China's PV company 'cull list' to have minimal global impact

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Market research group IHS said Thursday that a recently published Chinese government list of 109 companies that meet newly created "PV industry standards" will not have major implications for global PV markets.

The list, published by the Chinese Ministry of Industry and Information Technology last month, is in line with the government’s push for greater standardization and efforts to rein in further PV production capacity in the country in order to reduce oversupply.

The new PV industry standards is expected to stimulate consolidation among small Chinese photovoltaic suppliers.

"The recently published Chinese ‘PV industry standards’ will only have a minimal effect on global photovoltaic markets," said Jessica Jin, solar analyst at IHS.

"The government’s policy will accelerate consolidation amongst smaller suppliers, but will hardly have any impact on total available production capacity."

Jin added that the document "aims to offer guidance and recommendations for PV stakeholders rather than representing a list of permission licenses. The Chinese government is very unlikely to actively push companies not on the list out of business."

IHS said it nevertheless foresaw some impact for these companies, particularly the smaller ones, which may struggle to secure financial support from banks or receive governmental export tax refunds. Additionally, they may not qualify for project bidding in China, IHS added.

Large companies not on the list will not necessarily be harmed, the research firm pointed out. The list will be reassessed on a half-yearly basis and several of them may be included in one of the following rounds.

Major cell maker Shunfeng did not even apply during the first round yet the company is still enjoying good profits from its monocrystalline cell operations, expects booming business in 2014 and does not see any negative consequences of the list as a result. LDK is another major supplier not immediately meeting the official criteria, but IHS nevertheless expects governmental support for it to continue.

"Whereas the new PV industry standards might stimulate consolidation among smaller Chinese PV suppliers, IHS does not see a major consolidation of capacity and forecasts only a minimum influence on the global PV supply chain," the group said.

According to IHS’ new report, IHS Solar PV Integrated Market Tracker – Q4 2013, the 109 companies on the list account for 92% of Chinese polysilicon manufacturing capacity, 94% of Chinese wafer capacity, 95% of Chinese cell capacity and 93% of Chinese module capacity. "Even in a highly unlikely ‘worst case’ scenario assuming all other companies to exit the PV business during the course of 2014, the impact on global PV supply will be very small. Compared to other risks associated with PV markets in 2014 — notably the unclear situation for demand in Japan — it will be negligible," IHS concluded.

China’s Ministry of Industry and Information Technology announced in September new PV industry standards defining a variety of conditions, ranging from manufacturing capacity and utilization to technological and environmental criteria. On Dec. 30, it published a final list of 109 companies that passed the examination and officially meet these standards. Most, but not all, major PV suppliers were included. Prominent exceptions included LDK, Shunfeng, ET Solar, CNPV and Tianwei.