CHINA is changing its power system in ways that reduce payments to solar providers while making energy storage more profitable, as it seeks to digest an unprecedented boom in new solar panels across the country.

At least 20 of China’s 35 provinces and regions have adopted electricity rate regimes that reduce prices in the middle of the day and raise them in peak morning and evening hours, according to trade publication International Energy Network. The shifts will likely reduce revenue for solar during peak generation hours, while boosting profits of storage systems, particularly batteries, that can buy power when prices are low and sell when they rise.

The change underscores some of the problems China faces after it added a record amount of solar capacity this year in its attempt to peak and eventually zero out emissions. While cheap and clean, panels only generate power when the sun is out, leaving some grids with too much electricity in the middle of the day and not enough at night.

The solution is to shift that excess midday power, either geographically or temporally. China has already invested heavily in the former by building a world-leading series of long-distance transmission lines that connect vast sunny deserts with crowded mega-cities.

Changing power prices can help do the latter. Chinese grids historically have charged the same price at all hours of the day, which made sense when the system was dominated by coal plants that can generate whenever needed. Time-of-day pricing can give energy storage systems the opportunity to buy power at lower rates during the day and sell them in the evening when solar generation is dropping but power is still needed.

China is expected to more than triple energy storage installations this year, in part because of improving economics thanks to the increasing difference in peak-valley prices, according to BloombergNEF. That’s a boon to China’s battery firms, of which Contemporary Amperex Technology is the largest.

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The effect of lower midday prices on the economics of solar remains to be seen. Panel costs have already plunged to an all-time low and continue to fall, helping offset some of the impact of cheaper power.

Still, companies including top manufacturer Longi Green Energy Technology have said that grid constraints will likely slow the rate of solar installations next year, while others have warned that lower prices and overcapacity could lead to company failures. BLOOMBERG