China Pushes Solar to the Roof as Bigger Plants Stay Idle

China is seeking to boost demand for solar panels mounted to roofs of homes and businesses as the market for larger utility-scale plants dries up.

Installations atop factories, malls and airports are likely to surge sixfold to almost 40 gigawatts by the end of 2020 and 125 gigawatts by 2040, according to Bloomberg New Energy Finance. That would give China roofs installed capacity roughly equal to the entire solar market in the U.S. at the end of 2016.

The move would help manufacturers led by JinkoSolar Holding Co. and Trina Solar Ltd. weather a slump in demand for bigger projects far from cities, where a lack of grid connections and a flood of new projects has depressed power prices and prompted regulators to seek slower growth from the industry. Rooftop projects currently account for 9 percent of China’s solar market, compared with about 35 percent for commercial and residential solar in the U.S.

The market “is very huge,” said Kevin Ao, executive director at Beijing Gorun New Energy Technology Co., a Chinese clean-energy company planning to develop 300 megawatts of rooftop projects this year. The ground-mounted segment “will definitely be smaller. A delay in government subsidies also has a more significant impact,” he said.

China’s solar market at 83 gigawatts last year was the biggest in the world, supporting an industry of panel-manufacturers built up in the nation by government-subsidized lending from institutions led by China Development Bank Corp. Most panels sold into the domestic market have gone to build up massive farms in remote regions, which is a problem because the grid is struggling to build capacity to transmit the electricity to regions where it’s consumed.

Even so, the developers are plunging into rooftop projects by returns of as much as 15 percent, according to a BNEF analysis.

Competition is intensifying for work, said Thomas Lapham, chief executive officer of Asia Clean Capital Ltd., a Hong Kong-based installer, noting that “the discount we have to give is going up.”

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