China is working extensively to unlock its domestic solar potential by pushing small-scale distributed projects. The State Council's detailed guideline to facilitate the development of the solar products' industry, issued on July 15, is a major boost in this regard. In fact, the solar industry has featured twice on the agenda of China's cabinet in just more than a month.

On June 14, Premier Li Keqiang chaired a regular State Council work session, where the solar industry's development was one of two subjects discussed (the other being controlling air pollution). The session came up with a six-point strategy, highlighting the urgency of distributed solar power projects and full grid connection, and called for optimizing financial incentives for distributed solar energy generation.

The July 15 guideline goes one step further in implementing the high-level strategy. The first thing that stands out in the guideline is the raising of the 2015 solar installation target to 35 gigawatts, a seven-fold jump from what the government set at the beginning of the 12th Five-Year Plan (2011-15). To achieve this target, the authorities aim to increase installed solar power generation capacity by at least 10 GW a year from 2013 to 2015. This is an ambitious goal considering that China's current accumulative solar generation capacity in GW barely touches double digits.

Chinese policymakers are banking on the large untapped distributed solar power market to raise demand. The guideline explains how distributed projects will be supported.

First, it calls for improved grid cooperation. Distributed energy grid connection used to be the biggest problem for prospective project developers, largely because of an uncooperative State Grid Company. But the SGC's attitude has undergone a 360 degree shift since October, when it issued its guideline for distributed solar energy grid connection, allowing distributed solar installations to be connected to the grid with no extra infrastructure cost.

After the SGC issued its guideline, Greenpeace became one of the first applicants for grid connection. On April 16, the organization connected its 5-kW project to the grid without any hitch. With the grid connection process running well, the State Council guideline has come as another strong policy assurance for project developers.