Abstract In 2014, China's PV terminal market construction target was set at 14 GW. By 2015, the cumulative target reached 35 GW. The capital required for these projects was approximately 120 billion yuan in 2014 and 350 billion yuan in 2015. As China continues to grow as a major player in photovoltaic power generation, the annual demand for investment in the sector remains substantial. Given the current industrial and financial landscape, along with lessons from developed countries, it is clear that financial innovation will be key to addressing these massive funding needs.
According to the "Several Opinions of the State Council on Promoting the Healthy Development of the Photovoltaic Industry," expanding the domestic market is seen as essential for improving technology and accelerating industrial transformation. The author emphasizes that a strong photovoltaic industry cannot exist without a robust terminal market. This is evident in two main aspects: First, the expansion of the domestic terminal market plays a crucial role in industrial upgrading. Before 2012, China was primarily a leading manufacturer of PV products but remained at the lower end of the supply chain. Only when production companies move into the terminal market can they transition into service-oriented photovoltaic power generation enterprises, marking the beginning of an era of industrial upgrading. Second, expanding the terminal market helps balance supply and demand in the mid-to-upper parts of the industry. Currently, the PV sector is not fully market-driven, with severe overcapacity in the upstream segment. By rationally expanding downstream demand, the industry can reverse this imbalance and promote greater integration. Thus, developing the terminal market is not only vital for industrial consolidation but also a top priority for maintaining and enhancing China’s global competitiveness in the PV sector.
Financing remains a critical challenge for the development of the PV terminal market. Within the full value chain, the terminal segment is relatively low in technical complexity. Once factors like electricity price subsidies and grid connection are determined, the success of the project largely depends on the availability of financing. The efficiency and structure of the financing environment determine whether projects can proceed smoothly. Unfortunately, the current financing situation for the PV terminal market is quite challenging.
A lack of traditional financial support is one of the main reasons behind the difficulties in securing funds. Many PV manufacturers have accumulated significant non-performing loans, and the imbalance between credit and debt has made it difficult to recover corporate performance. Additionally, public misconceptions about the PV industry persist, further complicating access to capital. Traditional financing methods—such as bank loans, debt financing, and equity investments—are no longer sufficient to meet the funding requirements of the 12th Five-Year Plan for PV development.
Financial innovation offers a promising solution to the financing challenges faced by the PV terminal market. This is driven by two key factors: first, as traditional methods fail to meet growing demands, new approaches must be adopted. Research conducted by the author shows that innovative financial tools can become the primary channel for funding in the PV sector. Second, the rapid growth of the PV market, its large scale, and long payback periods make financial innovation essential. The author believes that the future of the PV terminal market will be driven more by market share than short-term profits, and its financing strategies should align with the characteristics of a new economic model.
In mature markets with well-developed capital systems, financial innovation has become the main source of funding for the PV sector. For example, in the United States, in 2013, the country ranked third globally in PV installation with a total capacity of 4.2 GW. A significant portion of this came from residential rooftop installations, which accounted for 65% of the terminal market. Companies like SolarCity, which have successfully transitioned from manufacturers to power generation service providers, have played a key role in this shift. Their success highlights the importance of financial innovation in supporting sustainable growth and business model evolution in the PV industry.
According to the "Several Opinions of the State Council on Promoting the Healthy Development of the Photovoltaic Industry," expanding the domestic market is seen as essential for improving technology and accelerating industrial transformation. The author emphasizes that a strong photovoltaic industry cannot exist without a robust terminal market. This is evident in two main aspects: First, the expansion of the domestic terminal market plays a crucial role in industrial upgrading. Before 2012, China was primarily a leading manufacturer of PV products but remained at the lower end of the supply chain. Only when production companies move into the terminal market can they transition into service-oriented photovoltaic power generation enterprises, marking the beginning of an era of industrial upgrading. Second, expanding the terminal market helps balance supply and demand in the mid-to-upper parts of the industry. Currently, the PV sector is not fully market-driven, with severe overcapacity in the upstream segment. By rationally expanding downstream demand, the industry can reverse this imbalance and promote greater integration. Thus, developing the terminal market is not only vital for industrial consolidation but also a top priority for maintaining and enhancing China’s global competitiveness in the PV sector.
Financing remains a critical challenge for the development of the PV terminal market. Within the full value chain, the terminal segment is relatively low in technical complexity. Once factors like electricity price subsidies and grid connection are determined, the success of the project largely depends on the availability of financing. The efficiency and structure of the financing environment determine whether projects can proceed smoothly. Unfortunately, the current financing situation for the PV terminal market is quite challenging.
A lack of traditional financial support is one of the main reasons behind the difficulties in securing funds. Many PV manufacturers have accumulated significant non-performing loans, and the imbalance between credit and debt has made it difficult to recover corporate performance. Additionally, public misconceptions about the PV industry persist, further complicating access to capital. Traditional financing methods—such as bank loans, debt financing, and equity investments—are no longer sufficient to meet the funding requirements of the 12th Five-Year Plan for PV development.
Financial innovation offers a promising solution to the financing challenges faced by the PV terminal market. This is driven by two key factors: first, as traditional methods fail to meet growing demands, new approaches must be adopted. Research conducted by the author shows that innovative financial tools can become the primary channel for funding in the PV sector. Second, the rapid growth of the PV market, its large scale, and long payback periods make financial innovation essential. The author believes that the future of the PV terminal market will be driven more by market share than short-term profits, and its financing strategies should align with the characteristics of a new economic model.
In mature markets with well-developed capital systems, financial innovation has become the main source of funding for the PV sector. For example, in the United States, in 2013, the country ranked third globally in PV installation with a total capacity of 4.2 GW. A significant portion of this came from residential rooftop installations, which accounted for 65% of the terminal market. Companies like SolarCity, which have successfully transitioned from manufacturers to power generation service providers, have played a key role in this shift. Their success highlights the importance of financial innovation in supporting sustainable growth and business model evolution in the PV industry.
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