UBS Securities' Yan said the industry’s profitability challenges due to supply-demand imbalances are also expected to ease this year. — Xinhua
BEIJING: Financial services provider UBS has forecast growth of 10% in China’s photovoltaic (PV) installed capacity this year, reaching between 260 and 280 gigawatts (GW), fuelled by ground-mounted installations particularly from state-owned enterprises.
“This year marks the conclusion of China’s 14th Five-Year Plan (2021 to 2025). Many state-owned enterprises are still 30% to 40% away from their targets set for 2025, possibly leading to increased PV installations, especially large-scale projects,” said Yan Yishu, China utilities analyst at UBS Securities.
Yan said the industry’s profitability challenges due to supply-demand imbalances are also expected to ease this year following a series of favourable policies introduced at the end of 2024.
“The industry is poised to accelerate toward rebalancing, with a noticeable improvement in supply-demand dynamics anticipated as early as the second quarter of this year. Rebalancing may be seen by 2026 to 2027,” she said.
The annual Central Economic Work Conference held in December highlighted the need to prevent industry-wide price-centred hyper competition in certain industries and promote sustainable growth in 2025.
Later, the Industry and Information Technology Ministry (MIIT) raised energy consumption standards for existing polycrystalline silicon production projects to 60 kilowatt-hours per kilogramme. New production capacity is required to operate below 53kWh per kilogramme.
Yan said MIIT’s move, among many others, was an important initiative to ensure energy-efficient practices, roll out outdated capacities and raise the bar for upcoming projects, which may be effective to help the PV industry reach supply-demand balance.
She said this shift is likely to affect around 20% of existing production capacity, potentially leading to operational restrictions.
Additionally, industry associations and companies are advocating for self-regulated production cuts and quotas to lower industry operating rates to below 50%.
While specific details are pending, these initiatives are expected to be pivotal in reshaping the industry, she added.
In response to the government’s call, leading solar firms Tongwei Co Ltd and Daqo Energy recently announced production cuts on specific lines to improve profitability.
Four high-purity crystalline silicon production companies owned by Tongwei will undergo gradual output cuts to reduce operational losses and improve overall profitability.
Daqo, on the other hand, will implement controlled production reductions on polysilicon production lines in Xinjiang Uygur autonomous region and Inner Mongolia autonomous region. — China Daily/ANN
