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PV Expansion In China On Record Course In 2022 - High Global Demand Drives Up Prices

Beijing, China - The expansion of photovoltaics in China will continue at full speed in 2022. However, the high price level and the high international demand could slow down the development.

According to the currently available installation figures, China will remain the world's largest photovoltaic market in 2022. However, interest in the expansion of photovoltaics continues to grow strongly internationally, not at least due to the Ukraine war.

New installations of 100 GW possible in China in 2022 In May 2022 alone, PV systems with a total capacity of 6.83 gigawatts (GW) were newly installed in China. Compared to the same month last year, this is an increase of 86 percent. In total, PV systems with a total capacity of 23.71 GW were installed in China from January to May 2022, which corresponds to an increase of 140 percent compared to the same period last year. This is according to the latest figures from the Chinese consulting firm Asia Europe Clean Energy Solar Advisory (AECEA).

According to China's Renewable Energy Engineering Institute (CREEI), which has just published the "China Renewable Energy Development Report 2021", up to 100 GW of new PV capacity is expected to be installed in 2022, slightly below the 108 GW targeted by the National Energy Administration.

Demand from Europe for Chinese PV technology is rising

However, demand is not only high in China. According to current export statistics, worldwide module deliveries amounted to 63 GW by the end of May, which corresponds to an increase of 102 percent compared to the previous year. In the same period, Europe alone imported up to 33 GW (+140 percent year-on-year). Given Europe's dependence on supplies from China, AECEA points out that the European Commission would be well advised to accelerate its "Important Project of Common European Interest (IPCEI)" in solar, announced in May 2022, with a view to reducing dependence on China.

Strong demand leads to price increases

Parallel to the high global demand, the pressure on commodity prices is also growing in view of a scarce supply of raw materials. The price of polysilicon, for example, rose by 24 per cent from January to the beginning of July to an eleven-year high of RMB 291/kg (approx. USD 43). Due to a fire at a production facility, upcoming maintenance at five production sites and expected lower additional supply, estimated production in July is expected to decrease by about 5 per cent from the previous month. Therefore, average polysilicon prices may soon cross the RMB 300/kg (USD 45) threshold. AECEA believes that the current tight supply situation is likely to continue until the end of Q3/2022.

In the solar products sector, prices for wafers, cells and modules have increased by an average of 18 per cent, 12 per cent and 8 per cent respectively since January. Due to the continuous price increases as well as other factors such as shrinking yields, logistical constraints due to COVID-19 or high shipping costs, about a dozen module manufacturers are currently considering suspending production for a few days soon.

Chinese PV market on record course in 2022 - costs and supply situation slow down

According to data from the Chinese Renewable Energy Engineering Institute (CREEI), China could install up to 100 GW of PV systems for the first time in 2022. This would be a 28-fold increase compared to 2012, when 3.5 GW of new capacity was installed. However, the price increase, the high demand and the tight supply situation are currently having a braking effect. In particular, the expected additional supply of polysilicon does not seem to be enough to meet the strong demand at home and abroad, according to AECEA. Developers are reportedly stretching orders for module deliveries into 2023 or setting a price cap in their tender documents.

Source: IWR Online, 19 Jul 2022