Shanghai's solar conference focuses on losses and pricing reform
The mood will likely be subdued when the largest solar energy conference in the world kicks off on Tuesday in Shanghai, as Chinese solar panel manufacturers grapple with the oversupply of panels and price reforms.
The majority of solar farms in the world are powered by modules and cells made in China. However, the top Chinese producers are suffering billions in losses due to the fierce competition that has driven prices well below their cost.
In response, producers are reducing production. They also face uncertainty regarding the future of demand due to changes in policy on solar energy project investments.
The SNEC Photovoltaic Conference and Exhibition, which will run until Friday, is expected to attract a half-million people from all over the world. They'll be listening intently to the speeches of top manufacturers such as Trina Solar or Longi Green Energy.
According to Shanghai Metals Market, the global output of solar panel dropped by 7% from May. It will drop another 4-5% between June and July.
This may only be a small drop in the bucket, as the production capacity of China has more than doubled the global demand over the past few years.
Last year, the Chinese government was asked for assistance by solar manufacturing leaders. The Chinese government responded with limited measures, such as voluntary guidelines for investment in solar photovoltaic manufacturing projects.
According to OPIS' assessment of advanced TOPCon modules, China solar panel prices were still down by nearly 30% compared to a year ago.
Beijing's decision to reduce subsidies for renewable energy after the boom of solar and wind power installations has created uncertainty regarding the demand for cells and modules.
Solar plants that are commissioned after the 1st of June will be required to sell their electricity on the market, rather than receive a guaranteed price benchmarked against the coal price.
Most Chinese provinces have yet to explain the way their power auctions work and whether generators can expect a price guarantee, also known as a "contract for difference".
According to a report by industry website BJX.com citing documents, Inner Mongolia officials decided to not offer any price guarantees for new renewables installed in the province's east grid.
In a post on social media, David Fishman, principal of Hong Kong's Lantau Group energy consultancy, said that the plan was "like the provincial government saying, 'We don’t need any renewables this year'".
"We don't give a damn if no one builds a new wind farm or solar farm in this year... You'll need to find your customers yourself if you want to continue building. Don't ask me to help you derisk your project. (Reporting and editing by Susan Fenton; Colleen howe)
(source: Reuters)
