develop-
ment and Reform Commission, other departments are fragmented and separated. All the
above regulators are segregated and fragmented, specializing in their fields. Fences be-
tween administrative departments will hinder the overall progress of a solar PV project.
There have been cases of conflicts between the Land Resources Bureau and the Forestry
Bureau, which led to the dismantling of a solar PV power station already in commercial
operation. Many new business models have emerged in solar PV power generation such
as combining fisheries and solar PV power, the integration of agriculture and solar PV
power, and desertification prevention with solar PV power listed in the literature [27].
These new modes require updated green policy and coordination between the regulators
themselves and between market actors [87]. Cross-sectoral coordination is needed to elim-
inate fences and clear out obstacles to promoting the development of solar PV power,
hence, paving the way to achieving sustainable development and the 2030 carbon peak
mission.

5.1.3. Invisible and Unforeseen Policies of Local Government (PC3)

China has a highly centralized national governance system. The function of the cen-
tral government is to formulate macro policies, while local governments are responsible
for the implementation and undertaking of enacted policies. Local governments are very
active in implementing the central government’s advocacy of an innovation-driven devel-
opment strategy and developing SEIs. However, local governments still have emulatory
pressure and compete for innovation, GDP growth, and personal promotion. Some local
governments have stealthily put forward accessional requirements for solar PV develop-
ers such as “donations” for resource compensation, industry-for-resource interchange, or
other invisible policies that are strictly prohibited by the central government. For the in-
dustry-for-resource interchange concept, China has formed an optimized industrial lay-
out according to differentiated regional advantages. Extensive energy-consumption pol-
ysilicon and silicon wafers are distributed in Yunnan, Inner Mongolia, and Xinjiang,
where the electricity is concessional. Solar PV cells and solar PV panels with intensive
technology and a firm reliance on the industrial supply chain are located in Jiangsu and
Zhejiang. In this case, companies have to pay monetary “donations” as additional policy
costs to obtain the local government’s consent and acquire business opportunities. These
kinds of incidents undoubtedly increase the costs of the solar PV companies or frustrates
the enthusiasm of potential project developers.

5.2. Economic Challenges (EC) Analysis

5.2.1. Additional Grid Access Cost and Rising Land Costs (EC1)
By the end of 2020, a total capacity of 254 GW solar PV power was installed all over
China, among which more than 70% of the solar PV power plants are centralized solar
power stations (CSPs), and the rest of the 30% being distributed solar power stations
(DSPs) [66]. All CSPs and 98% of the DSPs are connected to the state grid. According to
the Chinese Renewable Energy Law, grid companies are responsible for investing in trans-
mission lines for RE power generation (wind, solar, etc.), or they have a mandatory obli-
gation to purchase the transmission lines back built by the investors, but they must pay
compensations to investors [88]. Conversely, the grid companies did not perform well,
and the project investors had to increase their budgets to build the transmission lines
without any promises. The incremental funding was approximately CNY 40–50 cents/W
(USD 0.06/W), which took up 10% of the total investment. Moreover, solar PV power cov-
ered a large area of land. One kM2 land was estimated to accommodate a 43.65–50 MW
solar PV power station [89]. Since the solar PV power is overheated compared with the
scarce land resource, the landlord either continues to increase the rent or the renters are
asked to pay a lump-sum rent for 25 years. Undoubtedly, an additional burden is posed
on solar PV power generation [27].
Energies 2021, 14, 3061 18 of 28

5.2.2. Unexpected Cost Inflation of the Solar PV Supply Chain (EC2)

Attributed to the rapid advancement in technology, economics of scale, and increas-
ingly competitive supply chain, the cost of solar PV power has experienced a sharp decline
in the past decade and has obtained competitiveness against coal-fired electricity [26]. The
LCOE of solar PV power with grid parity benchmark has empowered a promising pro-
spect in the coming years. However, the price of solar PV products has been on the rise
since Q3 of 2020, especially the cost of solar PV panels and solar inverters. The unit price
of monocrystalline solar PV panels with a peak power output of 405 W was USD 0.2/W
(CNY 1.4–1.5/W), but prices surging in copper, aluminum, glass, polysilicon, and other
bulk products hiked the solar panels’ price to USD 0.23/W (CNY 1.68–1.72/W) in Apr 2021
and the price trend may not converse until Q3 2021 [90]. The upward price trend will
surely postpone the commercial operation date (COD) of various grid-parity solar PV pro-
jects. Though it is time to launch grid parity solar projects in China, solar PV panels still
account for 30–35% of the total investment [91]. A fifteen percent rise in the price of solar
PV panels will influence 4–4.5% of the total investment of a solar PV power plant. Under
the grid party scenario, solar PV power investors are more sensitive to cost; otherwise, the
targeted internal return rate (IRR) will not be achieved. Figure 10 shows the dismaying
price trend.

Solar Panel Price Trend as of Jan 2020 to Feb 2021

1.80
1.75
1.70
Unit Price (CNY/W)

1.70
1.68
1.65 1.64
1.60 1.60
1.55 1.57
1.50
1.45 1.47
1.43
1.40
1.35
1.33
1.30 1.31
1月-20 2月-20 3月-20 4月-20 5月-20 6月-20 7月-20 8月-20 9月-20 10月-20 11月-20 12月-20 1月-21 2月-21

Poly 275-280/330-335W Mono 325-335/400-405W Mono 335-365/425-435W

Figure 10. Price trend of solar PV panels from January 2020 to February 2021. Source:
https://news.solarbe.com/202102/25/335122.html (accessed on 20 April 2020).

5.2.3. Potential Emerging Unexpected Taxes and Fees (EC3)

The series of supportive policies to promote the development of solar PV power for-
mulated by the government include favorable and flexible land-use policies and prefer-
ential tax policies. The land-use policy indicates that types of land that can be used for
solar PV power include unused land, saline land, desertification land, and arable land
(other than primary farmland). Innovative applications of solar PV projects such as inte-
grated with greenhouse roofs, fishpond farms, or on wastelands are encouraged by the
government. Investors can lease these lands instead of purchasing the property [92,93].
For arable land and other solar PV power plants such as solar greenhouse rooftops, solar
fishpond farms are tax-exempted. Likewise, due to regional governance purposes, some
villages in China are called towns, and solar PV power plants located outside urban towns
are also tax-exempted. In 2018, China implemented taxation system reforms, which re-
sulted in the combination of the local taxation authority to the state-level integrated sys-
tem. When under the jurisdiction of the local taxation bureau, arable land occupation tax
and urban land use tax initially enjoyed the privilege of tax exemption. However, after
2018, both have been compulsorily levied by the brand-new tax administrators. The levy
Energies 2021, 14, 3061 19 of 28

benchmark was CNY 2–20/m2, and a 50 MW power station needs to pay CNY 10 million
supplementary tax, which has caused a devastating hit to investors.

5.3. Social Challenges (SC) Analysis

5.3.1. Prejudices and Misunderstanding of Partial Public (SC1)
The public’s understanding, psychological awareness, and behaviors of residents di-
rectly affect the willingness to participate and purchase low-carbon products [94]. Solar
PV power has experienced rapid development worldwide, and it is widely recognized as
being clean, abundant, and sustainable. However, the development of solar PV power is
not always straightforward. Misunderstanding and prejudice may exist, and they could
hamper the sustainable development of solar PV power. A study aimed at elucidating
these issues indicated that there are still negative stereotypes and prejudices except for
positive cognition. Those people hold stereotypes and prejudices, mistakenly conceive
that solar PV power is not reliable, is regionally restricted, challenging to store, and has a
higher cost level than coal [38]. Furthermore, a certain number of people do not master
the basic knowledge of solar PV power generation. They are often confused about solar
PV power technology and solar thermal technology and cannot distinguish between them.
Whenever they talk about solar PV power technology, they always stubbornly deem it is
solar thermal technology. Although this phenomenon has been significantly improved in
recent years, it still stands in the way, which is not conducive to the deployment of solar
PV power.

5.3.2. Barriers Impeding Promotion in Urban Areas (SC2)

The rapid development of solar PV power generation occupies many lands, and the
western region is far away from the energy consumption center. Hence, it is convenient
to install solar PV power close to the energy consumption center. Studies have shown that
it is an excellent choice to promote building-integrated solar PV plants (BIPV) in urban
areas with a high density of population and scarce land [95,96]. China’s central and east-
ern parts are of a high population density with scarce land resources, so there should be
countless BIPVs. In contrast, few BIPVs are available, and the 10.1 GW rooftops were in-
stalled in the countryside and suburbs in 2020. When exploring the underlying causes,
this was caused by China’s land ownership system. The landowner of the village’s land is
the collective, and the landowner in cities is the government [58]. Urban residents have
the right to use the land but without ownership. Installation of a solar PV power plant on
apartment roofs deserves the consent of all residents. Therefore, it is an almost impossible
task, even though there is enormous space for the development of solar PV power. Addi-
tionally, cross-sectoral administration causes difficulties in promoting the BIPVs. Solar PV
power projects are under the administration of the Reform and Development Commis-
sion, while the construction authority administers building affairs. Therefore, promoting
solar PV power in high-density urban areas faces institutional challenges.

5.3.3. Underlying Impact of the COVID-19 (SC3)

The fast-spreading pandemic of coronavirus disease that emerged at the end of 2019
has disrupted the world’s order and slowed down the world’s economy [97]. By 21 April
2021, more than 141 million people across 223 countries and regions had been infected,
and more than three million people were deprived of their lives [98]. The COVID-19 trig-
gered a global economic crisis and generated domino effects to all sectors. It has severely
hampered the cross-border flow of people and commodities and led to a complete halt in
the growth of RE installations [99]. Although China responded quickly and took decisive
lockdown measures that effectively curbed the spread of COVID-19, solar PV power was
still influenced. It brought an unavoidable time delay in newly installed solar PV projects,
and the short-term influence was also embodied in the rise in supply chain cost. A certain
number of solar PV projected scheduled to be COD had to be postponed for one to two
Energies 2021, 14, 3061 20 of 28

quarters [100]. Until now, social order has returned to pre-COVID-19 status in China, and
COVID-19 has sped up the Fourth Industrial Revolution (Industry 4.0), which has enabled
enterprises to stay responsive to market needs. Still, sizeable potential risks remain un-
cleared, and COVID-19 may rebound exceptionally to damage the whole society. Conse-
quently, the solar PV power industry is inevitable.

5.4. Technological Challenges (TC) Analysis

5.4.1. Endogenous Technical Challenges Caused by Solar PV’s Characteristics (TC1)
Although solar PV power generation has incomparable advantages over conven-
tional fossil fuel energy, just like a coin has two sides, it has its shortcomings. The first is
that solar PV power generation has the same characteristics as wind power such as inter-
mittent, volatile, and random. Once connected to the grids, it can result in voltage fluctu-
ation, current and frequency instability, and impact on power quality and safety [101].
The second is particular to China. Solar PV power generation is mainly installed in the
northeast and northwest part of China. These areas are backward in economic develop-
ment and the power consumption ability is limited. Electricity generated by RE resources
confronts a high curtailment rate in some regions. To solve the first disadvantage, the
adoption of storage batteries can help optimize the power management system [46,102].
Nevertheless, how to deal with the decommissioning and its environmental impact re-
mains unknown. Ultra-high voltage (UHV) technology enables large capacity and long-
distance power transmission, with a line loss of only 1.6%, is playing a vital role in relo-
cating the electricity generated by RE to consumption centers [103]. At the end of 2020,
there were 30 UHV lines in operation, and another five lines are under construction. Fig-
ure 11 shows the UHV lines both in operation and under construction. However, hot de-
bate regarding security, economy, and monopoly is continuing [104].

Figure 11. UHV lines in operation and under construction. Source: state grid.
http://www.sgcc.com.cn/html/sgcc_main_en/col2017112610/column_2017112610_1.shtml (accessed
on 24 April 2021).
Energies 2021, 14, 3061 21 of 28

5.4.2. Possibility of Being Supplanted by Disruptive Technologies (TC2)

Since China’s solar PV industry ranked first in the world in 2010, it has maintained a
rapid growth rate. The current production capacity and annual installation volume have
ranked first in the world for many consecutive years. However, it was found that China’s
solar PV industry has been focusing on crystalline silicon technology. Massive investment
in R&D and production facilities guarantee continuous technological advancement and a
sharp decline in cost. Innovation scientist Christensen elaborated that the emergence of
new technology may bring lower prices and advanced performance products, thereby
causing devastating damage to giant firms, known as destructive innovation [105]. Be-
yond the prevailing poly-crystalline SE technology and mono-crystalline PERC technol-
ogy, new emerging technologies include N-type Topcon technology, HIT technology, and
Perovskite solar cell technology. All of the latest technologies are experiencing unbeliev-
able progress in development. However, the fact is that Chinese solar PV practitioners are
exclusively involved in poly-crystalline SE technology and mono-crystalline PERC tech-
nology. Once emerging technologies are mature enough to gain advantages in cost and
performance, existing solar PV players will have to turn their direction to follow the tech-
nology trend or collapse and withdraw from the market. Figure 12 shows all the technical
roadmaps under R&D.

Multijuction Cells
• 47.1%(6-J,143x), NREL
• 44.4%(3-J,x),Sharp
• 39.2%(6-J),NREL
• 37.9%(IMM),Sharp
• 32.9%(3-J),NERL

Crystalline Silicon Cells

Emerging PV
• 27.6%(Singal 92x),Amonix
• 29.5%(Pervoskite/Si),Oxford
• 26.7%(HIT),Kaneka
• 25.5%(Pervoskite),UNIST
• 26.1%(Sigal crystal),ISFH
• 24.2%(Pervoskite/GIS),HZB
• 23.3%(Multi),Jk Solar
• 18.2%(Organiccells), SJTU/BUAA Best Research Cell • 21.1%(Thin-film crastal),Solexel
Efficiencies

Singaljuction

Thin-Film Technologies • 35.5%(.1x),NREL

• 30.5%(258x),NREL
• 23.4%(GIGS),SolarFrontier
• 29.1%(Thin-film crystal), Alta
• 23.3%(GIGS,Concentrator),NREL
Devices
• 22.1%(Cdte),First Solar
• 27.8%(Singal crystal),LG

Figure 12. Overview of all the technical roadmaps of solar cells. Notes: Chinese solar PV players
are focused on crystalline silicon solar cells. Source: Nation Renewable Energy Laboratory:
https://www.nrel.gov/pv/cell-efficiency.html (accessed on 24 April 2021).

5.4.3. Unavailability of Technical Standard for Emerging Modes and Recycling

Solar PV power is exceptionally active in innovative activities. New applications and
business modes have emerged such as solar PV power integrated with agricultural green-
house rooftops [36,79], solar PV power constructed on fishery ponds [80], or solar PV
power generation combined with desertification prevention or forestry cultivation. How-
ever, technical standards and supervision specification rules for solar PV power are con-
summated. Evaluation systems and proper methodologies to assess the authentic benefits
Energies 2021, 14, 3061 22 of 28

(economic, social, ecological) with transparency and stringent policy monitoring need to
be urgently established [27]. The last node in solar PV power generation that needs to
arouse people’s attention is the recycling procedures and technical standards. This refers
to the reuse of recyclable materials and disposal of wastes (unrecyclable rubbers, cement,
etc.) at the end of the commercial operation. The non-profit organization, PV CYCLE
(http://www.pvcycle.org/homepage/ (accessed on 18 April 2021)) offers tailor-made solu-
tions for solar PV panels under the mandatory obligations of WEEE. However, few studies
have focused on recycling technology in China and there are no mandatory governance
rules. Most of the operating solar PV power plants in China are less than ten years since
their COD, and the life-time of solar PV power stations is 25 years. It is time to duly con-
sider the recycling issue. Figure 13 demonstrates that 99.7% of the solar PV power gener-
ation were installed between 2011 and 2020.

Installation Volume (GW)

254.73
60 260
53.00
Installation Volume(GW)

55 240
50 220
45 200
40 180
160
35
140
30
120
25
100
20 80
15 60
10 40
2.70
5 0.84 20
0 0
P-2011 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Yearly Installation Volume Cumulative Installation Volume

Figure 13. Yearly and cumulative installation volume (2011–2020). Source: CPIA [66] and orga-
nized by the authors.

6. Suggestions to Accelerate the Development of Solar PV Power

6.1. Suggestions for Government Policymakers
Political Aspect: Incentive industrial policies are fundamental to the development of
REs [106]. Policy enforceability and continuity are vital for the sustainable development
of solar PV power. Delay in the payment of subsidies, persistent curtailment on RE elec-
tricity in northern regions, and discontinuous tax policies have deteriorated the invest-
ment returns of operating solar PV power plants. Policymakers have to solve these pend-
ing issues immediately. Another factor concerns the dynamic adjustment of policies and
coordination between regulators [27]. Emerging solar PV power applications require
breaking the fragmented bureaucratic system; multi-tiered cross-sectoral governance be-
tween the energy administrator and other related sectors is needed. A new evaluation
system to assess the comprehensive benefits of new solar PV applications needs to be set
up on a transparent and disinterested basis.
Economic Aspect: Project finance was a widely recognized shortcut financing way
for Res [107], and green finance was proven to have a pivotal impact on accelerating tran-
sition to sustainable development [108]. Currently, SOEs and private investors are not
equitably treated by banks and financial institutes. SOEs can obtain project finance easily
for their solar PV projects and enjoy a 10% discount on benchmark interest rates. Private
investors have little chance to access direct project finance. They are striving for financial
support via finance lease or mortgage, with an additional cost of 40–50% of the benchmark
Energies 2021, 14, 3061 23 of 28

interest rates. The government should mandate state-owned banks to release project fi-
nance to credible developers. Meanwhile, the planned green finance scheme should take
effect to sustain the deployment of solar PV power. Moreover, in the post-FIT era, cus-
tomized incentive policies must be introduced based on the coal-fired electricity tariff,
irradiation intensity, and installation capacity to maintain the economic viability of solar
PV systems, especially for northern China commercial and residential rooftops [109].
Social Aspect: The public’s participation plays a significant role in the sustainable
development and the adoption of REs. Studies have recommended that energy suppliers
and end-users should bear a differentiated mandatory obligation [110]. Currently, China
imposes RE ratios on power generation companies and limitations on carbon dioxide
emissions for large energy-consuming giants. It is strongly suggested that the government
implement incentive measures for all energy consumers including individuals. Personal
income deduction for the consumption of green electricity or purchasing Green Certifi-
cates can be realized with the support of big data technology. In big cities where applica-
ble, urban planning regulators and residents’ committees are encouraged to collaborate
to promote solar PV power generation.
Technological Aspect: UHV transmission technology has excellent performance in
transmitting REs to the consumption centers [104]. One reviewer disclosed that the stabil-
ity of UHV needs to be enhanced, and that some UHV transmission lines are operating at
50% capacity. Hence, UHV is not the sole key to dissolve curtailment on RE electricity.
More academic and technical research should be carried out relating to the coupling of
solar PV power generation with state-grid, solar PV power integrated with storage sys-
tems, and even solar PV technology with hydrogen technology. For solar PV industry
technology, we can conclude that Chinese private solar companies can be attributed to the
breakthrough of solar cell efficiency and only focus on crystalline silicon cells [111]. Re-
search institutions and universities with abundant R&D support are advised to participate
in the fundamental research and other roadmaps.

6.2. Suggestions for the Solar PV Industry

Political Aspect: Incentive policies are the keys to reduce investment risk and main-
tain sustainable development [112]. China’s solar PV power participators must strictly
comply with the enacted policies. Regarding policy discontinuity, uncertainties of en-
forceability, and lagged policies, solar PV companies can organize policy research teams.
The routine communication mechanism between the policymakers and the solar PV asso-
ciation can effectively lobby and solve the aforementioned issues. Following China’s Belt
and Road Initiative, actively participating in the emerging RE markets alongside the Belt
and Road can discover favorable political support and improve financial performance for
the solar PV companies.
Economic Aspect: The integration of solar PV power generation with agriculture,
fisheries, and other sectors solves the embarrassing situation of scarce land resources in-
novatively. However, due to low prices of crops or technical restraints, related industries
such as agriculture and fishery have almost been abandoned [36]. It is strongly recom-
mended that solar PV companies cooperate with professional companies to achieve full
utilization to gain more comprehensive benefits. Another way to increase economic per-
formance is to upgrade and renovate existing solar PV power plants. Both solar PV prod-
uct companies and project owners can benefit from upgrading activities and adopting in-
telligent O&M technology.
Social Aspect: Although a portion of people hold preconceptions on solar PV power,
they mistakenly believe that solar PV power generation is unstable, that the LCOE is
higher, it is not easy to store, or that it is restricted by regional constraints [38]. However,
solar PV power has gained widespread understanding and acceptance amongst people.
Companies should publicize the benefits of solar PV power to the public via various chan-
nels (social media, urban square, open day posters, schools, etc.). One more issue refers to
the after-sales service network. For business-to-business mode, point-to-point service is
Energies 2021, 14, 3061 24 of 28

sufficient. However, in recent years, millions of households across the country have been
eager to access technical supervision. Solar PV companies have to set up an after-sales
service network to fill the gaps.
Technological Aspect: China’s solar PV industry is committed to the R&D, produc-
tion, and sales of crystalline silicon cells. Significant effect of technology advancement and
scale economies have been accomplished. However, exclusive focus on one type of tech-
nology will lead to the ignorance of other technologies. The second curve theory implies
that the Chinese solar industry should set foot in new technological fields such as perov-
skite cells and thin-film cells. On the other hand, with the ambitious targets of carbon peak
by 2030 and carbon neutrality by 2060, new additional modes of a low-carbon economy
will knock the market. The whole solar PV power industry chain needs to strengthen their
collaborative innovation to improve their innovation capabilities. They also need to learn
about storage technology, hydrogen technology to accomplish cross-border cooperation.

7. Conclusions and Discussions

7.1. Conclusions
China is trying all means to transform its economic growth mode to achieve sustain-
able development. Dedicated to promoting the deployment of REs is an inevitable choice
to accomplish the aspirational target of carbon peak by 2030 and increase the RE ratio to
20%, and the development of solar PV power seems to be the priority. Facing the grid-
parity era and current development status, it is essential to conduct a holistic analysis of
solar PV power to investigate the potential opportunities and challenges, which is indis-
pensable for sustainable development. In this paper, the PEST analysis approach was
adopted to conduct the historical topic. It was discovered that a favorable macro-PEST
environment grants great potential opportunities and the estimated annual installation is
to reach 80+ GW in the coming years. However, potential challenges that will hinder the
development of solar PV power have also been found. Based on the PEST analysis, precise
suggestions to accelerate the further development of solar PV power for both policymak-
ers and the solar PV industry were put forward. As long as proper actions are imple-
mented, China can seize the opportunities and overcome the challenges, and promising
developmental prospects can be anticipated. Moreover, the PEST analysis methodology
is hopefully beneficial to peer countries like China.

7.2. Discussions
The PEST analysis framework was adopted to explore the potential opportunities
and challenges of solar PV power in China under the carbon peak scenario. However,
some limitations need further study in the future. At the outset, PEST is a qualitative anal-
ysis approach. The weights of each factor are not quantified; thus, the importance of each
element cannot be classified. Second, solar PV power is only one member of the RE re-
sources group. Research focused on comparative advantages in terms of economy and
technology between solar PV power and other RE resources (wind power, hydropower,
etc.) needs to be conducted to promote the comprehensive development of all REs. The
fuzzy analytic hierarchy process (FAHP) could be an alternative methodology. Third, in
the post-FIT era, green finance has to be introduced, but how to promote it in a sustainable
way and strengthen supervision needs more research. Moreover, the effectiveness of
green fund, green trust, and green lease needs to be compared to promote green finance
pertinently. Finally, due to the spontaneous limitations of solar PV power, it needs to be
integrated with new technologies such as smart grid, hydrogen energy, EVs, and further
studies require interdisciplinary cooperation.

Author Contributions: Conceptualization, H.W. and X.Y.; Methodology, H.W. and X.Y.; Validation,
X.Y.; Formal analysis, H.W.; Investigation, H.W., X.Y., X.X., and L.F.; Resources, H.W., X.Y., and
L.F.; Data curation, H.W. and X.Y.; Writing—original draft preparation, H.W.; Writing—review and
editing, H.W., X.Y., X.X., and L.F.; Visualization, X.Y. and L.F.; Supervision, H.W. and X.Y.; Project
Energies 2021, 14, 3061 25 of 28

administration, X.Y.; Funding acquisition, X.Y. All authors have read and agreed to the published
version of the manuscript.
Funding: This research was funded by the Ministry of Education of the People’s Republic of China
under the 2018 Key Projects of Philosophy and Social Sciences Research (grant number 18JZD032).
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: The data presented in this study are openly available in the China
Statistics and China Energy White Paper, reference number [1,2,11,26,59].
Acknowledgments: The authors sincerely thank the editor and anonymous reviewers for their in-
sightful comments and suggestions. Furthermore, the authors would like to thank all the 43 inter-
viewees who took their time to participate in the consultations and made valuable suggestions.
Conflicts of Interest: The authors declare no conflicts of interest. The funders had no role in the
design of the study, in the collection, analyses, or interpretation of data, in the writing of the manu-
script, or in the decision to publish the results.

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