The Chinese government’s actions this summer to further raise the country’s PV installation targets appears to have had the desired effect. IMS Research’s latest report provides hope to the Chinese market forecasting a surge in the second half of 2012 with more than 4GW of PV installations to be completed, taking full-year installations to 5GW, even though it experienced a slow start to the year with just 720MW installed in the first half.
Research company Bloomberg New Energy Finance published figures in July demonstrating China’s dominance in both solar and wind sectors, each securing hundreds of millions of dollars in financing. In the second quarter of 2012, China saw a surge in investment to US$18.3bn, up 92% from the previous quarter.
According to a development plan released by the National Energy Administration last month China is expected to invest around CNY250 billion (US$39.5 billion) in domestic solar power generation over a five-year period between 2011 and 2015.
A report from market research company Solarbuzz in September, noted this surge would have a positive affect on the European market, supporting a 30GW-plus global market this year.
Solarbuzz has also reported that PV projects on agricultural land in China have played a key role in the country’s rapidly growing distributed PV power generation segment. It is currently tracking more than 300MW of agricultural PV projects in the country in its China Deal Tracker report.
The China Energy Conservation and Environmental Protection Group (CECEP) has set a target to develop more than 100MW of PV projects within China’s agricultural sector. As a result, the market research company highlights that an increasing number of PV project developer are now eyeing up these new opportunities, with a particular focus in the Chinese provinces of Xinjiang, Hunan, and Hubei.
According to Steven Han, an analyst at NPD Solarbuzz, “The agricultural PV market segment in China was previously overlooked by downstream PV suppliers and installers. However, with the threat of anti-dumping actions from the United States and Europe potentially restricting their available sales channels, creating additional demand locally is now essential for both module and balance-of-systems suppliers.”
NPD Solarbuzz also noted that commercial agricultural PV projects are favoured by the top PV developers in China and that this segment is estimated to grow quickly in the coming years. With this in mind, developers have been seeking additional land space in central and eastern China to further boost domestic PV demand.
The China Daily reported in September that China also offers great potential for large-scale PV systems with a lot of suitable land for PV development. The Qinghai-Tibet Plateau, the Loess Plateau and the Inner Mongolia Plateau have been identified as suitable areas for the development of large-scale PV projects.
The Solarbuzz report also highlighted that ‘underperforming’ Chinese tier 2 and 3 manufacturers will be the victims in 2013.
This year has so far also bought difficult times for China’s huge supplier base and utilization rates remained low as a result of a strong focus on cost control and caution over the ongoing EU trade investigation into Chinese PV products.
The ITC is expected to release its final determination later today on AD and CVD allegations raised by SolarWorld in the US. India also recently jumped on the anti-dumping bandwagon.
Average utilization levels for PV polysilicon, wafers, cells and module manufacturers all declined in the third quarter; all were lower than 60%. Despite wafer production capacity in China declining in the third quarter, average utilization fell to just 58% as an increasing number of cell manufacturers favoured sourcing competitively priced wafers from third parties at a lower cost than manufacturing them in-house.
“If China’s Ministry of Commerce decides to impose anti-dumping and countervailing duties on polysilicon imports, prices are likely to increase. This will only help a limited number of local Chinese polysilicon producers. It will hurt not only foreign producers but many Chinese wafer, cell, and module makers. Also, it will not help to resolve the polysilicon oversupply issue and could restrict end-market growth due to higher prices,” stated Charles Annis, VP at NPD Solarbuzz.
While the top companies in China continue to gain market shares, the lesser-known Chinese solar manufacturers have been subjected to the same shutdowns that have recently affected companies such as centrotherm and Abound Solar, however, unless they are publicly traded, most don’t announce their closures or other big operational changes.
Utilization rates are forecast to recover slightly in the fourth quarter in response to the predicted boom in domestic installations.
“While old issues like grid-connection and power transmission have still not been solved, new issues emerged in the second quarter of 2012, such as worsening bankability, poor credit conditions and a general slowdown of the Chinese economy,” remarked Frank Xie, IMS Research’s senior PV analyst based in Shanghai.
“Many projects are said to have completed the bidding process; however, they are not yet under construction. Integrators are prioritizing projects to be completed by year end, and there will be a huge surge in installations in the final quarter of the year,” continued Xie.
Both inverter shipments and revenues declined in the second quarter of 2012 compared with the previous quarter as a result of weak demand. According to the IMS report, the first half of 2012 saw inverter shipments of just 700 MW, less than half of the amount shipped in the second half of 2011. However, Xie holds a positive view for future inverter shipments in the second half of the year, adding: “The situation is set to improve and China’s rapidly expanding inverter supplier base is forecast to ship more than four GW of inverters in the second half of 2012.”