DPV systems, typically small to medium-sized solar power installations on buildings, which primarily and directly supply electricity to industrial, commercial, or residential consumers in proximity. DPV is an advocated renewable substation for climate change and energy saving for merits of low installation costs, high energy efficiency, and the ability to provide decentralized power supply. Our research has theoretical significance in explaining and understanding the development and policy evolution of DPV in China and provide valuable suggestions for future industry policies during grid parity.

Since 2021, China has been phasing out its decade-long feed-in tariff policies, reducing the photovoltaic industry's dependency on subsidies. Despite the challenges posed by declining electricity prices and slowdown in economic growth, the authorities continue to prioritize the development of DPV due to its low investment costs, high energy efficiency, and decentralized power supply, and these technologies have already achieved demand-side parity. Driven by this phenomenon, this study examines the trajectory of DPV diffusion and the evolution of related policies over the last decade. It unravels the dynamic mechanism of DPV investment through theoretical analysis and develops a macro model to identify optimal installation strategies and renewable energy proportions. Our findings highlight the increasing role of green energy and suggest that green finance is crucial for stimulating DPV investment in the era of grid parity. The study concludes with practical recommendations for overcoming DPV challenges in China.

DPV has become a prominent renewable energy solution in other countries but not in China. We probe the system dynamics modeling to give explanation and solution during grid parity.