As new entrants muscle their way into China’s solar sector, overcapacity and price war concerns mount
- Global transition from fossil fuels to clean energy and a strong installation market have driven up demand for advanced solar-panel technology, Beijing new-energy firm executive says
- Chinese photovoltaic manufacturers went through a brief price war from late last year to January due to the oversupply of solar wafers and slow solar power installation
Last week, Shanghai-listed medical services provider Suzhou MedicalSystem Tech announced it is investing 1.86 billion yuan (US$272.4 million) in building a solar cell manufacturing plant in Mianyang, Sichuan province. The plant is expected to have an annual production capacity of 9 gigawatts (GW), and the company has signed an agreement with the local government to start construction within the next two years, according to Suzhou MedicalSystem Tech.
“The global transition from fossil fuels to clean energy and a strong installation market have driven up demand for [advanced solar-panel technology],” said Qi Haishen, president of The Solar, a Beijing-based new-energy firm. “It’s a good development opportunity for companies in the photovoltaics business.”
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Some of the solar sector’s biggest players have also made capacity expansion plans. Longi announced last month that it had signed investment cooperation agreements with authorities in Shaanxi province to construct a project with an annual output of 100GW of mono wafers and 50GW of mono cells.
A sudden crossover to the solar sector by companies in other industries, especially with a focus on investing in the most advanced technologies such as TOPCon and heterojunction technology solar cells, is good news for the solar industry, Qi said.
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Shenzhen-listed jewellery retailer Ming Jewelry announced this month that it would invest 10 billion yuan in a high-efficiency solar cell production plant with an annual capacity of 20GW in Shaoxing, Zhejiang province.
Dairy firm Royal Group, another Shenzhen-listed company, said late last month that it had signed an agreement with a Shenzhen-based solar cell company to accelerate the research and development of next-generation high-performance solar cell technology TOPCon. It also said it would spend 10 billion yuan on building an ultra-efficient TOPCon solar cell plant with a 20GW annual capacity.
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Concerns about overcapacity, however, still loom large over the industry, according to Lin Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University.
“If the installation market catches up, then we won’t need to worry about the overcapacity problem,” Lin said. “But if the downstream solar market fails to digest the increased solar cells capacity, it’s possible the global market will repeat what we witnessed towards the end of last year.”