Restrictions On PV Production Expansion In China?

• MIIT has issued a draft to check production expansion plans of players in the PV industry of China
• It wants the industry to focus on advanced technology and achieve low production costs
• Manufacturers need to invest at least RMB 10 million annually on R&D for solar
• They need to ensure at least 50% of their production capacity is utilized

The Chinese Ministry of Industry and Information Technology (MIIT) has issued a draft seeking feedback on government's plans to restrict solar manufacturers from expanding their capacity. The ministry wants to strictly control solar manufacturing projects that 'simply expand production capacity'.

The draft Regulatory Conditions for Photovoltaic Manufacturing Industry (2020 Edition) says adoption of the measures as listed will help strengthen the PV manufacturing industry of China and guide the industry to accelerate transformation and promote a sustainable and healthy development of the country's PV industry.

Issued by the Electronic Information Department under MIIT on May 29, 2020, the draft reads that manufacturers should focus on advanced technology and achieving low production cost. To achieve this, the government wants manufacturers to invest at least RMB 10 million ($1.4 million) annually on research and development. They will also be required to make use of at least 50% of their production capacity every year.

Manufacturing units located in ecology and water protection zones or where industrial enterprises are established, will not be allowed to expand their operations. They will be required to dismantle or shutter their activities here.

Reuters says the restrictions will take care overcapacity of solar products in the market as domestic installations drop.

Comments on the draft will be accepted till June 10, 2020.

Several solar PV manufacturers in China, mostly tier I have of late announced massive capacity expansion plans that have remained unchanged despite the COVID-19 pandemic. As analysts and the Chinese government see global demand for solar products growing much less than originally forecasted, the eyes are now again on China to push demand that has been decreasing in the last few years due to market restructuring. Recently, a National People's Congress (NPC) representative Cao Renxian was reported by local media to have recommended a national target of 300 GW for solar to be included in the 14^th Five-Year Plan.