Forecasting of electricity price subsidy based on installed cost of distributed photovoltaic in China

In China, the installed cost of distributed photovoltaic (DPV) is declining rapidly. However, the level of subsidy per kWh for DPV is adjusted less frequently by the Chinese government. This paper proposed a linkage model to forecast subsidy per kWh of DPV based on net present value (NPV) method. The results show that the increase of subsidy duration, internal consumption proportion and sunshine hours will reduce subsidy level. Therefore, it is suggested that the Chinese government should take varied and targeted measures, such as reducing different subsidies for new DPV users who install DPV in different years, choosing a longer subsidy duration and setting different subsidy levels in different regions. These varied and targeted measures are beneficial to both government and users, because they can reduce the annual financial burden for the government and the surcharges of electricity purchase for users.