Nine-month figures from China lay bare impact of May 31 policy U-turn

China's Photovoltaic Industry Association (CPIA) this week tried to put a brave face on domestic market conditions by emphasizing the downturn prompted by Beijing's u-turn on solar subsidies at the end of May had not proved as catastrophic as the most gloomy forecasters predicted.

But in announcing PV statistics for the first nine months of the year, the difference in trading conditions before and after that 31 May policy decision was starkly illustrated, and there seems little basis – other than optimism – for Vice-Chairman and Chief Secretary Wang Bohua's assertion that next year's figures will remain largely unchanged.

With the baseline silicon price fall experiencing a sharp pitch downwards in June, and year-on-year volume increases in solar wafer, cell and module output lurching from an all-out boom to a trickle, the impact of Beijing's decision to curtail domestic PV subsidies has been dramatic.

The upshot of the statistics is that China expects to see 40 GW of new solar capacity by the end of the year – making it still comfortably the world's biggest solar market, and better than forecasts of a full-scale retreat made by analysts immediately after May 31.

Utility scale and DG provide 50/50 split for new capacity

But the figure, if correct, will be 25% down on 2017, a 12-month period likely to be looked back upon as a golden year for global solar for the immediate future, and cynics may raise an eyebrow at official figures listing an almost 50/50 split between an expected 17.4 GW of new capacity from utility-scale projects and 17.14 GW from distributed generation.

Digging into the figures, the output of solar silicon has risen 4.94% compared to the same period last year, to 178,000 tons, with 350,000 tons expected by the end of the year. The price of silicon – which had retreated steadily from RMB138,000/ton ($20,000/ton) in December to RMB126,000/ton in May – then pitched down and was slumped at RMB82,000 at the time the latest statistics were compiled.

Around 50 GW of solar wafers were produced by Chinese factories in the first six months of the year – a 39% rise on the 2017 boom year – but in the subsequent two months, only a further 13.6 GW has been added to the total, dragging down the comparison to a 2.1% year-on-year rise. Prices too have slumped, with 156mm mono-silicon wafers falling from $0.69/piece in early January to $0.45/piece at the start of last month. Polysilicon wafer prices halved, from $0.62 to $0.31, in the same period.

Cells showed the same pattern, with a sharp break obvious at the end of May, as the 39 GW produced by factories in the first six months – a 22% year-on-year increase – was followed by 14.6 GW to the end of September, to pull the comparison back to a 5.1% rise. Modules too, followed the downward trajectory, with Chinese manufacturers producing 42 GW worth in the first six months – up 24% on 1H 2017 – and then just 12.9 GW to the end of September, for a year-on-year rise of just 3.58%. The price of polysilion modules fell steeply, from $0.337/W at the start of the year to $0.235 at the start of October.

By Vincent Shaw