Wrong China solar market demand data spooks stock markets

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Stocks in a large-number of PV companies were heavily sold-off last Friday on the same day erroneous market forecasts for PV demand in China and misinterpretation of recent Chinese Government agencies commitment targets for the sector in 2014 emerged.

Adding to spooked investors' concerns was the earlier announcement regarding the latest investigation by the US International Trade Commission (ITC) into imported Chinese PV products and the use of Taiwanese solar cells.

Bloomberg New Energy Finance (BNEF), on Thursday, 23 January revealed demand in China had “outstripped all expectations in 2013” and cited China’s National Energy Administration’s (NEA) preliminary figures and extrapolated that demand in China reached at least 12GW in 2013.

Yet, BNEF also remarked that when the official figures and its own analysis were completed that figure could have risen to 14GW for the year.

The problem was that BNEF only forecast demand in China in 2014 to be flat (14GW) with its higher range projection.

The 14GW figure for 2014 is actually the same as recently revised guidance given by Chinese Government agencies, which had previously called for 12GW of installations as part of a shift away from ground mounted to distributed commercial rooftop installations.

Importantly, widely cited government plans earlier in 2013 had called for 10GW of installations in 2014 and reiterated plans for 35GW of cumulative installations by the end of 2015.

Therefore the financial markets were taking note of higher than expected growth in 2013 with government guidelines of 10GW in 2014 resulting in a big decline this year or taking uncompleted data from BNEF and NEA on the market at best being flat in 2014, compared to the previous year.

In an effort to provide greater clarity on actual demand in China for 2013, NPD Solarbuzz undertook a renewed analysis of the Chinese market last week and expects a small incremental growth for the country in 2014.

Finlay Colville, vice president of NPD Solarbuzz told PV Tech: “The increase in capacity installed in China during Q4 is taking overall 2013 China PV demand close to the 11.5GW level. As a result, the global 2013 PV figure is now just above 37GW. The PV industry in 2014 remains on track to reach the 49GW forecast by NPD Solarbuzz during December 2013.”

According to NPD Solarbuzz the market in China is expected to reach between 12GW – 14GW in 2014, indicating continued meaningful growth for the year.

According to a research note from Deutsche Bank’s senior analyst, Vishal Shah China had not lowered PV installation plans for this year, after conducting further checks since late last week.

“Our key takeaway is that China is NOT reducing solar targets and is still planning to install 14GW in 2014,” Shah noted in the research note to investors.

Indeed, Deutsche Bank’s analyst was quick to reassure investors on the fact that there was no cap in place by Chinese authorities at the 10GW level for 2014, further highlighting that the NEA statement related to prior targets.

“Project financing, module availability and the provincial approval process have only improved since that timeframe. As such, we see upward bias even to the current 14GW target. As far as current fundamentals are concerned, projects in China are being approved without any specific quota in mind. Importantly, the govt has sufficient funds for anticipated FiT payments for 2014/15 assuming the 35GW target is reached by 2015 timeframe,” added Shah in the investor note. 

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