The country's top 10 solar panel makers have up to 100 billion yuan (16.23 billion U.S. dollars) in debts and the ratio of debt to assets is above 70 percent in general across the industry, according to Meng Xiangan, deputy director of the China Renewable Energy Society.
Though favorable policies have been mapped out to explore domestic markets, most enterprises are facing difficulties in repaying the debts, Meng told Wednesday's Shanghai Securities News.
On Sept. 17, the Ministry of Industry and Information Technology issued the Photovoltaic Manufacturing Sector Standard Requirements to raise admission thresholds for solar panel makers.
One threshold category traces production capacity, for example polysilicon output capacity should be no less than 3,000 tonnes per year and silicon rod production capacity should be no less than 1,000 tonnes per year.
Others cover technology standards, energy saving and environmental protection.
Restructuring will be inevitable in the future, as many PV cell manufacturers were not in operation in the first half of the year, said Ren Haoning, an energy analyst with CIConsulting.
Ren believes the restructuring will be drastic, eliminating about 90 percent of the current 50 to 60 polysilicon enterprises, and forming “five or six” polysilicon groups in the future.
With production costs rising and decreases in the prices commanded by PV products, China's solar cell sector has been mired in difficulties since 2011.
The country has mapped out many policies to boost the sector since July this year, said Wang Bohua, secretary-general of the China Photovoltaic Industry Alliance.
Its economic planner on Aug. 30 announced measures to subsidize solar power. Distributed solar power stations will receive a subsidy of 0.42 yuan per KWH.
Even if domestic markets are expanded, China's production overcapacity can not be fully digested and some manufacturers must be eliminated, Meng Xiangan said.
China has been emphasizing the importance of the PV industry amid the country's initiatives to upgrade its industrial operations and energy structure.
The State Council, China's Cabinet, issued a statement on July 15 that targets an annual installation of 10 GW of solar energy nationwide between 2013-2015, with total installed capacity exceeding 35 GW by 2015.
The moves came after China's solar cell sector saw shrinking market prospects in the US and the EU over trade rows in the sector.
The EU and China reached a deal this summer on a “price-undertaking” arrangement that will exempt participating companies from anti-dumping duties. It is an alternative trade measure that replaces a duty with an undertaking based on a minimum import price.