In recent months, data from a leading photovoltaic market research organization revealed that the total disclosed solar power projects in China—covering existing intentions, signed contracts, and ongoing developments—have reached 130 GW. This figure surpasses the newly proposed "14th Five-Year Plan" targets by more than three times, signaling a significant surge in domestic solar capacity. As the external environment for the photovoltaic industry becomes more transparent and internal policies become clearer, the Chinese solar market is on the verge of a new construction boom.
Theoretically, with factors such as sunlight availability, grid connection convenience, and projected income over 25 years considered, a western solar power plant could yield returns between 8% to 12%. This suggests that investing in solar power plants can indeed offer stable financial returns. However, achieving these returns under current conditions remains challenging.
**Reason 1: High Investment Costs Impact Returns**
Currently, a large portion of the capital invested in solar power stations comes from companies in various industries looking to offload excess inventory. Their goal is not necessarily long-term operation but rather quick profit through selling the project or transferring it to operators. In the northwest, where large-scale solar farms are being built, the average cost per watt is around 8 yuan. Projects built before 2012 often exceeded 9 yuan per watt, sometimes even reaching 12 yuan. These high costs are partly due to cost-cutting measures, such as using lower-quality components, which have led to a sharp decline in efficiency and reduced returns. Studies show that every 1% improvement in photovoltaic conversion efficiency can cut costs by up to 5%, and extending the operational life of a plant by just one year can significantly boost returns.
**Reason 2: Construction Quality Affects Long-Term Performance**
Data indicates that some completed solar power plants suffer from quality issues. The rush to meet policy deadlines, such as the 9.30 subsidy deadline in 2011, led many developers to hastily launch projects. This resulted in substandard work from unqualified contractors, leaving many plants with poor construction quality. Issues like panel discoloration, cable faults, and short-circuit fires have been reported, even in plants only two years old. Although grid connection and subsidy delays have been largely resolved, the focus now is on ensuring long-term performance. Sacrificing quality for short-term gains may harm the system’s lifespan and overall investment value.
Photovoltaic modules typically last at least 25 years, and many overseas plants continue to generate electricity for over 40 years. This highlights the importance of quality in the long run.
**Improving Quality and Reducing Costs for Better Returns**
Fortunately, there is a growing awareness among developers about the need for quality. Compared to past practices, today's developers place greater emphasis on long-term performance and efficiency. Many now partner with reputable service providers like Norseman Energy and Hao Sheng to ensure reliable operations, reduce generation costs, and increase returns. Extending the lifespan of a plant not only benefits investors but also supports the sustainability of the entire industry.
Ultimately, the photovoltaic sector must prioritize quality over short-term cost reductions. Ensuring high-quality construction is essential for the industry’s sustainable growth. Focusing on long-term energy output and performance will remain the core of future development. By balancing cost and quality, the industry can build a solid foundation for lasting success.
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