context: A high curtailment rate and reliance on imports for advanced technology components have long afflicted China's solar industry. Challenges in further bringing down the curtailment rate and the possible re-emergence of overcapacity indicates that more progress needs to be made to tackle some deeply entrenched obstacles, including inadequate power storage capacity.
Government support has led to rapid development in the solar industry in recent years. Some northern provinces where solar resources are the most abundant have exceeded 2020 targets for solar installations. The solar power curtailment rate also dropped 4.3 percentage points y-o-y to 6 percent in 2017, according to Economic Information Daily.
Yet challenges remain if the industry is to meet the target of a solar curtailment rate below 5 percent by 2020, comments an industry insider.
According to Economic Information Daily, this is because
- central government support continues pushing up solar power production, but policies to stimulate consumption have not proven effective
- power generators lack incentives to improve coal-fired power plants' flexibility to allow greater penetration of intermittent renewable energy. For instance, power generators are not sufficiently compensated for providing peak shaving services
- grid companies have failed to invest sufficiently in power storage and cross-provincial transmission capacity
China's solar industry is still largely reliant on imports for certain advanced solar components due to factors such as a lack of talent and innovation capacity, say industry insiders. Companies often favor low- to mid-tier products, as importing advanced components drives up costs. Meanwhile, production volumes of polysilicon and silicon wafers reached 242,000 tonnes and 87 GW in 2017 respectively, up 24.7 percent and 34.3 percent y-o-y. The rapid surge in production capacity, however, raises concerns over a new round of overcapacity.
To prevent potential oversupply of cheap and low-quality products, Ministry of Industry and Information Technology (MIIT) on 1 March released 'Solar industry standards and regulations (2018)', strictly prohibiting 'blind' expansion of new capacity.