AECEA: »Solar industry faces massive overcapacity«

Of some 248 gigawatts (GW) of global wafer production capacity, China accounted for 240 GW, producing nearly 162 GW of wafers in 2020 (168 GW globally). The top 5 wafer producers would account for nearly 82 percent, says consultancy Asia Europe Clean Energy (Solar) Advisory Co. Ltd. (AECEA). According to the data, global cell production capacity was about 250 GW last year, of which 202 GW was in China, up 22 percent from the previous year. Global module production capacity reached about 320 GW in 2020 (up 47 percent year-on-year). China's module manufacturers expanded capacity by more than 90 GW to a total of 245 GW, the analysts said - more than double last year's global installations of 120 GW.
The consultancy estimates that wafer production will expand by another 110 to 130 GW in 2021, and another 170 to 190 GW could be added next year, bringing production capacity up to 560 GW. This compares with cell production capacity of 450 GW. China's module production capacity could reach around 390 GW by the end of 2021, according to AECEA - an increase of 60 percent year-on-year. However, the capacity is in »stark contrast to projected global demand of 160 to 240 GW this year and next year,« explains AECEA managing director Frank Haugwitz.
By 2020, China's polysilicon production capacity was at about 420,000 metric tons. Preliminary estimates indicated that annual output could reach 1.6 to 1.8 million tons »in the foreseeable future.« Overall, Haugwitz said, demand for solar products will not come close to matching this massive production capacity, so »another industry-cycle featuring massive over-capacities is coming our way.«
The National Energy Administration (NEA) announced a pilot program in late June to explicitly promote the deployment of distributed PV, he said. Local governments are instructed to equip 20 to 50 percent of government, public and commercial buildings with rooftop systems over the course of implementation. China's NDRC-affiliated Energy Research Institute estimates the nationwide potential for rooftop systems at up to 800 GW; of which Shanghai, Zhejiang and Jiangsu alone have a cumulative total of about 200 GW. »Industry representatives suggest that such a pilot program could potentially trigger demand of up to 250 GW.«
According to AECEA, the pilot program is intended to both create demand and, by giving preference to public buildings, ensure that such systems could remain on the roof for up to 20 years, as statistically private property changes hands every eight to ten years, leading «great uncertainty for project owners.« In addition, this mitigates, among other things, the increasing scarcity of land for ground-mounted systems because rents are steadily rising. Due to the subsidies granted this year, demand for residential PV could reach 16 GW, up from 10.12 GW in 2020. »Overall, in the mid-term distributed solar PV is expected to make up an ever larger share of the overall market.«
According to recent announcements by provincial governments, the deadline for grid connection of already issued regulatory project approvals will not end in December 2021, as expected, but one year later. As a result, China's solar power plant additions could be stagnant at best in 2021, while AECEA believes demand will easily surpass the 100-gigawatt mark in 2022.

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