How should government and users share the investment costs and benefits of a solar PV power generation project in China?

Under the circumstances of global carbon emissions reduction, it has become a trend to promote the adoption of clean energies, such as solar energy. With the increasing maturity of photovoltaic (PV) technology, household-type distributed solar PV power generation projects are increasingly popular in China. Nevertheless, compared with conventional power generation, the initial cost of a solar PV project remains relatively high. Therefore, to mobilize the incentives of the general public, there is an urgent need for studies on how to share the costs and benefits of a solar PV power generation project between the government and users. By adopting the Shapley Game methodology, this paper has conducted a theoretical analysis of the cost-sharing among the central government, local government, and users and has built an investment cost-sharing model (C_i ^′=P(i)−Vs(i)−V_ri,i=1,2,3), which is able to coordinate the benefit of all three stakeholders. This is followed by a case study. The results show that, under China's central government subsidy of 0.42 yuan per kWh, the best strategy for the local government to encourage the public to install solar PV facilities is to provide a one-off compensation equal to 30% of the initial investment. Finally, this paper proposes relevant policy recommendations to promote the development of solar PV power generation for emissions reduction in China.