China witnessed an 18% fall in new PV capacity last year, according to figures announced by the nation’s PV industry association today, but that amounted to a better-than-expected performance from the sector after the government announced a plan to scale back its costly central subsidy system.
And with the production output figures of the world’s biggest solar manufacturers booming on demand outside China, the China Photovoltaic Industry Association (CPIA) was taking an optimistic outlook for this year.
When the Chinese government at the end of May announced a plan to rein in a PV subsidy program that last year mushroomed to $15 billion of unpaid incentives – according to consultancy Solarzoom – global solar analysts revised down estimates for China’s capacity additions as low as the 30 GW mark.
But today’s CPIA figures – which usually give an accurate guide to the official statistics expected around April – showed China installed some 43.6 GW of new solar in 2018, followed a record-breaking 53 GW a year earlier.
Curtailment halved
Whilst the government’s 5/31 New Policy announcement undoubtedly slowed installations, there was still 20 GW of large-scale, ground-mounted PV installed after the policy u-turn, after only 3.6 GW had been installed in the opening five months of the western calendar year.
Distributed generation was more balanced over the 12 months, with around 10 GW of small-scale solar added either side of a policy announcement that prompted dire predictions around the world.
Perhaps even more significantly, the amount of solar lost before reaching end-users was halved from 6% in 2017 to 3% last year. Yesterday, analysts told pv magazine the success of a new policy package designed to fire subsidy-free Chinese solar could hinge on reducing curtailment, and today’s figures offer reason to think the government is moving in the right direction on that issue.
What will come as little surprise, given the headlong rush for new production capacity seen in the second half of last year, is the output figures for China’s solar manufacturers.
Production booming
According to the CPIA statistics, there was a 21.1% year on year rise in cell production volumes, to 87.2 GW; a 19.1% rise in wafers (to 109.2 GW); a 14.3% leap in module production (85.7 GW); and a more modest 3.3% rise in polysilicon output – to more than 250,000 tonnes.
In overseas terms, CPIA vice chairman Wang Bohua told members in Beijing he expected further rises across the board during the current year on the back of healthy markets in Europe – especially now the EU has abandoned the minimum import price for Chinese modules and cells – India, the Middle East and South America.
The only potential fly in the ointment, said Wang, was U.S.-China trade, thanks to the unresolved trade spat between the two superpowers. However, with the U.S. already accounting for only 0.24% of China’s PV exports, a further deterioration in relations with President Trump need not be too catastrophic for Chinese solar, Wang added.
Josefin Berg, an IHS Markit analyst said, in reaction to the figures: “The decline from 2017 is a reflection of the policy changes made in May last year. We will still have to see the official 2018 statistics, but this announcement indicates that the Chinese PV market was not hit as bad by the halt to the feed-in tariff as many had expected. In our December forecast, we were confident that at least 40 GW of PV would be installed in 2018 in China.”
This article was amended on 17/01/19 to reflect 43.6 GW, rather than 42.6 GW of new solar was installed in China in 2018, that 53 GW was installed in 2017 and that central subsidies have been reduced, not stopped.
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The marked increase in utility PV after the May announcement suggests that developers had been gaming the system. China calls 5 MW systems “distributed”, a peculiar decision made a few years ago to mask repeated failures to meet rooftop PV targets. Since large PV farms are modular, and the largest subunit is set by the inverters, there are few difficulties in breaking up a 50 MW project into ten 4.99 MW ones to get a better FIT. With a firm cap imposed on these distributed projects, developers returned to more truthful packaging. A similar effect happened in Turkey, when village projects up to 1 MW did not need a permit. A surprising number of 999 KW projects sprouted all over Anatolia.