China's PV industry will usher in "Spring" in the second half of the year

[Source: "New Industry" February issue / Cao Mo] Under the promotion of a series of rescue actions by the Chinese government, the Chinese PV industry in distress may welcome "spring" in the second half of this year.

On December 19, 2012, Premier Wen Jiabao of the State Council presided over the State Council executive meeting to study and determine five policy measures to promote the healthy development of the photovoltaic industry, and made a "cardiotonic agent" for the Chinese PV industry.

According to the plan, China will accelerate the structural adjustment and technological progress of the photovoltaic industry; standardize the industrial development order; actively explore the domestic PV application market; improve support policies; give full play to the role of market mechanisms, reduce government intervention, and ban local protection.

"We believe that this reflects the strong signal of the government to rescue the market. The photovoltaic industry is expected to move towards healthy development under the guidance of policy support, technological progress and market mechanisms." Shen Xuhui, an analyst at Shenyin Wanguo, told the "New Industry."

Wang Haisheng, an analyst at Minsheng Securities, believes that among the five policies, the fourth one is the most important: “This is the first time to propose a subsidy period for photovoltaic power plants. No matter 20 or 25 years, the power subsidy mechanism will be formally established to greatly protect photovoltaics. The transfer of power from the power station and the central government's subsidy in arrears will greatly increase the enthusiasm of the owners. The value-added tax on PV power plants will be reduced from 17% to 8.5%, which will further increase the rate of power station utilization, which is very beneficial to the power station developers."

Many analysts believe that with the implementation of support policies, the PV industry situation will start to improve this year. Among them, inverters, distributed power generation related components, photovoltaic-related smart grid equipment and other industries will be better than the overall industry situation, and photovoltaic battery components will also improve in the second half.

However, the overall recovery time is in the first half of this year or the second half of this year, there is still a lot of controversy, the decisive factors are mainly concentrated on the EU's "double opposition" to the Chinese PV industry.

Installed capacity is adjusted to 35GW

On the afternoon of December 11, 2012, the Ministry of Science and Technology announced the catalogue of the 2012 Golden Sun Demonstration Project (second batch) and approved 2.83GW of PV projects, which is much larger than the first batch, exceeding the expectations of the outside world.

Earlier, the Ministry of Finance announced the total list of the first batch of demonstration projects for the Golden Sun in 2012, with a scale of 1.709 GW, nearly three times the approved installation in 2011.

However, 2.83GW still cannot release domestic excess capacity.

The data shows that as of the end of 2011, the total installed capacity of photovoltaic power generation in the country was only 3.6GW, of which, in 2011, the new installed capacity of photovoltaic power generation in the country was 2.7GW. In 2011, the domestic solar module production was about 21GW, accounting for 60% of the world's total output, ranking first in the world for five consecutive years.

An official of the National Energy Administration told the "New Industry" that in order to expand the domestic market, China's solar power installed capacity will be adjusted to 35G W during the "Twelfth Five-Year Plan" period, much higher than the National Energy Administration's "Solar Power Generation Development" in July this year. 21GW proposed in the Twelfth Five-Year Plan.

In this regard, a researcher of the China Photovoltaic Industry Alliance believes that in the next three years, the annual installed capacity of photovoltaics will be around 10GW.

"In order to support the development of the photovoltaic industry, the price department of the National Development and Reform Commission is formulating a tariff policy for the sub-regional grid of photovoltaic power plants." The above-mentioned energy bureau official said that the small-scale photovoltaic system filing system is also being researched and developed. Later, communities and homes may install small-scale photovoltaic power generation systems. No need to go through the approval of the National Development and Reform Commission, the filing system will be adopted.

Industry reversal mechanism
The rapid rise of China's photovoltaic industry has caused an alarming overcapacity, especially in the case of drastic changes in the external environment, which has forced the central government to consider expanding the domestic demand market.

According to the research data of Bank of China, as of 2011, China's PV output value is about 200 billion yuan, with 40,000 direct employees and over one million indirect employees.

From 2007 to 2012, China's PV industry has grown at an annual rate of more than 100% for five consecutive years. Overcapacity was evident in early 2009 and broke out in two years. By the fourth quarter of 2011, domestic PV companies began to show varying degrees. Loss.

SMEs were the first to suffer. According to CCID Research Institute of Photovoltaic Industry, more than 50% of China's small and medium-sized battery component companies have stopped production, 30% of production has been cut sharply, 10%-20% has been reduced or efforts have been sustained, and various levels of layoffs have begun. Enterprises cut production, suspend production or bankruptcy, and a large number of workers are laid off.

The US-listed Chinese PV giants have not been spared. In the third quarter of 2012, LDK (NY SE: L DK) posted a net loss of $136.9 million, which was the company's sixth consecutive quarterly loss; Big New Energy (NYSE: DQ) revenue decreased by 65. 5 %, net loss of 15.5 million US dollars; Yingli Green Energy (NY SE: YGE) net loss of 150 million US dollars, revenue of 355.9 million US dollars, down 47%.

Bank of China analysis believes that the blind expansion and overcapacity of the photovoltaic industry in recent years is mainly due to its “two-out” industry characteristics: the core components and markets are all abroad, and only raw material production, assembly and processing are in China. The simple processing mode and market channels make the downstream of the photovoltaic industry closely dependent on foreign markets, and the domestic market accounts for a very small proportion.

Under this circumstance, once the foreign market changes, the first impact will be Chinese manufacturing companies. In addition, China's market size is not enough to release the existing production capacity, and corporate closure is inevitable.

Although the country has already provided some subsidies to enterprises, the cost of products has also dropped significantly. However, compared with conventional energy generation, the cost of photovoltaic power generation is still about three times that of conventional energy.

This means that if China's domestic demand market is opened, the central government still needs to continue to increase policy support.

The State Council executive meeting emphasized that the photovoltaic industry is a strategic emerging industry. The development of the photovoltaic industry is of great significance for adjusting the energy structure, promoting the transformation of energy production and consumption patterns, and promoting the construction of ecological civilization. The current difficulties encountered by China's PV industry are not only a serious challenge for industrial development, but also an opportunity to promote industrial upgrading and upgrading. In particular, the cost of photovoltaic power generation has fallen sharply, providing favorable conditions for expanding the domestic market.

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