Tough competition in the global market place, vast oversupply and falling prices has put Chinese manufacturers’ balance sheets under huge pressure and China’s government has responded by more than doubling its long-term installation target from 20GW to 50GW by 2020.
Challenging conditions in the first half of 2012 and a bleak outlook in many major markets following incentive revisions and an on-going trade war in the US and Europe have resulted in production stalling, notes the IMS Research report. “Although a small number of manufacturers have been able to maintain reasonable utilisation levels, a large number of polysilicon fabs remain closed, meaning that average polysilicon production utilisation in China fell below 50 per cent in the second quarter of 2012.”
Cell production also fell, largely impacted by the America’s recent decision to impose import tariffs on cells manufactured in China [many suppliers have increased the amount of cells they source from Taiwan and other locations outside mainland China]. Prices also continued to fall during the quarter, with module prices falling by a further 7%, “bringing further bad news for China’s suppliers whose profit margins are already under huge pressure”, says IMS.
Frank Xie, senior market analyst at IMS Research said China’s new, “highly aggressive”, 50GW by 2020 target could be achieved “given the rate of deployment that China has already managed to achieve in the relatively short amount of time since its national feed-in tariff was launched, and provides a clear message that China will strongly support its PV industry in the future”. Indeed, PV installations in China will be a key driver in the growth of the global PV market - installations are forecast by IMS to grow quickly in the second half of 2012 with over 10 GW installed over the next two years.
Xie also noted that large megawatt-scale turn-key inverter solutions are forecast to increase their share of the Chinese PV market in 2012 “driven by their highly competitive upfront cost, and ease of installation and maintenance”. Inverter solutions larger than 1MW are forecast to double their share of the market over the next twoyears. Meantime, IMS Research also forecasts that China will follow a similar trend seen in the European PV inverter market and begin to employ an increasing amount of small three-phase inverters in its fast growing rooftop installation.