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China is about to wrap another record-breaking year for solar capacity additions, Bloomberg has reported, with new installations set to reach between 230 and 260 GW.
The data comes from the China Photovoltaic Industry Association, with the growth sizable in spite of the industry’s recent struggles with profitability and excess inventory and production capacity. Countering these problems is support for utility-scale solar development in the deserts, growth in rooftop solar proliferation, and grid expansion, which has made it possible for more solar power to reach consumers instead of getting wasted.
Even so, the year has not been very good for solar panel manufacturers in the world’s largest solar power market. Excess stock and overcapacity have pushed prices for the components to record low, prompting billions in losses for the manufacturers. Some have been priced out of the market altogether.
Earlier this year, the China Photovoltaic Industry Association said that China urgently needs consolidation in the solar manufacturing industry as overcapacity and price wars were leading local companies to a race to the bottom, after years of uncontrolled growth supported by cheap materials and policy support from the central and local governments.
In response to these concerns, the government in Beijing tightened the investment criteria for solar components manufacturing in a bid to alleviate the oversupply burden on the industry, which has remained after the phaseout of central government subsidies. The government now wants a minimum capital ratio of 30% for solar PV projects, up from 20% previously. This ratio typically refers to the share of total investment shareholders invest with their own assets.
China is in undisputed leader in solar power across the supply chain and in terms of capacity. Since 2017, its installed capacity has been growing at a compound annual rate of 25%, compared to 21% for the United States and 16% for the European Union.
