New policies to PV industry focus on the market mechanism

China enacted policies to promote the development of the photovoltaic (PV) industry, which recently, calls for reigning in and organizing production.

Five policies were confirmed in the meeting, deciding to focus on market mechanisms. The first policy is to use market mechanisms to accelerate the improvement of industry structure and technology.

The second policy is to regulate the order of industry development, to coordinate the PV industry and power network design.

The third policy is to speed the development of the domestic PV market.

The fourth policy is a provision to support industry development. For example, to provide subsidies for PV power consumption.

The fifth policy is to strengthen the influence of market mechanisms and forbidding protectionism in local governments.

Han Qiming, an analyst with the PV industry, says that in the detailed policies, the state initiated differentiation in price-setting for different places, and the policy, may result in higher grid prices since the demand, thermal electricity prices and fiscal revenues are all higher than those in the West. While the West has more abundant thermal power and fewer power demands, the demand for PV electricity may be much lower.

According to the state's suggestion, the polisilicon, cell and module projects will be restricted. Equipment firms may focus more on the downstream section, for example, the construction of power stations. This may be good news for some major companies, for example YingliGreen Energy Co., JinkoSolar Holding Co., JA Solar Co., and HareonSolar Co., as they have entered into this phase.

The industry is paying close attention to the subsidies for distributed solar system and for renewable energy. And the profits for downstream power station construction are also promising, said Han. He added that installed capacity in Twelfth Five-Year plan may reach 30 GW, much higher than the previous planned goal 21 GW.