China’s PV manufacturing base saw a major setback in the first and second quarters of 2012, with a severe slump in exports sparking the government to step in and further raise its PV installation target to 50GW, according to the latest quarterly report on China’s PV market from IMS Research. Tough competition in the global market place, vast oversupply and falling prices has put Chinese manufacturers’ balance sheets under huge pressure and China’s government has responded by more than doubling its long-term installation target from 20 to 50 GW by 2020.
“In an effort to restore confidence amongst its substantial PV supplier base and help meet its phenomenal energy requirements, China has more than doubled its PV installation target to 50GW by 2020,” commented Frank Xie, senior market analyst at IMS Research. “This highly aggressive target could be achieved given the rate of deployment that China has already managed to achieve in the relatively short amount of time since its national FiT was launched and provides a clear message that China will strongly support its PV industry in the future.”
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According to IMS Research, contrary to US and EU supplier accusations, Chinese PV suppliers have continued to suffer along with the entire global supplier base amid highly competitive market conditions. Challenging conditions in the first half of 2012 and a bleak outlook in many major markets following incentive revisions and an on-going trade war in the US and Europe have resulted in production stalling. Although a small number of manufacturers have been able to maintain reasonable utilization levels, a large number of polysilicon fabs remain closed, meaning that average polysilicon production utilization in China fell below 50% in the second quarter of 2012.
The US’s recent ruling to impose import tariffs on cells manufactured in China has forced many suppliers to increase the amount of cells from Taiwan and other locations outside mainland China, impacting falling cell production. Prices also continued to fall during the quarter, with module prices falling by a further 7%, bringing further bad news for China’s suppliers whose profit margins are already under huge pressure.
At the beginning of July, Bloomberg New Energy Finance published figures demonstrating China securing hundreds of millions in dollars of financing. In the second quarter of 2012, China saw a surge in investment to US$18.3 billion, up 92% from the previous quarter. This in turn has diversified the range of products being sold into the market.
“Large MW-scale turn-key inverter solutions are forecast to increase their share of the Chinese PV market in 2012 driven by their highly competitive upfront cost, and ease of installation and maintenance,” added Xie.
Inverter solutions larger than 1MW have been forecast to double their share of the market over the next two years. IMS Research also predicts that China will follow a similar trend seen in the European PV inverter market and begin to employ an increasing amount of small three-phase inverters in its fast growing rooftop installation.
In conclusion, IMS Research forecasts that PV installations in China will be a key driver in the growth of the global PV market. Installations are expected to grow quickly in the second half of 2012, with over 10GW to be installed over the next two years.