China’s Ministry of Industry and Information Technology (MIIT) has issued further government guidelines on the need for a major consolidation of PV manufacturing companies.
MIIT has issued guidance over the last few years on the need for restructuring the sector due to overcapacity notably in the number of polysilicon producers, leading to instructions over wafer, cell and module production consolidation.
However, global market dynamics in the polysilicon sector led to a massive shakeout of Chinese producers several years ago as prices plummeted well below small producers production cost levels.
Since 2012, companies such as JinkoSolar have acquired bankrupt solar cell and module assets from tier two and three producers, while others have struck OEM arrangements such as Yingli Green with lower-tier producers.
However, a large number of cell/module manufacturers remains in operation, be they state or quasi-state owned as well as privateers. Indeed, some may have directly benefited from China’s PV installation targets as its largest-based producers are also leading exporters and top 10 ranked companies that lack the capacity to meet both internal and overseas demand.
MIIT released a stream of new and reinforced guidelines on supporting industry consolidation, detailed on PV Tech’s China-dedicated sister site on 4 January.
Central to the guidelines was the number of key producers it expected to be operating sustainably and the timeline it expected the consolidation to be completed by.
MIIT hopes that 10 major PV module companies would be operating by the end of 2017, supplying 70% to 80% of domestic demand. MIIT did not reveal the names of the companies it expected to lead the consolidation phase.
However, these 10 companies would become the backbone of the PV industry in China and would receive a wide range of support including tax and land rights from government agencies, state and regional governments as well as financial support state and regional banks to undertake the consolidation process that has been slow to gain momentum.
In the polysilicon sector, MIIT is expects only five producers to be supplying 80% of domestic polysilicon production by the end of 2017. There had been over 100 polysilicon producers before prices collapsed.
GCL-Poly and Daqo New Energy have remained in production during this period and have been adding or ramping capacity to current full capacity and are likely to be two of the key five producers in China going forward.
Interestingly, LDK Solar recently completed upgrades to its polysilicon plants in preparation of restarting production since shutting down in 2012.
Overall, MITT has also detailed the barriers to previously guided consolidation efforts while highlighting the range of support to the ‘backbone’ of companies being offered in the latest attempt to manage the sector.