China’s National Energy Administration (NEA) announced at a recent press conference that the domestic installations of PV systems in 1H18 increased by 24.3GW, of which 12.06GW is related to utility-scale systems and 12.24GW is related to DG systems. Compared with the same period a year ago, the newly added utility-scale installations in this year’s first half fell by 30%, while the newly added DG installations increased by 72%. The total cumulative PV installations in China at the end of June 2018 came to 154.51GW, including 112.6GW of PV power plants and 41.9GW of DG projects.
The Chinese news organization National Business Daily has also reported that the yearly decline in the country’s PV installations is having an impact on the performances of domestic solar enterprises. The first half-year results and future projections from 30 listed domestic companies engaged in the solar sector have shown that 90% of these companies are expected to post profits. However, their earning growths are tapering off. Less than 30% of them are with a net profit of more than RMB 300 million, and about 30% of them are registering revenue decline. Four among them also have posted sharp drops in their earnings per share: SUNOWE Photovoltaic (aka Zhejiang Sunflower Light Energy Science & Technology LLC), MOSO Power Supply Technology Co. Ltd., Shenzhen Jiawei Photovoltaic Lighting Co. Ltd., and Jolywood (Suzhou) Sunwatt Co. Ltd.
China Photovoltaic Industry Association recently held a seminar to discuss the developments of the domestic solar market in 1H18 and the outlook for the year’s second half. Wang Bohua, secretary general of the association, forecast that China’s newly added PV installations for the entire 2018 will either reach or surpass 35GW. The association also released the production data on the domestic PV supply chain for the year’s first half: polysilicon production totaled 143,000 metric tons for a YoY growth of at least 20%, solar wafer production totaled 50GW for a YoY growth of 28.2%, PV cell production totaled 39GW for a YoY growth of 21.9%, and related component production totaled 42GW for a YoY growth of 20%. In sum, all sections of the Chinese PV supply chain recorded positive production growth for the first six months of 2018.
Zhao Yuwen, a noted analyst of China’s solar sector, said that Chinese solar enterprises will be entering an even deeper valley period with respect to market demand in latter half of 2018, as the government’s new policies for the industry will drive down system installations and component shipments. Zhao also stated that industry participants, whether they are manufacturers in the upstream and mid-stream or power plant operators in the downstream, will be facing operational challenges. Not only their revenues will continue to slide, the declines in the second half are expected to be larger than in the first half.
Wang agrees with Zhao’s assessment and added that the Chinese solar enterprises will have more difficulty in maintaining their profits in 2H18 because of the plummeting end demand and prices. In addition to the contraction of the market, costs are going up for the suppliers. Polysilicon manufacturers, for instance, are facing more stringent environmental regulations. At the same time, component manufacturers are still dealing with rising costs for glass and other raw materials. Therefore, profit margins for products across the supply chain will be further squeezed.
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