The announcement from Beijing at the end of May, detailing cuts to solar incentives, and the suspension of many PV projects, came as a surprise both inside and outside of China. Since then, the global solar energy industry has been in turmoil.
Manufacturers are trying to adapt to the new situation and counteract falling prices. EPC companies, meanwhile, are waiting to see how far prices will fall, to make their projects as cost-effective as possible.
It is undisputed that huge PV module overcapacities exist. In China alone, capacities have been massively built up in recent years. But the world market will shrink this year – probably the very first time ever. GTM Research recently downgraded its forecast to around 85 GW of newly installed capacity in 2018. In comparison, last year saw around 100 GW installed.
An eye to the future
The “One Belt One Road” initiative, and the “International Capacity Cooperation” have been actively promoting this goal for some time now. And at the end of June, a new central element was added, focusing specifically on the areas of PV and wind power.
The National Development and Reform Commission of China NDRC, the National Energy Agency (NEA), and the Chinese Ministry of Commerce launched the International Investment Alliance for Renewable Energy, in coordination with the Chinese Chamber of Commerce (CCCME).
The alliance is part of the “One Belt One Road” initiative and the “International Capacity Cooperation”, according to the CCCME website. The latter is a combination of state and export funds of Chinese companies to promote China's foreign trade and industrial policy.
On “International Capacity Cooperation,” the Global Policy Journal wrote last fall, “A top-down centrally planned industrial policy, it is quite an ingenious way to ‘solve’ China’s industrial overcapacity problem, restructure its domestic industry towards Industry 4.0 higher value-added advanced manufacturing, and export capital factor productivity without opening the capital account.”
The whole thing, however, was designed only as a one-way lane, which means for Chinese sales abroad. Other media add that the “International Capacity Cooperation” is China's “foreign direct investment strategy” abroad, in order to utilize its own capacities under the guise of development aid.
The political authorities in June called on key companies from the entire renewables industry in China to create the International Investment Alliance for Renewable Energy. According to the CCCME, which claims to be an advisory body, more than 120 participants, mainly from leading corporations and financial institutions, met at the founding ceremony in Beijing.
According to other reports from China Daily and Japanese business portal, Nikkei Asian Review, the alliance has been set up according to government guidelines. Part of the alliance includes module manufacturer, JinkoSolar and wind turbine producer, Goldwind, as well as China Energy Engineering Investment Corp. Ltd and China Gezhouba Group Overseas Investment Co. Ltd, writes China Daily.
According to the report, it is the first Chinese organization to cover the spectrum of investment, planning, construction and operation of renewable energy projects abroad. In addition to large domestic manufacturers, equipment, EPC and O&M companies are also represented in the alliance.
Finding official information about alliance members and target markets, however, is currently difficult.
First and foremost, the alliance aims to focus on emerging markets where the development of PV and wind power is still in its infancy. But Nikkei Asian Review reports that it is also about compensating for the lack of sales in the domestic market, and the export deficits that are caused by the tariffs in the U.S. for Chinese PV manufacturers.
As a result, established markets, such as Europe, are likely to become more of a focus for Chinese manufacturers and project developers.
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