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China’s oversupply of solar panels cripples its pact with EU

With China’s solar power production witnessing a sharp increase, and the domestic demandWith China’s solar power production witnessing a sharp increase, and the domestic demand

By BizLED Bureau

 Sep 19, 2016: With China’s solar power production witnessing a sharp increase, and the domestic demand declining suddenly, solar panel prices fell to an all time low. This has undermined the China-EU agreement to restrict damage to European manufacturers.

Increase in production

In the first half of 2016, China produced 27 GW of solar photovoltaic (PV) modules, marking a 37.8% increase. In the same period of time, China set up 20 GW of new solar power capacity,setting a record of thrice as much as solar capacity as compared to 2015.

Declining demand

However, over the recent times, the demand for solar power in the domestic market declined sharply.The total new capacity by the end of 2016 will be 30 GW, implying only 10 GW in the second half, according to China Photovoltaic Industry Association (CPIA).

READ ALSO: Japan’s booming solar industry begins to decline

The price of certain solar panels dropped to below 0.40 euros per watt in comparison to the previous average European cost of around 0.50 euros. The solar prices fell by some 20% in August to below the cost of production. A second wave of bankruptcies might take place, according to EU ProSun, an association of EU solar producers.

China’s oversupply of solar panels cripples its pact with EU

In 2013, China and European Union were on the brink of a trade war over EU accusations of dumping of solar panels in some European countries. However, the trade war was prevented by agreeing a lesser amount of Chinese panels could be imported free of tariffs, provided they did not price them below 0.56 euros.

Chinese firms opted out of pact

Regardless of signing an EU agreement, a number of Chinese companies withdrew from the undertaking, and are ready to trade solar panels at cheaper prices, even when charged with duties of between 27.3 and 64.9%.Some big companies like JinkoSolar Holding opted out of the undertaking saying the minimum price no longer represented the market reality.

READ ALSO: California sets new solar record, produces 8,030 MW of electricity

Yingli Green reported that it faced lower selling prices in the second half of 2016 due to rising competition and higher anti-dumping duties in the US.

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