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China’s PV industry has given a feedback result of more than 20GW of grid connection in the first half of 2016; however, this is a good sign as much as it may be a warning sign. It’s a good sign being that the overall state of the market is still relatively stable and well, and the grid connection can be expected to reach as high as 30GW; but the concern is the imbalance of supply and demand that immediately follows. On the other hand, the target of 150GW PV connections from the “Thirteen Five-Year Plan” may be revised downward due to power generation curtailment.
China Photovoltaic Industry Association (CPIA)had held “2016 Mid-Year Industrial Development Retrospect and Prospect Conference Meeting” on July 21, 2016. CPIA secretary-general, Bohua Wang, stated that the amount of PV grid connection in the first half of this year would be expected to be triple that of the 7.73GW in the first half of 2015, soaring to more than 20GW; and the cumulative grid connection across the nation could be expected to reach as much as 65GW.
Elevated Production, but with Underlying Risks
According to CPIA’s statistics, the China-wind PV module production in the first half of 2016 had reached 27GW, representing a 37.8% year-on-year growth; and the reported 42 module manufacturers had an average utilization rate of 88.6%. The production of polysilicon in the first half of 2016 had also shown a y-o-y growth of 28.4%, reaching 95 thousand metric tons, and with 60 thousand metric tons through import. Most of the polysilicon companies had reached their full production capacity, yet may still be slightly under market demand.
Bohua Wang says that this year’s annual grid connection amount has a chance of reaching a historic high of 30GW. Overall speaking, the demands of the market would pose to be dense in the beginning but later relieved distribution.
Though he warns, with a stimulated market, there already existed a degree of corporate polarization: large brand name companies being widely trusted, but undersized companies being generally questioned about their long-term stability and quality control. He also wants to remind both upstream and downstream manufacturers within the industry to keep a careful watch on market trends; otherwise, there may very well be another imbalance of supply and demand. Bohua Wang states that there is already a trend of decrease in the number of module manufacturers, and there would most definitely be a series of mergers and restructurings in the future.
Issue of Power Generation Curtailment yet to Be Resolved, PV Target for “Thirteen Five-Year Plan” May Be Revised Downward
There are three major problems limiting the development of China’sphotovoltaic industry: power generation curtailment, land for PV development, and subsidies. The problem of power generation curtailment is the most severe of them all, to which Bohua Wang admitted as, “currently unsolvable.”
According to China’s National Energy Administration (NEA), Gansu province and Xinjiang region’s power generation curtailment rates at the end of 2015 were 31% and 26% respectively, and deteriorated further entering the first quarter of 2016 to 39% and 52%, with the total amount of abandoned electricity across the nation reaching 1.9 billion kWh.
The problem of power generation curtailment can only be resolved through both (1) the full purchase of electricity generated from renewable resources, and (2) power grid infrastructure, being completely implemented and developed. But with the present financial burdens, the problem of photovoltaic subsidies being overdue alone couldn’t be solved, and power grid infrastructure, on the other hand, requires time. Thus, the two aspects mentioned above can yet to be completed in the near future.
This would ultimately have an impact on the PV target set in China’s “Thirteen Five-Year Plan.” This year, China has been coming up with various related solutions, such as pending new construction plans and project applications, especially in areas with high power generation curtailment. The government also plans to suspend expanding any new phase of large-scale constructions until the existing problems are solved. Under such policy of objectives, the “Thirteen Five-Year” plan’s target of 150GW installations to be revised downward can be said to be unavoidable.
High Expectations for PV Poverty Alleviation Project, Distributed PV Generation Systems, and Top Runner Program
In comparison to large-scale power plants facing the problem of generation curtailment, PV Poverty Alleviation Project, Distributed Photovoltaic (PV) Generation Systems, and projects under Top Runner Program have become the new head turners on the market.
China’s NEA had set 2016’s PV installation plan at 18.1GW at the beginning of June 2016, which does not include PV Poverty Alleviation Projects, letting it become a market of high potential. On the other hand, distributed PV generation systems that are able to be combining with rooftop, agriculture facilities, and fishery industries, still pose to have high expectations. Installation capacity in the first quarter of 2016 was nearing 1GW, mainly distributed in the middle-eastern and southern regions.
And with an officially issued capacity of 5.5GW in 2016, the Top Runner Program has been highly anticipated for in the PV industry. It requires utilizing either multicrystalline PV modules with a conversion efficiency of 16.5% or more, or monocrystalline modules with efficiency of 17% or more. Such high standards will accelerate the PV industry transforming and advancement.
The first demonstration project of Top Runner Program is the 1GW project in Datong, Shanxi province, and all the solar power plants were connected to the grid by June 30th. Bohua Wang believes that the success of this project would enable future advancements to go even smoother. This year’s demonstration project is selected to be built in Baotou city of Inner Mongolia region, also with an installation target of 1GW.
Aside from the Top Runner Program at the national level, Ningxia, Xinjiang, Jiangsu and several provincial governments are also putting forth their own”top runner programs” one after another. There’s no doubt that the Top Runner Program is of irreplaceable importance in China’s photovoltaic industry.
(Photo: CMIG’s large-scale solar power plant in Ningxia, with an installation capacity of 380MW for the first phase.)
(Written by Rhea Tsao, Chief Editor of EnergyTrend, originially in Chinese. Translated by a contracted translator of TrendForce Corp.)