New PV stimulus package to offset EU barriers

The government has introduced a new stimulus package to boost the development of the domestic photovoltaic (PV) industry and offset the negative impact from punitive EU duties imposed in June.

Just one year after announcing an increase in its cumulative PV capacity target to 21 million kilowatts (kW) for 2015, the government said Monday that it is raising the target to 35 million kW.

To boost PV use in the domestic market, the government will build 100 distributed PV demonstration zones and 1,000 distributed PV demonstration towns and villages, according to the statement released by the State Council on Monday.

The government is also encouraging the expansion of small-scale distributed PV generation, such as residential PV installations, throughout the country.

The new goal will create market demand totaling 100 billion yuan ($16.2 billion), industry insiders have calculated.

The government's attempts to reinvigorate the PV industry have seen positive effects since last year.

Jiangxi Solar PV Corp, a manufacturer of crystalline solar cells in East China's Jiangxi province, resumed production in April after an 8-month production halt.

"We have enjoyed double-digit growth since January and orders have been booked up for the whole year," said Zhang Zhongliang, executive general manager of Jiangxi Risun Solar Co Ltd, a PV cell and module manufacturer.

Overcapacity, over-dependence on overseas markets and inadequate development in the domestic market have troubled the industry since the beginning of last year, as overseas demand for Chinese PV products shrank significantly during the global economic downturn.

The punitive duties imposed by the EU since June dealt another blow to the struggling PV industry, as it relies heavily on the European market.

On June 6, the EU imposed an interim anti-dumping duty of 11.8 percent on imports of all Chinese solar panel products, including panels, cells and wafers. The duties will be raised to an average of 47.6 percent two months after they were first imposed if both sides fail to negotiate a better deal.

"The negotiations are ongoing," said Zhou Dalin, deputy director-general of the bureau of fair trade for imports and exports under the Ministry of Commerce.

"We have the basis of reaching an agreement. A scheme that both sides can accept will be mutually beneficial," Zhou said.

"China needs the EU market and the EU needs cheap PV products from China," he said.

Emerging markets

Tapping emerging markets is being seen as an effective way to offset losses in the EU market, industry insiders said.

"There is huge demand for PV products around the world. We don't necessarily have to focus on the European and US markets," said Qian Xiping, director of the new energy department of the information and technology commission of the city of Xinyu in Jiangxi.

Overseas sales at Jiangxi Risun Solar have dropped to a third of the company's total production due to strategic restructuring, according to Zhang.

The company began shifting its business focus to Asia after the EU began its anti-dumping investigation against Chinese PV products last year. About 80 percent of the company's sales are in India.

Chinese PV companies are also building factories in emerging markets in order to facilitate market access.

China Sunergy Co Ltd, a specialized solar cell and module manufacturer in east China's Jiangsu province, has already started shipping solar modules from its plant in Istanbul to customers elsewhere. The Turkey plant is the company's second-largest plant.

Jiangxi Risun Solar is building a factory in Latin America and is considering building one in Algeria.

Financing needed

The government said Monday that it will subsidize on-grid solar electricity for 20 years, as well as provide tax breaks to PV companies that are participating in mergers, acquisitions or reorganization.

Banks will be encouraged to finance PV companies with independent intellectual property rights, advanced technology and high potential, according to the statement.

Industry insiders have expressed hope that supportive taxation, subsidy and financing measures will be implemented as soon as possible.

"A lack of subsidies, as well as poor financing and sales for on-grid solar electricity, are restricting the development of the domestic PV market," said Tong Xingxue, president and chief executive officer of LDK Solar, a leading Chinese PV company.