A call for better and greener solar PV to tackle “overcapacity”

The Ministry of Industry and Information Technology (MIIT) has issued a preliminary draft of the revised Regulatory Specification for Solar Photovoltaic Manufacturing. Although not mandatory, the Regulatory Specification serves as a benchmark for both central and local industrial authorities in assessing solar PV projects, thus functioning as a guiding document for the industry.

According to the new draft, the minimum capital ratio requirement for new construction and expansion projects in all categories of solar PV products would be raised from 20 to 30 per cent. The draft regulation also introduces more stringent standards for PV components in terms of performance, as well as for energy and water usage during the manufacturing phase. It also encourages manufacturers to obtain carbon footprint certification for their products, without specifying the exact standards they should adhere to.

The overall objective of this latest revision is to make better and cleaner solar PV products, while also containing the growth of outdated manufacturing technologies, against a backdrop of “structural and temporary overcapacity” – a term used by Chinese authorities to refer to the current situation, in which numerous obsolete production facilities are sitting idle, while the demand for advanced products remains unfulfilled.

It is worth noting that there is currently only one A-shares listed company in the solar PV industry with a market value of RMB 100 billion, while there were as many as thirteen back in November 2021. The industry attributes the unchecked race for cheap products as the cause of this trend. It is still uncertain if the new regulation draft will effectively eliminate this unhealthy competition.