China’s industry ministry has warned companies making photovoltaics (PV) – panels for solar power – that serious problems in the sector show an “urgent need to deepen industry management”.
Officials issued a notice on Wednesday that warned against market monopolies, saying supply and demand mismatches, plus severe price fluctuations and hoarding were harming the sector, which has seen significant growth because of huge demand.
They called for companies to promote and optimise development of the country’s photovoltaic industry, and encouraged the creation of power and storage projects.
“Local market supervision departments should strengthen supervision and management… (and) severely crack down on illegal activities in the photovoltaic industry,” the ministry said, referring to activities such as price bidding, monopoly practices and the production and sale of fake products.
The ministry also cautioned against hoarding and reselling materials and resources within the industry, and encouraged relevant enterprises to develop reserves of polysilicon, batteries and other materials to promote peak shaving and the stability of the industrial supply chain.
“Hoarding is strictly prohibited,” it said.
More Diverse PV Supply Chain Needed, IEA Says
The ministry’s notice follows a report by the International Energy Agency (IEA) last month that said “the world needs more diverse solar panel supply chains”.
Chinese industrial and innovation policies focused on expanding solar panel production had helped solar PV become the most affordable electricity generation technology in many parts of the world, the agency said.
“However, this has also led to imbalances in solar PV supply chains, according to the IEA Special Report on Solar PV Global Supply Chains, the IEA’s special report said.
Global manufacturing capacity for solar panels has increasingly moved out of Europe, Japan and the United States over the last decade and into China, it said.
“China’s share in all the key manufacturing stages of solar panels exceeds 80% today, according to the report, and for key elements including polysilicon and wafers, this is set to rise to more than 95% in the coming years, based on current manufacturing capacity under construction.”
China had helped to bring down costs of solar PV all around the world, helping the transition to clean energy, IEA executive director Fatih Birol said.
But the world still needs huge annual additions of solar PV capacity, which “need to more than quadruple by 2030 to reach net zero emissions by 2050”, Birol said.
That meant global production of key building blocks for solar panels such as polysilicon, ingots, wafter, cells and modules would need to more than double from today’s levels and existing production facilities would need to be modernized, the IEA said.
Supply chain bottlenecks had led to an increase of around 20% in solar panel prices over the last year, with “challenges” in the market for polysilicon causing delays in deliveries and higher prices.
Another problem was China’s “electricity-intensive manufacturing of solar PV is mostly powered by fossil fuels today because of the prominent role of coal in the parts of China where production is concentrated,” the IEA said, noting that “solar panels still only need to operate for four to eight months to offset their manufacturing emissions,” while panels usually lasted for 25 to 30 years.
China Eyeing 83-99 GW More Solar This Year
As well as being the biggest maker of solar products, China has also become one of the world’s biggest users of solar power, having installed close to 55 gigawatts (GW) of new photovoltaic power in 2021. And even more is being added this year.
In February, Wang Bohua, honorary chairman of the China Photovoltaic Industry Association (CPIA), predicted that China could add between 83 to 99 gigawatts in new solar capacity each year from 2022 to 2025.
That was close to half of the 200 GW expected to be installed globally this year, according to IEA data.
China plans to boost rooftop solar power in central and eastern parts of the country that are close to consumers and offer easier access to the grid.
Projects to build more large-scale solar stations in the Gobi and other Chinese desert regions in the west are also in the pipeline, with construction for about 100 GW of solar power capacity already under way in the area.
Wang also warned that the booming pace of solar manufacturing in the US and Europe would challenge the industry in China.
- Jim Pollard with Reuters