Outlook of China’s solar market

Continued uncertainty around China’s solar policy means the achievement of its 2014 solar target of 14GW “could be challenging,” according to a new report from Deutsche Bank.

The report, published on Monday, said analyst meetings with Chinese solar companies had confirmed the bank’s earlier view that the country’s ambitious installed solar goal could be out of reach.

According to the analysts, the key hurdles for China’s solar market – expected to be the world’s biggest in 2014 – were difficulty securing project financing; implementation issues for distributed solar power; grid curtailment issues; and delayed payment of subsidies.

In particular, the report pointed to problems with the implementation of the 8GW target for distributed solar power, and predicted only one-quarter of that amount might be achieved.

“We continue to see risks of softness in demand and product pricing in 2014 as headwinds for the sector in the near term,” it says. However, it says if policy is improved then demand for distributed generation could likely increase to the 8-10GW run-rate.

Among the measures being considered are a doubling in distributed solar incentives to around RMB 1/kWh from the current incentive of RMB42c/kWh; and a removal  of counter-party risk by getting the state grid to pay for incentives over the next 20 years.

Deutsche’s China update follows notable downgrades from some of the country’s big PV market players, including Trina Solar, which this week warned it would fall far short of its previous sales forecasts for the just-ended first quarter.

And Yingli Green Energy said last Thursday that it would ship fewer solar modules in the first quarter than expected – an adjustment the company attributed to seasonal weakness and problems with a project in Algeria.

 © 2014 Solar Choice Pty Ltd

Giles Parkinson