On September 30, China placed a moratorium on new wind manufacturing plants for the next three years. A frenzy of investment by some 80 wind turbine manufacturers has led to 20 GW of annual capacity, while demand is half that, and the domestic industry is still weak in turbine and key component design technology.
On the solar side, over a dozen companies rushed into polysilicon manufacturing to take advantage of state incentives for renewable energy production earlier this year.
The result has been severe drops in prices and massive over-capacity.
The moratorium will enable China to develop proprietary technologies and increase competitiveness in the world market, while avoiding overcapacity and redundant construction.
China is also curtailing expansion in its solar sector. The decision should help China’s established companies such as Yingli, GCL, LDK Solar, and Renesola, which have strong balance sheets and large, built-out manufacturing capacity.
Withholding new project funding and approvals will make it difficult for smaller companies, which comprise about half of its market.
"Capacities at factories are just so huge, China could easily supply all of the world’s expected solar demand next year," Wendy Wang, analyst at Hong-Kong based Yuanta Securities told Reuters.
China’s polysilicon production is at 8 GW, while global demand is 7 GW.
Loading...