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					</table>According to a recently published report by the Asia Europe Clean Energy (solar) Advisory (<a href="http://www.aecea.com.de/" target="_blank" rel="noopener">AECEA</a>), 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&amp;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 (<a href="http://english.www.gov.cn/state_council/2014/10/01/content_281474991089761.htm" target="_blank" rel="noopener">NEA</a>) 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 <a href="https://mercomindia.com/china-installed-53-gw-solar-capacity-in-2021/" target="_blank" rel="noopener">additions</a> last year.
China <a href="https://mercomindia.com/china-exports-modules-2021/" target="_blank" rel="noopener">added</a> 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.

China Adds Nearly 7 GW of Solar Capacity in May 2022

The share of installed renewable power generation capacity in China amounted to 40% (hydro 17.7%, wind 10.4%, solar 10.2%, and biomass 1.5%) for the calendar year (CY) 2019.
According to a report published by the National Energy Administration (<a href="http://www.nea.gov.cn/" target="_blank" rel="noopener noreferrer">NEA</a>), the share of renewable energy in the power generation mix reached 28% (hydro 17.8%, wind 5.5%, solar 3.8%, and biomass 1.1%).
As per the latest Asia Europe Clean Energy (Solar) Advisory Co. Ltd. (<a href="http://www.aecea.com.de/index.html" target="_blank" rel="noopener noreferrer">AECEA</a>) report, the construction of a national network of long-distance ultra-high-voltage lines was started to connect China’s western regions with load centers along the east coast. According to the report, over the past few years, bringing the grid curtailment under control has been the top priority for the NEA. But things took a turn as the coronavirus spread, and the electricity consumption in the country dropped by 6.5% in the Q1 2020. This led to the curtailment for solar power, reaching 2.8%, 5.6%, and 1.8% in January, February, and March, respectively.
According to AECEA Director Frank Haugwitz, ensuring minimum curtailment for the financial viability of grid parity projects, NEA’s new policy marked a shift from subsidy-driven to subsidy-free market development. As a part of this initiative, earlier this year, the two national grid operators were asked to reassess the additional GW installations the grid infrastructure could take. The findings of 48.5 GW will now serve as the bottom line for NEA while approving feed-in-tariff (FIT) supported and grid-parity projects in 2020.
However, the total projects submitted, (which include approximately 20 GW in 16 provinces and 32 GW of bidding projects in 21 provinces) have already passed the threshold of 48.45 GW mentioned above. The deadline for filing the full list of projects was June 15, 2020, and full-year targets will be announced in the latter half of June.
According to the AECEA report, during the Q1 2020, an additional 3.95 GW of solar projects were installed, which represented a decline of 24% year-on-year. Installations in April and May reached 1-1.5 GW and 2-3 GW, respectively. The report further states that because the feed-in tariff supported projects will have to be grid-connected before June 30, 2020, the month of June is likely to witness a surge in installations. However, during this period, the cell and module prices are expected to remain low. From January to May this year, the cell and module prices dropped by 20% and 10%, respectively.
The report further notes that during the first three months of the year, domestic module production output increased by 17% YoY, whereas the exports remained stable at 15.6 GW YoY. The report states that this might be the reason that led the Ministry of Industry and Information Technology (MIIT) to <a href="https://mercomindia.com/china-streamline-solar-manufacturing-expansion/" target="_blank" rel="noopener noreferrer">come up</a> with a draft for streamlining the manufacturing capacity of solar components in the country.
As per the ACECA report, if these guidelines are enforced effectively, it will lead to an uncertain future for many manufacturers, and they may have to think about exiting the industry. The main aim of MIIT is to provide a solid ground for the development of the domestic solar industry and stop companies from making irrational investments, leading to massive overcapacities.
In this context, the National Development and Reform Commission’s (<a href="https://en.ndrc.gov.cn/" target="_blank" rel="noopener noreferrer">NDRC</a>) recent decision to reduce enterprise income tax by 10% to 15% for companies generating 60% of their income in western China might provide the much-needed boost to the expansion of production capacities there.
It is expected that in the government’s 14th Five-Year-Plan, the government will prioritize the utilization of distributed renewable energy sources and also plan large-scale renewable projects in the Northern and Western regions of the country. The draft of the plan will be made available to all the stakeholders to seek their feedback by November, and the final plan will be endorsed by March 2021.
According to ACECA, the 14th Five Year Plan will change the landscape of the solar market. The guidelines announced by MIIT might lead to the consolidation of the industry to unprecedented levels. At the same time, it might also open doors for large power utilities that may drive the smaller privately-owned players out of the market.
ACECA also maintained that new installations would remain in the range of 23-31 GW for the year, which will be a decline of nearly 23% YoY.
Recently, the National New Energy Consumption Monitoring and Early Warning Center <a href="https://mercomindia.com/china-likely-to-add-over/" target="_blank" rel="noopener noreferrer">announced</a> the projected addition of new solar and wind power capacities in China in 2020. According to the announcement, China will add 85.1 GW of solar and wind capacity to its grid in 2020, which includes 35.1 GW of wind capacity and 48.45 GW of solar capacity.
Earlier, China’s NEA had <a href="https://mercomindia.com/china-sets-subsidy-budget-rmb-1-5-billion-new-solar-projects/" target="_blank" rel="noopener noreferrer">announced</a> that it plans to provide subsidies of RMB 1.5 billion (~$216.1 million) for new solar power projects in the country this year, according to its ‘construction plan for photovoltaic power generation projects in 2020.’
Image credit: LONGi Solar

China’s Draft Solar Manufacturing Guidelines May Lead to Consolidation

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