China’s National Energy Administration (NEA) announced on March 16 that it has revised the country’s overall PV installation target from the original 15GW to 17.8GW. Additionally, the government will increase its efforts to supervise closely on the previous year’s projects that are unfinished and ongoing. The government has also taken further steps to loosen the regulatory control over the installations of rooftop solar systems.
China’s production of PV modules reached 35GW in 2014, according to Angus Kao, analyst for EnergyTrend, a division of TrendForce. Out of the total PV module production in 2014, 60% went to and relied on exports. Furthermore, top ten domestic PV module manufacturers in China accounted for 56% of the production and had the capacity utilization rate of close to 90%. For module manufacturers with less than 500 MW in terms of production scale, however, their average production utilization rate reached a low of 72%. Kao stated that the NEA’s big raise in the installed capacity target can provide immediate relief for Chinese module makers affected by excess capacities and tariff duties levied by importing countries. Nonetheless, Kao believes the rapid expansion of PV module manufacturing in China in the last few years has led to products varied widely in quality and price wars. The NEA’s target therefore will not improve the industry’s situation on the whole. “The policy’s main beneficiaries will be manufacturers with sound financial health and strong technological advantages,” said Kao, “so the industry will enter its integration stage where only the fittest will survive.”
The current survey of the market and supply chain shows high inventory levels in the upstream sector and the reduction of stocks is slower than anticipated. Clients from Europe and Japan are delaying placing orders and deliveries because of the depreciation of their currencies, thus lowering the number of visible orders. The manufacturers in the downstream sector have slowed down in their purchases since the start of March, reflecting fewer-than-expected orders at their end as well. Most manufacturers are cautious on their assessments for April’s incoming orders. As a result, prices along the entire PV supply chain so far have kept a downward trend. However, Kao anticipates that China’s internal demands will be stimulated by NEA’s announcement, causing orders to return and prices to stop falling and stabilize in both the upstream and downstream sector.