Analysis of Causes of Loss in PV Industry

Photovoltaic production capacity is seriously oversupply. Last year, the global installed capacity of photovoltaic was about 27GW, and the production capacity was at least 70GW, of which China had more than 50GW of production capacity (data from the Development and Reform Commission Energy Research Institute).

Market reasons

So how do these excess capacity come from? To a large extent, it was stimulated by the EU's international support policy for the photovoltaic industry. Since 2004, Germany, Spain, Italy and other countries have successively introduced new energy subsidy policies, which have enabled domestic PV companies to see a huge market and continue to expand. However, the raw materials and markets of the photovoltaic industry are “outside” and are greatly affected by the international market. Photovoltaic companies in China rely heavily on European orders. After the European debt crisis, not only did the demand decrease, but governments also introduced some restrictive measures and reduced subsidies. As a result, the financial figures of PV companies are ugly. The anti-subsidy and anti-dumping investigations initiated by the EU will also have a severe impact on the export of enterprises.

Technical reasons

New energy sources give investors a lot of room for imagination. However, some key technical problems cannot be resolved and it will be difficult for them to make major developments. They will only become “vase projects”. Compared to traditional energy sources, the solar energy density is too low to become the main force for maintaining the operation of the grid (ie, to become a “baske power station”). Considering the pollution in the production process, there is a big controversy at the decision-making level as to whether or not there is widespread promotion.

The domestic photovoltaic crisis is essentially a business that caters to the needs of the government rather than the market. Once the government's finances decline, these companies whose profits are mainly dependent on subsidies are immediately discovered to be “naked swimming”.