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China's new energy will force the domestic market to break down
In late 2012, China's photovoltaic (PV) industry faced a significant challenge as it was subjected to "double reverse" investigations by both the United States and the European Union. Under the pressure of trade "big sticks," the global market for Chinese PV module manufacturers became increasingly restricted, putting the entire new energy sector in a difficult position.
"This is the only way for China’s new energy industry to achieve standardized development and industrial transformation," said Wu Shengxue, director of the Energy Bureau in Jiuquan City, Gansu Province.
Over the past decade, China's new energy industry—especially wind power and solar photovoltaics—has experienced rapid growth. According to Liu Zhenya, chairman of the China Electricity Council, at the 2012 Power Enterprise Summit, China's wind power installed capacity had grown 118 times, with an average annual growth rate exceeding 60%. Solar PV installed capacity increased 67 times, with an average annual growth rate over 50%, making China the world leader in wind power capacity.
However, despite this progress, challenges remain. After two years of adjustment, issues within the wind power industry have not been fully resolved. In the first half of the year, the country added 5.41 million kilowatts of new wind turbines, nearly matching the same period last year. As of June 30, total wind power capacity reached 61.9 million kilowatts. But due to power curtailment in the "Three North" regions, grid-connected capacity dropped by about 16% year-on-year to 7.88 million kilowatts.
"Power delivery remains a major obstacle to the development of the wind power industry," Wu Shengxue noted.
By early November, Europe and the U.S. launched "double anti-dumping" investigations against Chinese PV companies. According to the China Metal Industry Association Silicon Industry Branch, 90% of China's PV industry operates in foreign markets, with 70% sold to Europe and 30% to the U.S. and other regions. These trade restrictions are expected to cause significant losses for the domestic PV industry.
Industry experts point to two main reasons for the current crisis: internal overcapacity caused by excessive investment during the 11th Five-Year Plan period, and external dependence on foreign markets, which makes the industry vulnerable to trade protectionism.
To address these challenges, recent government policies have focused on expanding domestic demand. "Expanding the domestic market is the most viable strategy for saving PV companies," Wu Shengxue emphasized.
Shenyin Wanguo Securities analysts believe that the focus of the PV industry will shift from manufacturing to application, with the market moving from overseas to China. The key opportunity lies in the domestic distributed solar market.
The National Energy Administration’s "Twelfth Five-Year Plan for Solar Power Development" aims to reach more than 21 million kilowatts of solar power capacity by 2015, a sixfold increase from previous levels.
Zhou Jianhong, general manager of Nikkei Solar Power Co., Ltd., argued that the current "overcapacity" is relative. The real issue is the lagging domestic market.
Some believe that the current crisis is pushing China to transition from a PV manufacturing powerhouse to a full-scale manufacturer and application leader, moving away from its previous reliance on foreign markets.
Since the EU cut subsidies for solar power plants in early 2011, the Chinese PV industry has pushed for domestic market expansion. However, due to tight capital flows and difficulties in grid connection, progress has been slow. Recently, the "new solar deal" has broken through this bottleneck, attracting capital from outside the industry and sparking a wave of PV investment.
Industry leaders believe that the "double opposition" from Europe and the U.S. has also forced Chinese PV companies to change their development model. Wu Shengxue sees this as an opportunity for industry consolidation and upgrading.
Meng Xianyu, vice chairman of the China Renewable Energy Society, pointed out that the PV industry still suffers from overbuilding, low-level duplication, and homogenized competition. During periods of low sentiment, domestic manufacturers may be forced to adjust their product mix and move toward high-end sectors.
On October 26, State Grid issued "Opinions on Doing a Good Job in Grid-connected Services for Distributed Photovoltaic Power Generation (Temporary)," offering full-process services for projects under 6 MW per grid connection point, including testing, debugging, and full purchase of surplus power.
However, the problem of power curtailment in wind energy—seen in areas like Gansu, Inner Mongolia, Heilongjiang, and Jilin—raises concerns about similar issues affecting the PV industry. In the long term, resolving grid connection and power consumption challenges is essential for the sustainable development of new energy.