China will install over 24% less PV in 2018, compared to the previous year's 53 GW. The 40 GW guidance was given by China Photovoltaic Industry Association's (CPIA) Vice-Chairman Wang Bohua, according to a Reuters article.
He cited overcapacity of solar power products and the government's inability to offer subsidies for clean energy generation as possible reasons for this possible decline of the industry.
Several solar power projects were commissioned in China in the last two years, spurring manufacturing growth. The state offers subsidies that have thus far given financial incentives to solar power generators. But these very reasons may now lead to the market contracting in the current year, fears Bohua.
The PV manufacturing industry of the world's largest solar power market may have created overcapacity of products buoyed by the huge demand. It may lead to further falling of prices. Small and medium sized enterprises are under pressure and may close this year, said Bohua. Some of these have already cut utilization rates to about 65%, he added.
With costs down a lot while subsidies stayed high is a further reason for the growing demand of solar over the past two years. However, the Chinese government has not been able to pay up all developers and PV power producers.
To be able to stem its huge renewables plans financially, China is working on changing its FIT based subsidy model to other schemes. Among others, according to Reuters, China is considering a quota system that will force grids to source some power from renewable energy projects. Every region will have a quota fixed according to the draft guidelines. Companies that source this clean power will be eligible for renewable energy certificates.
However, the observation from CPIA comes at a time when the country installed 9.65 GW of new PV in Q1/2018, more than any other quarter before (see China Installed Record 9.65 GW PV In Q1/2018).
Yet, it is in line with Asia Europe Clean Energy (Solar) Advisory Co. Ltd.(AECEA), a China based consultancy, that believes changes in the incentive scheme is likely to bring down the country's PV installations to 40-45 GW in 2018. GTM Research forecasts 48 GW of new PV capacity in 2018 (see GTM Pegs 2018 PV Demand At 104 GW).
However, the two biggest solar consultancies are more optimistic: BNEF has provided in its Q1 forecast a range between 51.5 and 60.5 GW, while IHS foresees 53 GW in its Q1 market update.
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