According to a recently published report by the Asia Europe Clean Energy (solar) Advisory (AECEA), China added 6.83 GW of solar capacity in May 2022, an increase of 86% month-over-month (MoM).

From January to May, a total capacity of 23.71 GW was added, representing an increase of 140% year-over-year (YoY).

According to China’s Renewable Energy Engineering Institute’s report ‘China Renewable Energy Development Report 2021,’ up to 100 GW could be installed this year, slightly below the National Energy Administration’s envisaged number of 108 GW.

However, the demand is strong not only in China. According to export statistics, shipments of modules globally amounted to 63 GW, an increase of 102% YoY by the end of May. During the period, Europe imported up to 33 GW, an increase of 140% YoY, just 12 GW short compared to the whole of 2021.

The European Commission is expected to accelerate its current solar-related ‘Important Project of Common European Interest’ undertakings as announced mid-May this year.

Strong demand will lead to price rise

The report states that strong demand combined with tight raw material supply is driving up the prices. Polysilicon prices have increased 24% since January, reaching an eleven-year high of RMB 291/kg (~$43) in early July.

Due to a recent fire at one of the manufacturing facilities and upcoming maintenance at five manufacturing sites, polysilicon supply is anticipated to be tight in the short term. The estimated July output is expected to be down by nearly 5% MoM. This could potentially lead to average polysilicon prices exceeding RMB 300/kg (~$45).

AECEA believes that the current tight supply situation will probably stay till the end of Q3 2022.

The report notes that since January, the wafer, cell, and module prices have increased by 18%, 12%, and 8%, respectively. Considering the constant price rise of raw material prices, nearly a dozen module manufacturers are planning to suspend production. Other reasons include the prevailing high-price ecosystem, shrinking returns, domestic logistical constraints caused by Covid-19 measures, and high shipping costs.

China’s growing market share

In its recent annual report, the China PV Industry Association noted that China’s global share of combined polysilicon, wafer, cells, and module production capacities reached 85% in 2021. Most notably, its wafer production amounted to 98%. TCL Zhonghuan alone shipped 52 GW of wafers in 2021, which accounted for roughly a quarter of the global total.

Considering the additional polysilicon plants across west and southwest China are currently either under construction or planned, it is fair to assume that China may reach a level equal to its global share of wafer production capacities in the not too distant future.

Provincial solar industry action plans

Since China’s president Xi Jinping announced that the country will aim at carbon peaking and carbon neutrality by around 2030 and 2060, respectively, provincial governments have made efforts to promote renewables as a new growth engine.

The report notes that many provinces have released plans covering the period between 2022 and 2024. The distinctive feature of these action plans is that they foster an ‘industrial upgrading’ rather than simply aiding production expansion as in the past.

Shaanxi, Beijing, Tianjin, and Hebei regions have earmarked RMB 298 billion (~$44 billion) for 42 unspecified solar upstream-related projects.

HJT and Perovskites are making significant inroads

The solar industry is witnessing an increasing influx of new arrivals. AECEA has compiled a list of nearly 40 companies, consisting of a mix of privately-owned, stock-listed, and state-owned enterprises, all betting big on HJT. Another list contains almost two dozen companies and research entities pursuing perovskite-based technology.

The report predicts that by the year-end, China could be home to nearly 15-20 GW of operational HJT production capacity, including 3 GW mainly used for R&D purposes.

Due to its lower level of commercialization, most perovskite announcements feature smaller capacities up to 100 MW range. This indicates that perovskites will not make a significant impact anytime soon.

Market outlook

According to China’s Renewable Energy Engineering Institute, 2022 might be the first year China could deploy up to 100 GW of solar capacity. If realized, this would represent a 28-fold increase from 3.5 GW installed ten years ago in 2012.

However, AECEA maintains its earlier assessment of 80-90 GW new capacity additions in 2022, representing an increase of 45-63% YoY.

China’s National Energy Administration (NEA) recently announced that out of the 121 GW of solar projects under construction, nearly 108 GW of new solar capacity would be connected to the grid by 2022. The number put forward by NEA is nearly double the 54.94 GW solar capacity additions last year.

China added 55 GW of solar installations in 2021, and module exports surpassed 100 GW, despite the pandemic and various supply chain issues. According to China’s solar PV Industry Association, last year, the annual polysilicon, wafer, cells, and module outputs increased by 28.8%, 40.7% (227 GW), 46.9% (198 GW), and 46.1% (182 GW), respectively.