The Chinese government has introduced production capacity expansion restrictions as part of its ongoing efforts to consolidate the number of PV manufacturers in the country due to chronic overcapacity across the supply chain.
China's Ministry of Industry and Information Technology has said in a statement that beside the need for companies to reach set solar cell conversion efficiency rates to continue operating, strict control of capacity expansions will also be adopted, without providing further details.
Companies will also be required to invest at least 2% of annual sales in R&D activities to further promote a focus on technology innovation.
Many Chinese PV manufacturers already struggle to spend such low percentages of sales on R&D.
Capacity expansion restrictions are believed to be another weapon to force consolidation in the sector as little if any consolidation has yet occurred, with many becoming ‘zombie’ companies rather than being acquired by tier 1 producers.
The likes of Yingli Green have preferred to outsource capacity to third party manufacturers which have excess capacity, rather than acquire or add internal capacity, despite guiding 2013 shipments around 1GW higher than internal capacity.