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Imminent Tera-scale Market: Distributed Family PV!
The Notice of Opinions on Accelerating Implementation of Energy Development and Construction in Poor Areas to Advance Poverty Relief has been published on the official website of the National Energy Administration, with a view to implementing the spirit of the Central Working Conference on Poverty Relief and Development, giving full play to the fundamental function of energy development and construction in poverty relief, promoting economic development and improvement of people’s livelihood in poor areas, and striding toward the moderately prosperous society together.

The main objective of the implementation opinions has proposed that, as of 2020, the universal energy service level in rural areas will be remarkably improved, and the universal power service level in rural areas will basically reach the average level of the province (region, city); full coverage of dynamic electricity in rural areas will be realized basically; and construction of the PV poverty relief project for 2 million poverty families to establish cards and archives will be completed.

What is family PV?

Family PV mainly refers to a system for power generation by installing and using distributed solar power on the roof of a family. The family PV features small capacity, multiple installation points, simple grid connection flow, direct and obvious earnings, and it is also a distributed PV power generation application form with the highest state subsidies.

How big is the family PV market?

At present, the family PV market is divided into rural family PV and urban family PV.

The rural family PV is mainly concentrated on self-built housings in rural areas and unified housings built in new countryside. Generally they are low-rise buildings. The urban family PV is mainly concentrated on high-grade villa areas and urban village self-built housings around the city.

The rural family PV occupies the most part of the market in China, and the latest data published by the Ministry of Housing and Urban-Rural Development shows that, there are 400 million families, where the conservative market estimate of families with roof constructions is 30 million. While the market holdings of city villas and urban village self-built housings are over 20 million.

According to the scale of average 3-5kW for each household and investing RMB 30,000-50,000, the market capacity of the whole family PV is more than the scale of 1.5 trillion to 2.5 trillion.

But at present, this market has been developed by not more than 0.2%!

What business models does family PV have?

The business model of family PV is single at present, and it is mainly the family investment, or solar power generation poverty relief model organized and led by the State.

PV power generation is like a small plant, and the electric power generated cannot only be used by ourselves, but also can be sold to the power grid and users near the power distribution network. There are also good encouragement policies for solar power in China, thus solar power generation has very strong financial attribute, unlike other household appliances or equipment. Therefore, apart from self-investment, banks and third-party financial institutions will also get more involved in solar power generation.

How to promote family PV?

Promotion of family PV is an open topic, and there are different promotion ways in different areas.

The first is encouragement by the State for green energy saving

The life cycle of the solar power generation system exceeds 30 years. Each 1KW solar system can averagely generate over 25,000 kilowatt-hour power in its life cycle. While the power consumption for generating 1KW solar system is only about 1,500 kilowatt-hours. The energy recovery ratio exceeds 16.7 times.

Meanwhile, in the life cycle, emission of carbon dioxide can be reduced by 24.925 tons.

The second is having a very high return on investment

The return on investment of the solar power generation system is generally not lower than 10%, and can be up to 20% at most. On the premise of China’s rapid economic development, it is also a very good way for financial management of family which is conditional for installing solar power; the common financing products have only 7% of earnings, and the financing products of Internet p2p have over 15% of earnings, but there are a lot of transaction risks. The bank interest is even less than 3%. Thus, buying real estates is a financing direction. However, real estate cannot be bought indefinitely, so why not to select a high-yield solar system, which can not only generate power and protect the environment, but also have national guarantee?

The third is to provide the latest solar power for the aged

In rural China, rural residents have not paid for the social insurances in normal lives, thus the old-age pension has become a widespread difficulty when they are getting older and older, and cannot undertake relevant works. By now, residents can select to buy pension insurances; however, people suspect pension insurances under double pressures of the present economic conditions and aging population.

However, a subsidy contract with the validity of 20 years is provided by the State for the solar power generation. There is over 10% of return on investment; it will be a net profit process after cost recovery of 5-6 years, and the amount of subsidy is provided for additional charges of renewable energy sources in China; the fund source is clear, thus PV provision for the aged becomes a new model.

According to reliable data identification, in Zhejiang, only in 2015, there were over 20,000 residents selecting such investment. Children of most rural families work in cities, and for the purpose of providing a living guarantee for parents, they can make the aged have earnings of RMB 300-500 every month in the next 20 years as long as they invest RMB 30,000-50,000, thus it is a once for good thing!

Where is the pain spot of family PV market?

Well, family PV is so good, why does it develop so slowly at present? Main reasons are as follows:

Ordinary people suspect PV power generation

Chinese residents have relatively lower knowledge cognition than those in developed countries, and they are not familiar with this new product (solar power generation), so they will use it only when all people around have accepted installation, and they have seen the implementation of capital subsidies by themselves.

PV power generation is just emerging in China

PV manufacture has been well known in China, while PV power generation was only distributed in large northwest surface power stations originally in China. The distributed PV power generation is just emerging only in emerging east economically-developed areas, and relevant supporting enterprises have just started.

The financial support has not been in place yet

At present, the initial investment of solar power is relatively high, while the bank support policy for solar power generation has not been put into place yet, which makes many people who want to invest solar power not believe in the earnings of PV power generation. The distributed power generation has just started, so banks have not responded very rapidly. For now, more and more distributed power generation bank support polices have been staged successively, and it is believed that all banks will launch support polices for PV power generation in the near future.

Summary

The above is some analysis for family PV, and it is believed that, family PV can ignite the investment community in several years to come, and become a new tera-blue ocean market.
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