The Chinese photovoltaic industry may reach a total capacity of 550 GW for solar cells and 500 GW for PV modules by the end of this year, according to new figures provided by analyst Asia Europe Clean Energy (Solar) Advisory (AECEA). In 2021, by contrast, Chinese manufacturers saw capacity expansion for wafers reach a total of only 340 GW.
“To illustrate, just in Q4, more than 80 GW of new wafer production capacities were stated by largely new entrants,” the consultancy explained, adding that there would not be sufficient demand for this additional capacity in the near future. “During the past decade there wasn’t hardly any period where the industry wasn’t facing over-capacities,” it stated. “The latter is rather the norm than the exception.”
Furthermore, AECEA revealed that, at the end of 2021, China's polysilicon industry reached an aggregate capacity of 530,000 MT, to which another 300,000 MT under construction may be added during the first half of this year. “Polysilicon prices shall stay elevated at around RMB 200/kg till summer and possibly fall to RMB 170/kg by year end. Starting Q1/2023, prices are expected to fall more rapidly and possibly sooner than later, prices again will hit previous historical levels of RMB 56/kg,” the analyst added, noting that solar module prices should reach a price level of up to RMB 1.75 ($0.28)/W by the second half of the year, which would be slightly down from up to RMB 1.9/W currently.
The analyst also provided some figures outlining the growth of the Chinese PV market in 2021, which showed around 53 GW of new PV systems were connected to the country's grid. “Knowing 2021 will be the final year able to benefit from central government subsidies, it is not surprising why residential PV systems grew 113% YoY (21,59 GW),” AECEA said. Distributed generation including another 7.5 GW of commercial and industrial PV systems accounted for more than 50% of the market share last year. The country's cumulative PV capacity reached 306 GW at the end of December, of which 107.5 GW is coming from distributed solar.
“Overall, C&I solar PV systems are expected to benefit most from higher electricity tariffs,” the AECEA further explained. “Whether the same logic applies to ground-mounted, utility-scale projects remains to be seen, given that land use fees in particular have significantly increased in certain provinces by a few hundred percent, thus offsetting potential gains from higher electricity tariffs.”
Looking forward, the consultancy said 2022 showed interesting signs of growth, with an unprecedented number of module procurement tenders being announced in the past weeks.
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