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Solar PV industry hurt by overcapacity: official

By Chen Yang (Global Times)

08:45, July 13, 2012

More than 300 Chinese cities are making efforts to develop the solar photovoltaic (PV) industry, mostly driven by short-term interests, and this has caused a problem of overcapacity in the sector, an official from the National Energy Administration (NEA) said Thursday.

There are more than 2,000 domestic companies in the PV industry, and half of them are focused on production of solar products, Shi Lishan, deputy director of the New Energy and Renewable Energy Department with the NEA, said at a forum in Beijing.

Such investment has been mainly driven by short-term interests, and investors lack the necessary understanding of the tech-intensive and high-risk PV industry, Shi said.

"The central government asks local governments to save energy, reduce emissions and develop high-tech industries, and the PV industry can satisfy all these requirements," Meng Xian'gan, secretary-general of the China Renewable Energy Society, told the Global Times Thursday.

"That's why local governments have been eager to develop the industry in the past few years," he noted.

But Meng said that blind development has caused the problem of overcapacity in the domestic PV industry, and the economic downturn among European countries, a major export destination for Chinese-made solar products, has put the industry in a tougher situation.

Shi also warned that large-scale construction of big solar power plants across the country should be prevented, because China has not formed a well-established pricing mechanism for solar-generated electricity and there are not enough policies that support solar power.

Weakening external demand and the small domestic market has left Chinese solar manufacturers facing a struggle. Major players including Suntech Power Holdings, LDK Solar and Yingli Green Energy Holding all posted larger-than-expected profit losses in the first quarter of 2012.

During Premier Wen Jiabao's tour of East China's Jiangsu Province last week, executives from local solar companies such as Trina Solar lobbied for more policy support for the domestic PV industry, the Xinhua News Agency reported Sunday.

A batch of stimulus policies regarding tax reduction and pricing of solar-generated electricity should be worked out to boost the PV industry, Shi said.

"The price gap between solar electricity and thermal electricity is still high, especially in some northwestern areas such as Ningxia, and there should be policies to tackle this problem," said Cai Wenbin, an industry analyst at Shanxi-based Datong Securities.

Chinese solar manufacturers are also dealing with a preliminary decision made by the US Department of Commerce, after it announced in May that the US would impose anti-dumping tariffs of 31 to 250 percent on imports of Chinese-made solar products. A final determination is expected to be released in October.

"The global solar industry is facing challenges from trade protectionism. The move by the US will not only hurt the Chinese PV industry, but also damage global trade of solar products," Zhou Xiaoyan, director of the Bureau of Fair Trade for Imports & Exports with China's Ministry of Commerce, said at the forum.

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