The analysis suggests that emerging energy is becoming a global trend in energy development. Coupled with strong national support for the photovoltaic industry and the self-reliance of photovoltaic enterprises, China’s photovoltaic sector remains promising despite the challenges posed by excessive industry expansion. However, China's photovoltaic industry faces significant hurdles. In early November, the U.S. International Trade Commission made a final ruling, determining that Chinese imports of crystalline silicon photovoltaic cells and modules have caused substantial damage to related industries in the U.S. Consequently, the U.S. plans to impose anti-dumping and countervailing duties on these products. Following this, the EU launched a countervailing investigation into photovoltaic cell products imported from China. Affected by these "double anti" measures from both Europe and the U.S., as well as the sluggish global economy, China’s photovoltaic industry is caught in the quagmire of overcapacity and heavy reliance on external demand. Most market investors now see the photovoltaic industry as a negative example of overcapacity.
In recent years, given the emphasis on developing strategic emerging industries and the promising outlook for the photovoltaic industry, all regions across the country have prioritized its development. Over 300 cities have committed to photovoltaic development, with more than 100 cities establishing photovoltaic industrial bases. Since 2007, China has become the world leader in PV module production. However, due to declining exports, PV companies with excess capacity are struggling. Under the pressure of low-cost dumping from the EU, the U.S., and South Korea, statistics show that three of the seven polysilicon companies listed on the A-share market have ceased operations. Nationally, among the 43 polysilicon enterprises currently in operation, only 7-8 remain active, while the rest have shut down their production lines, with an overcapacity rate exceeding 80%.
At the beginning of 2012, as applicants, four polysilicon companies from the EU requiring a "double anti" investigation could still begin construction. By the second quarter of 2012, two of these applicants—Luoyang Zhongsi and LDK—were almost entirely out of operation. Additionally, the sluggish export of China's photovoltaic industry exposed the industry's reliance on external demand. Currently, over 90% of domestic PV companies sell their products abroad, exporting about 10% of their total output to the U.S. Data from the U.S. Department of Commerce shows that the value of crystalline silicon photovoltaic cells and modules imported from China in 2011 reached approximately $3.1 billion. Furthermore, EU sales account for 70% of China's total production. Due to this heavy reliance on external demand, China's PV industry faces significant exchange rate risks and foreign trade policy risks.
Wendong Zheng, Secretary of the Party Committee of Hainan Yingli New Energy Co., Ltd., emphasized in an interview that the development of solar energy and other emerging industries must focus on the international market while also developing the domestic market. Market diversification is essential to avoid being overly reliant on a single market. When the demand in foreign markets shifts unfavorably, enterprises may face severe impacts.
Domestic enterprises need to accelerate industrial upgrading. Presently, China’s photovoltaic industry is mired in overcapacity and heavy reliance on external demand, lacking core technology, which has led to the loss of pricing power and influence in the global market. In this context, China's photovoltaic enterprises should expand the domestic market and enhance scientific and technological innovation. The government should also strengthen overall planning and policy guidance.
Mr. Xiao, Deputy Manager of the Project Department at Hanergy Hainan Branch, noted in an interview that the installed capacity target for China's photovoltaic industry under the "Twelfth Five-Year Plan" is 21 GW, with a national installed capacity of 3.6 GW as of 2011. This indicates that the domestic market potential over the next 4-5 years will be significant. The group aims to tap into the domestic market through the performance advantages of its thin-film modules and the establishment of large-scale power plants. Secondly, the photovoltaic industry must increase technological innovation, improve core technology R&D capabilities, and strive for pricing and speaking rights in the international market. Currently, China’s photovoltaic enterprises face issues of low technology levels, insufficient innovation capabilities, and core technology constraints. To boost technological innovation, the establishment of a national-level technological innovation and R&D center is essential, along with enhancing enterprise innovation capabilities and focusing on the introduction, absorption, and digestion of high-end equipment manufacturing, key components, and major auxiliary materials to consolidate and develop core competitiveness. Mr. Xiao emphasized the importance of investing in scientific and technological innovation to reduce costs and make green energy affordable for everyone.
Thirdly, overall planning and policy guidance should be strengthened to ensure the photovoltaic industry returns to rational development. The biggest problem in the domestic PV industry is profit-driven. Since the listing of Suntech, many companies have rushed into polysilicon production and component industries. Local governments are also profit-driven, leading to blind expansion of the entire industry. In the current difficult situation, governments at all levels should rationally plan and unify strategies to prevent overinvestment and redundant construction from exacerbating overcapacity. The photovoltaic industry needs to return to the path of healthy, orderly, and sustainable development.
Despite the challenges, the future remains bright. Recently, the state has introduced a series of policies to rescue the photovoltaic industry, addressing grid connection issues and expanding domestic market demand. PV companies are also making efforts to save themselves and promote industry health. Experts point out that the long-term energy crisis indicates positive prospects for PV. On October 26, the State Grid announced a free grid-connected service policy for distributed power stations, promising free access to system planning, grid-connected testing, and commissioning throughout the process. Many measures took effect on November 1st. Countervailing and anti-dumping investigations on imported solar-grade polysilicon from the EU began, and on November 26, the Ministry of Commerce started retrospective anti-dumping duties on imported solar-grade polysilicon from the U.S., South Korea, and the EU. Whether from the U.S. or the EU, retrospective countervailing duties on imported solar-grade polysilicon were also imposed. Reporters learned at the 8th Pan-Pearl River Delta Regional Cooperation and Development Forum and Economic and Trade Fair held on the 29th that these measures have significantly boosted the confidence of domestic PV companies and brought good news to the industry. It signals that the Chinese PV industry, amidst its struggles, has glimpsed a new dawn. Currently, the Ministry of Commerce is formulating policies to encourage Chinese PV companies to vigorously develop the African photovoltaic power generation market. This news is undoubtedly a major boost for the entire industry.
Mr. Xiao mentioned that the solar lighting conditions in Africa are excellent, and most of Africa is a developing region. Future electricity demand is immense, so the development potential of the African PV market cannot be overlooked. Some enterprises are actively conducting technical cooperation in China, continuously researching high-efficiency solar cells, reducing the cost of photovoltaic power generation, and accelerating the pace toward grid parity. Other enterprises are accelerating transformation and upgrading, developing downstream photovoltaic power station businesses to enhance profitability. Mr. Xiao also stated that although China's PV companies are currently facing difficulties, given the world's increasing energy supply shortages and the growing importance of emerging energy sources, the prospects for the photovoltaic industry remain favorable. Among various new energy sources, solar photovoltaic power generation stands out for its green environmental protection, renewability, abundance, wide distribution, and diverse applications. Countries worldwide attach great importance to the development of the photovoltaic industry. China's photovoltaic industry is currently improving in manufacturing levels, industrial systems, and technological research and development. Both domestic and international market potentials are vast. As long as we seize development opportunities and accelerate transformation and upgrading, we will usher in broader development spaces in the future.
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