Introduction: When China Photovoltaic Industry Association’s honorary president said: “the distributed photovoltaic industry is ushering in new development opportunities” at China Photovoltaic Industry Symposium: A Review on the First Half and Outlook on the Second Half of 2021 on July 22, he didn't mean a mere nominal outlook. The installed capacity of distributed photovoltaic power plants may set a new record in the unsubsidized era this year.
This benefits from the changes brought to the industry by the general trend of social development. In 2020, China's top leaders unusually set a target for the industry: by 2030, the total installed capacity of photovoltaic and wind power plants shall exceed 1,200GW. Guided by China's goal of carbon peaking and carbon neutrality, countywide rooftop distributed photovoltaic power promotion policy was introduced in July 2021, which triggered a distributed photovoltaic power boom across China.
Under the goal of carbon peaking and carbon neutrality, the trend of distributed photovoltaic power has long been sensed by the industry. As a Top 3 distributed photovoltaic power investor in the past, with its first mover advantage and the new opportunities in the industry, Jinko Powerhas accelerated the development of its distributed photovoltaic business. Like all investors, Jinko Power went through the throes of transition under the weight of subsidy arrears. However, as one of the few private photovoltaic businesses still active in the photovoltaic power plant investment market, Jinko Power clearly does not rely on "luck".
The year 2021 marks the 10th anniversary of the founding of Jinko Power. In 10 years, from winning the most Pioneering Photovoltaic Projects among private bidders to winning the bid for the world's largest single photovoltaic power plant in Abu Dhabi, with capacity of 2.1GW, to the first private photovoltaic power investor listed with pure photovoltaic power plant business in the A-share market, Jinko Power has been a model in every step for private investors determined to move forward in this changing market.
A Second Round for Distributed Photovoltaic Power
Jinko Power was a top player in the photovoltaic power investment market from 2016 to 2018. During the Golden-Sun Demonstration Project period, Jinko Power began to develop distributed photovoltaic power in depth. In the scramble for roofs, the distributed photovoltaic power team of Jinko Power finished 3.2GW of reserves and about 650MW of grid-connected capacity from March 2016 to the end of 2017. In the first half of 2017 alone, 87 projects with 437MW of grid-connected capacity were completed. It was a quick and highly active decision.
After the “Notice on Photovoltaic Power Generation Matters in 2018” released on May 31, the distributed photovoltaic power investment market cooled down rapidly. Facing subsidy arrears, Jinko Power put a brake on its distributed photovoltaic business. With continuous reduction in the photovoltaic power plant system, as well as the national policy guidance for the photovoltaic industry under the goal of carbon peaking and carbon neutrality, and the increasing recognition and acceptance of photovoltaic power by the public, distributed photovoltaic power has become the mainstream in the market once again.
In Nov. 2020, at the 4th Distributed Photovoltaic Carnival hosted by PVMen.Com, Jinko Power CEO Jin Rui announced the official return of the company's Distributed Photovoltaic Power Business Unit. In Jin Rui's opinion, with the rapid and large-scale development of the whole photovoltaic industry, there has been a new situation characterized by the integration of wind, photovoltaic, hydroelectric and thermal power generation and storage, the integration of power generation, grid, load and storage, the coexistence and complementarity between comprehensive large-scale bases and distributed small sites. In the new period of historic opportunities, distributed photovoltaic power has become a new growth engine leading the development of photovoltaic power generation in China.
The market response after its return is surprising. The person in charge of Jinko Power‘s distributed photovoltaic business told PVMen.Com: “We thought the visibility of Jinko Power in the field of distributed photovoltaic power was much lower in the last two years. Unexpectedly, every day we receive at least seven or eight projectinquiries consulting about distributed photovoltaic power investment and construction.”
It seems to Jinko Power that supported by the national goal of carbon peaking and carbon neutrality, distributed photovoltaic power investment is ushering in new development opportunities, and Jinko Power needs to devote greater effort in this aspect. Meanwhile, the establishment of a dedicated Distributed Photovoltaic Power Business Unit is conducive to the centralized integration of internal and external resources, the establishment of a standard process different from ground development, and more efficient market expansion. In addition, Jinko Power wants to develop diversified innovative business lines from distributed photovoltaic power generation, including the integration of photovoltaic power generation, charging and storage, photovoltaic hydrogen production, integrated energy services and so on.
This veteran in the field of distributed photovoltaic power investment is making a comeback and still competitive.
Different Distributed Photovoltaic Power
However, after the turbulent decade for photovoltaic power investment, the direction of Jinko Power’s distributed photovoltaic business is also changing. After its return, Jinko Power mainly adopts three business models for distributed photovoltaic power development. First, it cooperates with foreign platforms or investors, such as Singapore Power Group and Pufeng New Energy. These companies often have the advantage of low-cost capital. Jinko Power develops projects with them through resource cooperation and follow-up investment. For example, Jinko Power and Singapore Power Group will establish a joint venture to acquire and invest in renewable energy assets and develop integrated energy solutions in China. Second, it works with central or state-owned enterprises to take part in development, EPC or maintenance through bidding. Third, it develops self-invested projects.
Jinko Power selects quality project owners and pays more attention to the rate of return for self-invested projects, which can not only help the company generate higher revenue and cash flow in the holding period, but also create profit margins for switching to the BT (BuiId-Transfer) model afterward. In Jinko Power’s view: "generally speaking, in areas where population and business inflow keep growing, electricity demand is expected to keep increasing, and the boundary conditions for projects will not change substantially; in addition, grid-connected networks in these areas are relatively scarce resources.”
However, the development scope of distributed photovoltaic projects is also expanding. “For high-quality project owners, the standard for the rate of return is relatively relaxed, trying to control project risks through technical costs.In addition, fully grid-connected projects are also being promoted, mostly in central and eastern provinces with higher benchmark coal prices and good cash flow.” the person in charge of Jinko Power‘s distributed photovoltaic business introduced.
In addition, in terms of project size, Jinko Power adopts countywide development for projects with relatively concentrated physical locations but smaller unit sizes. “Basically, a countywide size of more than 30MW is up to our standard for investment.” As far as PVMen.Com knows, Jinko Power has applied for more than 40 countywide projects, most of which have applied to provincial energy departments for approval. So far, it has signed strategic contracts with nearly 20 counties and districts, with a total project scale of nearly 8GW.
Moreover, driven by the distributed photovoltaic power boom, household photovoltaic power has also ushered in a new period of vigorous development. As a main force in distributed photovoltaic power investment,Jinko Power is also gradually developing household photovoltaic power. Recently, Jinko Power joined hands with partners in the field of household photovoltaic power to jointly develop household photovoltaic projects. At present, development standards and requirements for household distributed photovoltaic projects have been developed and plans for specific projects are being made with counties in Shandong.
Facing great historic opportunities for distributed photovoltaic power, Jinko Power’s Distributed Photovoltaic Power Business Unit is recruiting new members to get prepared. Professional development teams of more than 110 members from six regional companies are also working together, coupled with powerful support from back offices like the design institute, engineering management, supply chain, etc.
As one of the few private investors in photovoltaic power still active in the market, Jinko Power has a keen insight into the market. The person in charge of Jinko Power‘s distributed photovoltaic business told PVMen.Com that the market is busy enough at this stage and more and more project owners begin to understand distributed photovoltaic power. “There is little need for salesmen to do the legwork. Meanwhile, the professionalism of project owners is also improving. They now have higher requirements for the rationality and safety of project schemes, the coverage of insurance, and the response speed of operation and maintenance.”
Changes in the market situation mean more opportunities and higher standards for Jinko Power. “Jinko Power has developed more than 260 distributed photovoltaic projects, with total capacity exceeding 1.2GW. We have a complete set of technical solutions for complex application scenarios.” When talking about past projects, the person in charge knows all about them.
Jinko Power’s own design, operation and maintenance team also went through the development process of photovoltaic power plants in the first five years. From the roof reinforcement scheme to the operation and maintenance response to water leakages and electrical repairs, Jinko Power supports photovoltaic power plants around the country with more than 600 employees at 20 central stations.
Moreover, in the new market situation, Jinko Power’s distributed photovoltaic business also meets the diverse needs of project owners through integrated energy service solutions. At present, it’s working with the government of Lai'an County in Anhui Province on a 350MW "power generation, grid, load and storage" integrated demonstration project, which has got approval.
Meanwhile, Jinko Poweralso consolidates its photovoltaic "concentric circle" development model through a series of cooperation, including signing a strategic cooperation agreement with Air Products to cooperate in the field of photovoltaic hydrogen production. At present, plans for the first batch of projects are being made, and photovoltaic hydrogen production demonstration projects are planned to be built in Weifang and Feidong of Hefei. It also has signed a strategic cooperation agreement with USAS on BIPV cooperation. The two sides will focus on the development of BIPV solutions based on their respective advantages, providing more paths for the comprehensive promotion of BIPV.
“What we need to do in the future is to continue model innovation and maintain our core competitiveness in the industry. It is our goal to realize efficient operation of the whole power system through distributed power plants and information technology. We will find a new path in homogenization and a foothold in breaking the situation. Distributed photovoltaic power is the only effective means to reach the end consumer in zero-carbon-emission energy. We will do our best to make this platform work.” This is the mission given by Chairman Xiande Li to Jinko Power in the new era, as well as the preferred way for Chinese private photovoltaic power investors after the turbulent decade for photovoltaic power plant investment.
