Solar Boom in China Reaches 16 Gigawatts, Manufacturers Still Suffering

While the steep fall in solar prices is a real problem for manufactuers, it’s resulting in a boom of solar installations in China, where project developers are seeing significantly improved internal rates of return. 

The non-residential PV project pipeline in China grew to 16 gigawatts (GW) at the end of October, according to the Solarbuzz China Deal Tracker. About 1100 such projects have either been installed or are under development across 29 provinces.

195 of those projects totaling over 1.8 GW will be installed in 2011, about the same as in the US this year. 

State-owned enterprises are behind much of the development: China Power Investment Corporation, China Guodian Corporation, China Huadian Corporation, China Guangdong Nuclear Power Holding Corporation, and China Energy Conservation & Environmental Protection Group.

China’s national solar feed-in tariff, instituted in July, combined with low system prices has pushed profitable projects beyond regions with the highest solar radiation.

Currently, rooftop projects only account for about 10% of total capacity, but if system prices continue falling it will make economic sense for industrial and commercial companies to generate their own electricity, says the report.

Manufacturing Side Not So Bright

Meanwhile, Chinese solar companies seem to be experiencing the same problems as US and European solar firms. 

US firms filed a trade complaint against Chinese solar companies for dumping huge inventories of solar components at extremely low prices. The United Steelworkers – with 850,000 active members, the nation’s largest union – joined the petition today calling for anti-dumping and countervailing duties on Chinese imports.

After setting the bar at such low prices, Chinese manufacturers say they will run plants below capacity to reduce spending and shed inventory.  

Factories are running at 50-75% of full levels, and some small manufacturers have shut down altogether. They are simply losing too much money having to sell their products at such low prices.

Prices are expected to decline further next year as the industry absorbs its over-expansion, resulting in lower earnings across the board.

That will lead to reduced spending for equipment which hit a historic peak of $13.1 billion this year. Spending is expected to fall more than 45% in 2012, according to the Solarbuzz PV Equipment Quarterly report.

"Aspirations of rapid market entry or market-share gains from lower tier cell manufacturers have been key factors behind the surplus in equipment spending during 2011," says Finlay Colville, Senior Analyst at Solarbuzz.

(Visited 5,479 times, 5 visits today)

Post Your Comment

Your email address will not be published. Required fields are marked *