China to force rationalisation on solar-cell manufacturing sector

January 03, 2014 // By Graham Prophet
Just prior to the end of 2013, Nikkei Asian Review reported that the Chinese government, perhaps confirming that the concept of the planned economy has not yet been consigned to history in favour of pure market-forces, made announcements that could amount to a cull of the country's solar-cell manufacturing businesses.

China's Ministry of Industry and Information Technology has announced a list of 134 producers of silicon materials, solar panels and other components of photovoltaic systems as meeting certain conditions, as measured by factors including 2012 production, capacity utilisation and technical standards. That, by some reckoning, means that over 300 companies have failed to secure the State's “seal of approval” and could be forced to close or merge; they also lose borrowing rights and export-credit entitlements.

The move takes place in the context of fractious international relations with, for example, both China and the EU accusing each other of unfairly subsidising solar cell production, and the EU having stated that it believes Chinese suppliers have been dumping product into European markets at below cost prices.

This report comes against a backdrop of a photovoltaic market that analysts expect to do well in 2014; US firm Solarbuzz predicts that demand is poised for “explosive” growth in 2014, to reach 49 gigawatts (GW), up from 36 GW in 2013.

“The solar PV industry has reached a critical tipping point, with end-market demand hitting record levels almost every quarter,” added Finlay Colville, vice-president at NPD Solarbuzz. “This growth is being driven by leading module suppliers and project developers that returned to profitability during 2013, and which have now established highly-effective global sales and marketing networks.”

Q4’13 will be another record quarter for the solar PV industry, exceeding the 12 GW barrier for the first time ever. Furthermore, demand in Q1’14 will also achieve record-breaking status, as the strongest first-quarter ever seen by the PV industry.

Over the six-month period from October 2013 to March 2014, the solar PV industry will install almost 22 GW, which is greater than all the solar PV installations that occurred between 2005 and 2009, during the previous high-growth phase of the industry that was driven by the European market.

The record solar PV demand in Q4’13 is heavily weighted