China’s Solar PV Industry Saw Continued Recovery in 2016

China’s solar PV industry continued its recovery in 2016, with gross output value reaching 336 billion yuan (US$49 billion), a rise of 27 percent compared to 2015, according to statistics released by the Ministry of Industry and Information Technology of China.

Production of polysilicon topped 194,000 tons in 2016, an increase of 17.5 percent from a year earlier, while that of wafers grew 31.2 percent to 63 GW. Solar cell production climbed to 49 GW, up 19.5 percent, while solar module production hiked 20.7 percent to 53 GW. The country’s newly installed PV capacity reached 34.5 GW during the year, a surge of 127 percent compared to 2015. Average gross margins at the top five polysilicon manufacturers pushed past the 20 percent mark, while the same at the top 10 module producers came in just above 15 percent. Among the 31 publicly-listed PV companies, nine saw their net profit more than double.

PV companies, driven by measures taken by the Ministry of Industry and Information Technology to regulate the industry, continued to promote intelligent manufacturing, leading to higher levels of automation and digitalization across production lines. A market-led resource consolidation accelerated across the sector: Henan Yicheng New Energy successfully completed the reorganization of LDK Solar while LONGi Green Energy Technology (formally LONGi Silicon Materials) acquired U.S.-based SunEdison’s Malaysian plant.

Production costs continued to decline as a result of technology advances and economies of scale. The PV power generation cost in resource-rich regions decreased to 0.65 yuan (US$0.09) per kilowatt-hour.

The PV industry accelerated its expansion into global markets. Encouraged by the One Belt, One Road initiative, the Chinese government’s program to reinvigorate economic ties with countries aligning the ancient Silk Road trade routes, Chinese PV companies have built manufacturing facilities in more than 20 countries worldwide, with total capacity exceeding 5 GW. With these new facilities coming on line, China’s wafers, cells and modules saw exports decrease 11.3 percent to US$13.84 billion. Exports to emerging markets, notably, India, Turkey, Chile and Pakistan, grew significantly, while the proportion of exports to traditional markets in Europe and the U.S. fell to less than 30 percent of the total, further reducing the impact of the anti-dumping and anti-subsidy measures taken by those markets against China-originated PV products.

Despite the recovery shown in China’s PV industry, challenges remain across the sector, including the support polices put in place by the Chinese government proving inadequate; lack of innovation among Chinese PV makers; slow advances in key processes and technologies; difficulties in obtaining financing and high financing costs; fluctuations in domestic demand; a disorganized market system and mechanism within China; and the increasingly complex international trade environment.

Lead image credit: Snowacinesy | CC BY-SA 3.0 | Wikimedia Commons