China Solar Expansion

China Pushes Solar Companies to Increase Production

Written by Green Chip Stocks
Posted February 24, 2012 at 3:59PM

The Chinese government is increasing domestic solar production this year by setting high targets for 2015.

Despite the oversupply of solar cells that led to last year’s price drop, China is continuing to boost production in order to decrease solar imports.

The government is setting standards for each major company to reach 50,000 in polysilicon capacity by 2015, and for each major solar cell company to produce 5 gigawatts in the same period.

As far as solar farms go, the Middle Kingdom wants 15 GW worth by 2015.

Gao Hongling of the China Photovoltaic Industry Alliance said that it had a lot to do with relying on the domestic market:

“China imported half its polysilicon from overseas companies; this means there’s still room for domestic producers.  The key is whether they have capability to grab a share in the market and to lower costs.”

And information from the Energy Research Institute shows how important this capability will be.  It approximates that the oversupply could lead to a drop in the number of polysilicon manufacturers from 300 to just 15.

Western companies aren’t happy about this production boost either.  While some companies have already gone under due to Chinese competition, others are struggling to stay afloat.

The price of polysilicon fell 59% last year to $29.28 per kilogram, and the price of solar cells fell by about half.

And many Western companies are posting huge losses as Chinese companies continue to take the market.  This supply increase, which Western companies can’t afford to imitate, will put the nation at a further advantage.

Some of the Chinese leaders in the industry include Suntech Power Holdings Co (NYSE: STP) and GCL-Poly Energy Holdings Ltd (HKG: 3800).

Low spot prices may still hinder China’s ability to continue to produce, but the nation is on track to maintain control of the solar industry.