Li Lifeng has placed dozens of solar panels that gleam in the winter light on the rooftop of his home in China’s Shaanxi region, next to green onion and wheat fields.
Over the past five years, he has been one of over 2.4 million Chinese householders doing their part to clean up the world’s largest source of planet-warming carbon pollution.
The majority of the rooftop solar has been added in the last two years, as China has granted incentives to local governments to increase installations and boosted power costs for companies, making self-generation more appealing.
As a result of the consequent renewables boom, China built more small-scale solar capacity last year than any other country.
In 2022, about one out of every five panels placed globally will be atop a Chinese house or company.
Li made a financial decision. The 52-year-old operates a noodle store and two rowhouses in central China, roughly an hour outside of Xi’an.
With one son due to marry and another about to start college, he and his wife sought to secure another source of income before retiring.
Since connecting its first panel to the grid in early 2018, Li’s family has sold clean power for more than 62,000 yuan ($8,963). “You can’t get this much return putting money in the bank,” Li said.
China already has the largest wind and solar fleets in the world, but its electrical infrastructure is still largely reliant on coal, the dirtiest fossil fuel.
Energy price spikes following Russia’s invasion of Ukraine, as well as protracted droughts that impacted hydroelectric power, drove China to increase coal-fired generation last year, even as it rushed to build renewable capacity.
If China wants to accomplish President Xi Jinping’s aim of attaining net-zero emissions by 2060, it will need to do more to phase out fossil fuels and cut greenhouse gas emissions.
The government is already building massive wind and solar farms in the country’s sparsely populated inland deserts, but the infrastructure required to connect them to the megacities of central and eastern China is prohibitively expensive and not fully built.
Room for utility-scale renewables is becoming scarce in more densely populated areas, particularly coastal provinces like Shandong and Hebei. After decades of uncontrolled industrialisation, the government is also under pressure to balance the energy shift with a separate push to protect natural areas.
Instead, it is turning the country’s rooftops into a weapon in the battle against climate change.
Last year, China installed more than 51 gigatonnes of small-scale solar power.
Rooftops and backyards now account for almost 40% of its total solar capacity, including some projects that helped deliver power to rural towns and isolated monasteries for the first time.
The national government originally subsidised all solar installations, ensuring high enough returns to make investments worthwhile.
When solar panel prices plummeted, the subsidy scheme was permitted to expire at the end of 2021, and local subsidies have either dwindled or vanished.
In their place, Beijing started a trial programme in 2021 that assists local governments in pooling smaller projects for large orders, attracting more developers and lowering prices.
Cities were pushed to cover almost one-third of commercial buildings and one-fifth of farmhouses with solar panels by the end of 2023, resulting in an extraordinary surge in small-scale solar installations.
According to Niu Yanyan, chairman of Longi Green Energy Technology Co.’s domestic distributed photovoltaic business, the country will install 60 gigatonnes of small-scale solar this year and continue to increase by roughly 20% yearly for the foreseeable future.
According to the company, China’s buildings and roofs have the potential to host more than 1 terawatt of solar power capacity, which is about the same size as the whole present world industry.
Longi developed its first panels created exclusively for the rooftop solar market last year, which are more efficient and aesthetically beautiful.
It is not only households. Rooftop solar installations on industrial and commercial buildings have increased considerably in recent years, following a series of lengthy blackouts that hampered output.
Chinese enterprises are also under significant pressure to reduce greenhouse gas emissions, both from the Chinese government and from overseas clients looking to decarbonize their supply chains in the face of heightened investor scrutiny.
Following repeated power outages in late 2021, the government permitted utilities to charge industrial and commercial customers higher power charges, accelerating the changeover among enterprises.
More than 300 rooftop panels provide half of the power consumed by the Yuanzheng Incubator in a Xi’an industrial park.
It currently saves roughly 42,000 yuan per month on power expenditures because it is home to more than 20 enterprises that make items such as electronics and prosthetic limbs.
Jinze Power Group, a solar equipment vendor and project builder whose distributed solar business increased in both 2021 and 2022, installed the panels.
“In 2015, we would be pretty happy if we sold a few dozen panels for distributed solar,” said Liu Jihong, the head of project development. “Now, signing deals for thousands of panels is like an ordinary day.”
But, the prognosis is not totally positive. The rapid speed of installation has made it challenging for certain systems to handle all of the increased power generated when the sun shines.
Shandong, which has the most rooftop solar in China, requested residents to turn off their systems over the Lunar New Year break in January to safeguard the grid as electricity consumption fell.
It is one of a few provinces that are testing spot power trading systems to better manage supply and demand, and the local government has announced guidelines that allow for negative pricing to discourage generation when there is extra electricity.
Power markets that are becoming more autonomous and localised may result in more fluctuating power prices — and more variable revenues for people like Li.
Several coastal areas are now mandating or pushing new rooftop installations to be linked to battery storage, which is a costly proposition.
While some local governments have their own incentive programmes, the expiration of national subsidies means that new rooftop solar installations are less lucrative than they were, despite falling equipment prices.
“In the next couple of years, there’s still room for massive growth, but it’ll have to be done in a more sustainable way,” said Cosimo Ries, an analyst with consultancy Trivium China Ltd.
When it comes to rooftop solar, Li is a repeat client. After recouping his 60,000 yuan investment in his first system, he took out a roughly 100,000 yuan loan in December to create a second, with brand new Longi panels vaulted high above his rooftop.
If Li is concerned about incurring so much debt as he prepares for retirement, he doesn’t show it.
“We are farmers, so we don’t get much in monthly pension payments,” Li said. “Revenue from the solar panels will help ease the pressure on the kids to provide for us when we get old.”
