Can't We Build a Floating Photovoltaic System?

Heavy new regulations! Can't we build a floating photovoltaic system? Interpretation by personnel from the Ministry of Water Resources: Not one size fits all approaches

"Photovoltaic power stations, wind power generation and other projects are not allowed to be built in rivers, lakes, and reservoirs."

Recently, a short sentence from an official document from the Ministry of Water Resources has raised doubts among many investors. Is there still investment value in floating photovoltaic power stations?

Red Star Capital Bureau found that multiple listed companies have projects related to floating photovoltaic power stations.

On May 25th, a staff member from the Ministry of Water Resources told the Red Star Capital Bureau that the document is not meant to be a one-size fits all solution. Water areas with less impact on flood control, such as the surrounding lakes and reservoirs, should be discussed and decided by local authorities.

The floating photovoltaic power generation is 10% to 15% higher than ground level.

Call to Stop: Construction is not allowed in rivers, lakes, or reservoirs

The photovoltaic industry is experiencing rapid development, and in 2021 alone, China's newly installed photovoltaic capacity is about 54.88 million kilowatts. Among them, floating photovoltaic power stations have always been popular because they do not occupy land resources, can reduce water evaporation, and can also accommodate fishing and aquaculture.

The so-called "floating photovoltaic power station" refers to a photovoltaic power station established on the ponds, small and medium-sized lakes, reservoirs, reservoirs, and water bodies formed by mining subsidence areas.

The Science and Technology Daily once quoted a set of data stating that due to the higher light reflectivity of water surface than (mountain) ground. Compared to rooftop or ground photovoltaic power generation systems, the overall power generation of floating photovoltaic systems is 10% to 15% higher under the same conditions.

On May 25th, the Ministry of Water Resources released the "Guiding Opinions on Strengthening the Spatial Control of Rivers and Lakes Waterfront" on its official website (hereinafter referred to as the "Guiding Opinions").

The Guiding Opinions point out that photovoltaic power stations, wind power generation and other projects are not allowed to be built in rivers, lakes, and reservoirs. The construction of photovoltaic and wind power projects around lakes and reservoirs should be scientifically demonstrated and strictly controlled.

The Guiding Opinions also put forward three "nots" : not obstructing the smooth flow of flood, not endangering the safety of water conservancy engineering facilities such as reservoirs, dams, and embankments, not affecting the stability of river conditions and navigation safety.

Red Star Capital Bureau has learned that currently, surface photovoltaic power stations are mainly divided into pile driving ones and floating PV stations. From the perspective of pile driving, if the pile foundation is too dense underwater, it will create certain obstacles to the water flow, which may hinder flood discharge.

In addition, a staff member from the Water and Waterfront Management Office of the River and Lake Management Department of the Ministry of Water Resources told the Red Star Capital Bureau that in addition to pile driving, floating photovoltaic systems also have hidden dangers, and the possibility of being washed downstream should be considered, which can also cause obstacles to flood discharge.

"Even if it is floating, it cannot be said that it has no impact. In case it collapses or is washed away, the downstream (flood control) project will be piled up in front of the project, in a large area. Do you think it has any impact?"said the above staff to the Red Star Capital Bureau.

Photovoltaic panels have been installed on 2/3 of the water surface of the Beigang Changhe River.​

In fact, before the Ministry of Water Resources issued the Guiding Opinions, floating photovoltaic power stations appeared in many "photovoltaic+" projects due to their advantages. Among them, the most recognized model in the industry is the "complementary fishing and lighting" project.

As the name suggests, "complementary fishing and light" can be simply understood as the cultivation of fish underwater and the installation of photovoltaic panels on the water surface for power generation.

Taking the listed company Huayin Electric Power (600744. SH) as an example, according to Hunan Daily, it has reached an agreement with Sihushan Town in Yuanjiang City, Yiyang City, Hunan Province to build the Beigang Changhe Photovoltaic Power Station. This is known as the longest span floating photovoltaic project in the world.

Public information shows that the Beigang Changhe River is located in the area around Dongting Lake, with sufficient sunlight in the area. It is 12 kilometers long and connected to South Dongting Lake, with gates at both ends.

It should be noted that the Dongting Lake water system is located in the middle and lower reaches of the Yangtze River and plays an important role in water storage, flood discharge, and regulation of the Yangtze River runoff.

According to Yiyang Daily, the fishing and solar complementary photovoltaic power generation project located in the Changhe River area of Beigang has laid a total of more than 270000 photovoltaic panels, which are connected for 8 kilometers and can generate electricity of 500000 to 600000 kWh per day.

That is to say, about two-thirds of the 12 kilometer long Beigang River is covered with photovoltaic panels. Yiyang Daily used a sentence to describe it: "In the Beigang River, there are floating photovoltaic panels connected to each other on the water surface, with no end in sight."

According to public information, the Red Star Capital Bureau found that in addition to the above-mentioned photovoltaic power generation projects, Huayin Power also involves projects such as the Yiyang Baxingcha Fishery Photovoltaic Complementary Power Generation Project (under construction) and the Xiangtan Shibakou Reservoir Fishery Photovoltaic Complementary Power Generation Project.

From 2021, Huayin Power's annual photovoltaic power generation is approximately 132 million kilowatt hours (kWh), with a revenue of approximately 54.02 million yuan and a cost of approximately 26.86 million yuan generated through photovoltaic power generation.

On May 26th, the Red Star Capital Bureau called the Securities Department of Bank of China Electric Power, and the staff who answered the phone said that the photovoltaic power generation project consulted by the reporter had publicly disclosed information, and whether the policy document issued by the Ministry of Water Resources would have an impact is not within their scope of responsibility. Then, the staff member hung up the phone directly.

Two water surface photovoltaics have been reported.

Personnel from the Ministry of Water Resources: Policies are not meant to be one size fits all.

In addition to Huayin Power, Red Star Capital Bureau has found that listed companies such as Three Gorges Energy (600905. SH), Huaneng International (600011. SH), Tongwei Co., Ltd. (600438. SH), and Datang Power Generation (601991. SH) all have "Fishery Solar Complementary" photovoltaic power station projects.

The floating photovoltaic power station is located in Panji District, Huainan City, Anhui Province, according to the official account "China Three Gorges Energy".

A practitioner told Red Star Capital Bureau that their company has taken note of the documents issued by the Ministry of Water Resources, but it is not yet clear what impact it will have. It will need to wait for specific regulations in various regions to be determined.

​The Red Star Capital Bureau has noticed that two water surface photovoltaic power stations/facilities have been required to be demolished and renovated previously.

According to China Energy News, in November 2021, the Ministry of Water Resources reported a case of illegal construction of photovoltaic power stations on the Tuhai River beach in Shandong Province. The photovoltaic array of this project is installed in the riverbank floodplain, illegally occupying a shoreline length of 3.4 kilometers and an area of 1021 acres, which has a significant impact on the flood control and safety of the river. It has now been demolished in accordance with the law.

In May of this year, the official website of the Ministry of Water Resources announced that the relevant inspection team watched aerial videos of the water area in Sihong County, Jiangsu Province, and demanded immediate action to address prominent issues such as photovoltaic facilities occupying the lake's flood passage, and to complete the cleaning and rectification by the end of May.

The aforementioned staff from the Ministry of Water Resources revealed to the Red Star Capital Bureau that in recent years, after various developments and utilization, rivers and lakes have been artificially narrowed, which has a significant impact on flood discharge.

According to the Guiding Opinions, the range of locations for laying water surface photovoltaic power stations may be reduced to the surrounding areas of lakes, reservoirs, ponds, reservoirs, and water bodies formed by mining subsidence areas.

So, how to define "lake periphery"?

The staff member stated that this cannot be uniformly fixed and should be based on the actual situation. The Guiding Opinions do not require a one-size fits all approach. Water areas with relatively small impacts on flood control, such as lakes and reservoirs, should be discussed and decided by local authorities.

Red Star Capital Bureau has noticed that the "Guiding Opinions" also state that each province (autonomous region, municipality directly under the central government) can make specific regulations on the utilization of various types of water bodies and shorelines in accordance with the law and regulations based on actual conditions.

The staff also informed the Red Star Capital Bureau that a flood control assessment should be carried out according to the procedures before the establishment of the water surface photovoltaic power station, and if not, it should be supplemented. Those that meet the conditions can continue to be retained, while those that do not meet the conditions should be gradually dismantled and withdrawn.