The subsidy can alleviate the financial burden of residents. And the FITs allow the excess electricity generated from distributed solar PV to be sold to electric utilities at a fixed price during a given number of years, which can provide stable revenues for residents.
On June 1, 2018, National Development and Reform Commission, Ministry of Finance, and the Energy Bureau issued another notice on solar PV generation. It declared to decrease the subsidy of electricity generation from distributed solar PV by 0.05 CNY/kWh. Besides, the on-grid electricity price is also decreased by 0.06 CNY/kWh.
Subsidies can incentivize greater adoption, while also brings about heavy financial burdens for governments. From residents’ side, subsidies will be linked to their decision-making process in the adoption of distributed solar PV generation as discussed in abovementioned model.
In addition, government subsidies can reduce research and development costs of PV companies. Moreover, it is beneficial to achieve the collaborative innovation of PV industry chain between PV manufacturers and solar cell suppliers. Third, most control variables pass the significance test.
We apply spatial econometric model to analyze the performance of government subsidies on photovoltaic industry. The installed capacity of photovoltaics has shown a significant spatial agglomeration situation since 2012. The feed-in tariff and R&D subsidy policies play a positive incentive to the photovoltaic installed capacity.
The current PV subsidy policy—the zonal FIT policy—was enacted in August 2013 and went into effect in 2014 . It divides mainland China (except Tibet) into three different zones (Fig. 1).
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