China’s domestic photovoltaic (PV) market

China announced its latest Photovoltaic Development Five-Year-Plan which targets 20 GW of PV systems and one GW of concentrated solar thermal power to be completed by 2015.

China’s domestic photovoltaic (PV) market made a slow start to the year, with just 720 megawatts (MW) installed in the first half, according to the latest research from IMS Research (recently acquired by IHS Inc. (NYSE: IHS)). However, installations are forecast to surge in the second half, with more than four gigawatts (GW) of PV installations to be completed, taking full year installations to five GW, according to the Q3’12 edition of the China PV Market – Supply and Demand Quarterly report, released in September.
In September, China announced its latest PV Development Five-Year-Plan which targets 20 GW of PV systems and one GW of solar thermal power to be completed by 2015. However, this plan did not bring the levels of financial stimulus that were expected. “While old issues like grid-connection and power transmission have still not been solved, new issues emerged in the second quarter of 2012, such as worsening bankability, poor credit conditions and a general slowdown of the Chinese economy,” remarked Frank Xie, IMS Research’s senior PV analyst based in Shanghai. “Many projects are said to have completed the bidding process; however, they are not yet under construction. Integrators are prioritizing projects to be completed by year end, and there will be a huge surge in installations in the final quarter of the year.”

2012 has so far also bought difficult times for China’s huge supplier base and utilization rates remained low as a result of a strong focus on cost control and caution over the ongoing EU trade investigation into Chinese PV products. Average utilization levels for PV polysilicon, wafers, cells and module manufacturers all declined in the third quarter; all were lower than 60 percent. Despite wafer production capacity in China declining in the third quarter, average utilization fell to just 58 percent; as an increasing number of cell manufacturers favored sourcing competitively priced wafers from third parties at a lower cost than manufacturing them in house. Utilization rates are forecast to recover slightly in the fourth quarter in response to the predicted boom in domestic installations.

Both inverter shipments and revenues declined in the second quarter of 2012 compared with the previous quarter as a result of weak demand. According to the report, the first half of 2012 saw inverter shipments of just 700 MW, less than half of the amount shipped in the second half of 2011. However, Xie holds a positive view for future inverter shipments in the second half of the year, adding: “The situation is set to improve, and China’s rapidly expanding inverter supplier base is forecast to ship more than four GW of inverters in the second half of 2012.”

Researched by IMS Research’s Chinese analysts, the ‘China PV Market – Supply and Demand Q3’12’ was published on 27 September and contains quarterly analysis and forecasts of the supply and demand dynamics of China’s PV industry.