Chinese solar PV capacity additions likely to fall short of previous projections

Due to the COVID-19 outbreak and its impact, it is expected that China’s solar PV capacity additions for 2020 would fall short by 6.6GW compared to the earlier estimates. Before the onset of the pandemic, 40GW capacity addition was estimated for 2020, up from 30.1GW in 2019. However, the current projections show that installations are likely to reach about 33.4GW over the same timeframe, says GlobalData.

The Chinese solar market is one of the largest in the world and the country remains an integral part of the global supply chain. Due to the COVID-19 outbreak, manufacturers are under tremendous pressure amid shutdowns and quarantine restrictions. These have slowed down the production rates of components and is causing a domino effect across the global solar market. The prominent industrial areas of Jiangsu, Guangdong, Anhui, and Zhejiang have been greatly affected due to the outbreak and forced to halt operations for a short tenure, as per government directives.

Domestic manufacturers supported by the Chinese government’s aggressive industrial expansion plans, had built large production facilities to cater to the domestic and global demand. Before the outbreak, policy changes pushed for solar grid-parity where the government removed limits on non-centrally-subsidized PV projects across 12 Chinese provinces. Now, with the COVID-19 pandemic, the market is expected to take a major slip downwards.

According to GlobalData, the disruptions in the solar manufacturing segment is expected to cause a shortage of modules and with the subsidy quota deadline fast approaching, by the end of March 2020, several developers are expected to face delays in project completion and could abandon projects altogether. Although regulators are likely to grant extensions, the annual installed capacity is estimated to dip by 8.4% from 40GW, as per prior estimates, to 33.4GW in 2020.

Within China, the capacity additions are likely to be stemmed and many projects are expected to face uncertain delays, due to the unprecedented circumstances. The global demand for solar equipment is expected to decline, because of the economic slowdown and the lack of capital to undertake new project development. However , as soon as the Chinese economy shows nascent and early signs of recovery from the effects of the pandemic, it can be expected that the government would strive to get the industry back in shape.

Source: GlobalData