A Conference Note From Graham Da Ponte

Background: The Asia Solar Photovoltaic Industry Exhibition and Forum took place in Shanghai Oct. 28-30, attracting more than 5,000 solar industry experts. OTR Global was represented at the conference and spoke with several sources in attendance.

Strong Government Support to Meet Official Target

Table 1: PV Installations (2009-2015)

Source: National Energy Administration, China Photovoltaic Industry Alliance

Sources interviewed during the conference expect China to meet the target of 35GW of installed solar power capacity by 2015 that was announced by the Chinese government in July, and some sources even expect the target to be exceeded because of strong government support. Since early 2013, the Chinese government has released eight new policies that have been boosting demand, including new and simplified Feed in Tariffs (FITs), financing solutions and grid connection policies. These policies generated confidence among the PV manufacturers, government officials and industry experts interviewed during the exhibition that the China PV market would grow quickly. One said, “I’m very excited. I think the China market finally enters the fast development phase.”

Polysilicon, PV Prices on the Rise
Sources at the conference said global polysilicon spot prices have increased from $16/kg at the beginning of 2013 to $18/kg, and they are expected to reach $20/kg in 2014. Sources said new Chinese polysilicon manufacturers were entering the market without being able to meet demand: The number of domestic polysilicon manufacturers rose from seven in 1H13 to 15 in 3Q13, but 70,000 tons of polysilicon are still expected to be imported from abroad in 2013.

Increasing polysilicon prices are expected to be relayed to PV prices, and sources said PV module prices have increased from 4 yuan per watt ($0.66/w) at the beginning of 2013 to 4.3 yuan per watt ($0.70/w).

Table 2: 2013 PV Production in China

Source: China Photovoltaic Industry Alliance

Tier-one and Tier-two Players Expected to Benefit
Sources said major solar companies were producing at full capacity and outsourcing production to relatively small manufacturers. However, sources expect companies that can lower costs to benefit most in the long term because the supportive policies are unlikely to last for more than three to four years. The industry is expected to further consolidate, although some government officials were worried high demand might revive some small companies, putting the market back into oversupply.

Industry experts and government policy makers expect tier-1 and tier-2 players like Yingli Green Energy Holding Co. Ltd., Trina Solar Ltd., JA Solar Holdings Co. Ltd., ReneSola Ltd., Canadian Solar Inc., JinkoSolar Holding Co. Ltd. and GCL-Poly Energy Holdings Ltd. (3800 HK) to benefit from the rapid development of China’s PV market because of their low cost, market reputation, high efficiency and high profitability. “ReneSola and Yingli did very well and were catching up in the recent several years because of improved management and strategies. Trina is always very stable,” one said. Sources said PV manufacturers with good government relationships such as Shanghai Aerospace Automobile Electromechanical Co. (600151 CH) and TBEA Co. Ltd. (600089 CH) would also benefit.

Export Shifts Away from Europe To Asia

Table 3: Export by Region (January-September)

Source: China Customs

Table 4: Export by Country (January-September)

Source: China Customs

What: The 8th Asia Solar Photovoltaic Industry Exhibition and Forum
When: Oct. 28-30
Who: 13 companies, with about one-half dealing with PV manufacturing and services and one-half dealing with thermal power. No major PV manufacturers were present except for Astronergy and Canadian Solar. Several hundred people including government officials, industry experts, PV manufacturers and service providers visited the exhibition and forum.

Buzz
Government Officials and Industry Experts
"I expect tier-1 and tier-2 companies to benefit. The government intention is to support leading and strong companies. It doesn't want small companies to revive."

"During the 12th Five-Year period (2010-2015), I expect 60% of the total installation to come from distributed solar power systems and 40% to come from large-size PV farm projects. After that, I expect the two kinds of projects to development at the same pace."

"If the amount of PV power connected into the grid is under a limit, it shouldn't cause big fluctuation to the stability of the grid. I think the current projects will be no problem for the grid to take in." 

PV Manufacturers
"The current high demand will make the high-cost production lines work again. If companies don't manage to further lower cost, when the government doesn't support PV power three or four years later, I expect the industry to be trapped in the same situation as in 2011 and 2012."

"The current subsidy is mainly from the central government. It will be distributed to PV projects through grid companies, so the subsidy shouldn't be a problem."

"Japan has very high requirements on certification. At the beginning, it was very hard for companies to get the certificate; now, many companies got the certificate, and the prices decreased because of intensified competition."

"The domestic market is very good because of supportive government policies. Many projects are rushing to finish before the end of the year to take advantage of the 1 yuan per watt subsidy."

"We expect the market in China to be good in the next two to three years. Our current capacity isn't enough. We have plans to expand capacity."

"Almost all tier-1 players in China are doing PV projects to enjoy the government subsidy."