The analysis suggests that renewable energy has become a global trend in energy development, with strong backing from the Chinese government for the photovoltaic sector and the self-motivated efforts of photovoltaic firms. Despite the challenges posed by overexpansion, China's photovoltaic industry remains resilient. However, the industry faces significant hurdles. In early November, the U.S. International Trade Commission ruled that crystalline silicon photovoltaic cells and modules imported from China had caused substantial harm to relevant American industries. Consequently, the U.S. imposed anti-dumping and countervailing duties on these products. Following this, the EU launched a countervailing investigation into Chinese photovoltaic cell imports. These "double anti" measures from Europe and the U.S., combined with sluggish global economic conditions, have left China’s photovoltaic industry grappling with overcapacity and heavy reliance on external demand. Many investors view the photovoltaic sector as a prime example of overcapacity.
In recent years, to foster strategic emerging industries and capitalize on the promising future of the photovoltaic industry, numerous regions across China have prioritized photovoltaic development. More than 300 cities have committed to photovoltaic growth, with over 100 establishing specialized photovoltaic industrial parks. Since 2007, China's PV module output has ranked first globally. Yet, due to declining exports, companies with excess capacity are struggling. Under pressure from low-priced polysilicon imports from the EU, the U.S., and South Korea, data from the Silicon Industry Branch of the China Nonferrous Metals Industry Association shows that three of the seven A-share listed polysilicon firms have ceased operations. Nationally, among the 43 polysilicon enterprises now operational, only 7-8 remain active, with the rest having shut down or idled their production lines, resulting in over 80% underutilization. Early in 2012, four companies applied for an EU "double anti" investigation on polysilicon. By Q2 2012, two of the applicants—Luoyang Zhongsi and LDK—were nearly entirely inactive. Moreover, the sluggish export performance highlights the industry's reliance on external demand. Over 90% of domestic PV firms sell overseas, with approximately 10% of total exports going to the U.S. Data from the U.S. Department of Commerce shows that in 2011, the value of crystalline silicon photovoltaic cells and modules imported from China reached $3.1 billion. Additionally, EU sales account for 70% of China’s total PV production. This heavy reliance on external markets exposes the industry to significant currency and trade policy risks.
On the 29th, Wendong Zheng, Secretary of the Party Committee of Hainan Yingli New Energy Co., Ltd., noted in an interview that the development of solar energy and other emerging industries must focus on both international and domestic markets, diversifying as much as possible to avoid being overly reliant on a single market. When foreign market demands shift unfavorably, businesses risk severe impacts. Domestic enterprises need to expedite industrial upgrades. Currently, China’s photovoltaic industry suffers from overcapacity and heavy external reliance, lacking core technologies and thus losing pricing power and industry influence. In response, photovoltaic firms should expand domestic markets while strengthening technological innovation. The government should provide comprehensive planning and policy guidance. Mr. Xiao, Deputy Manager of the Project Department at Hanergy Hainan Branch, mentioned in an interview that China’s photovoltaic “12th Five-Year Plan†targets an installed capacity of 21GW, with only 3.6GW installed by 2011. This indicates substantial untapped domestic market potential over the next 4-5 years. The group aims to tap into this market through its thin-film component advantages and large-scale power plant construction. Secondly, increasing technological innovation within the photovoltaic industry is crucial, focusing on core technology R&D to secure international pricing and discourse rights. Currently, Chinese photovoltaic firms face low-tech levels, insufficient innovation, and core technologies often constrained by others. To boost technological innovation, a national-level technology innovation and R&D center should be established, alongside enhancing corporate innovation capabilities, particularly in high-end equipment manufacturing, key components, and major auxiliary material absorption and digestion to reinforce core competitiveness. Wen Dongzheng emphasized the importance of investing in technological innovation to lower costs and make green power affordable for everyone.
Thirdly, overall planning and policy guidance are essential to steer the photovoltaic industry back toward rational development. Profit-driven motivations have been the main issue domestically. Since Suntech’s listing, many companies have flooded into polysilicon production and module sectors. Local governments, driven by similar interests, have fueled the industry's blind expansion. Under the current challenging circumstances, governments at all levels should rationally plan and unify strategies to prevent overinvestment and redundant construction from worsening overcapacity. This would help the photovoltaic industry return to a path of healthy, orderly, and sustainable growth.
Despite the pain, the future looks promising. Recently, the state has introduced a series of policies to rescue the photovoltaic industry, addressing grid connection issues and boosting domestic market demand. PV companies are also making efforts to自救 and promote industry health. Experts note that the long-term energy crisis indicates favorable PV prospects. On October 26, State Grid introduced a free grid-connected service policy for distributed power stations, offering free access to system planning, grid-connected testing, and commissioning services. Many measures took effect on November 1st. Countervailing and anti-dumping investigations on EU-originated solar-grade polysilicon began. On November 26, the Ministry of Commerce started retroactive anti-dumping duties on U.S., Korean, and EU-originated solar-grade polysilicon, with countervailing duties potentially retroactively applied. At the 8th Pan-Pearl River Delta Regional Cooperation and Development Forum and Economic and Trade Fair held on the 29th, these measures significantly boosted domestic PV company confidence, bringing positive news to the industry. This marks a new dawn for China’s photovoltaic industry amidst its current struggles. The Ministry of Commerce is drafting policies to encourage Chinese PV companies to enter the African photovoltaic market—a significant boost for the sector.
Mr. Xiao mentioned that Africa boasts excellent solar lighting conditions, with most areas being developing countries. Future electricity demand is vast, suggesting immense development potential. Some firms are actively engaging in technical cooperation, focusing on high-efficiency solar cell R&D to reduce photovoltaic power costs and accelerate price parity. Others are transforming by developing downstream photovoltaic power station businesses to enhance profitability. Although challenges persist, the global energy crisis and the pursuit of alternative energies make the photovoltaic industry's future optimistic. Solar photovoltaic power generation stands out due to its green, renewable, abundant, widely distributed, and versatile nature. Nations prioritize photovoltaic development. China’s photovoltaic industry is improving in manufacturing, industrial systems, and technology R&D. With enormous domestic and international market potential, seizing opportunities and accelerating transformation will lead to broader growth ahead.
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