Beijing Moves to Prop up Solar Panelmakers Hit Hard by Price War

Officials in Beijing have vowed to curb disorderly price-cutting in the solar sector in a bid to prevent further financial losses caused by vicious competition between companies producing solar panels.

The industry ministry pledged on Thursday to help prop up the photovoltaic industry, as many of the country’s top solar manufacturers have suffered losses because of huge overcapacity and a prolonged price war.

Most of the world’s solar farms are powered by cells and modules made in China, but the country’s top producers are facing billions of dollars in losses as breakneck competition has pushed prices below cost level.

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China solar module prices as of the end of May were down nearly 30% from a year earlier, and uncertainty about demand for cells and modules has complicated matters as Beijing is scaling back subsidies for renewable energy projects after the boom in solar and wind power installations.

New solar plants commissioned after June 1 will have to sell their power into the market instead of receiving a guaranteed rate benchmarked to the price of coal.

In a meeting on Thursday with solar companies and industry association representatives, Li Lecheng, head of China’s industry ministry, said authorities should guide companies to improve quality and “promote the orderly exit of outdated production capacity,” according to a statement released by the ministry.

The ministry will step up guidance and governance for the industry, Li said. He also urged industry associations to take responsibility for improving industry self-discipline.

Earlier this week, China’s senior leaders said they would tighten regulations to deal with aggressive price-cutting by Chinese companies.

Separately, China’s top solar panel manufacturer LONGi Green Energy Technology told state media Securities Times on Thursday that it would accelerate the commercialisation of high-efficiency products to overcome the low-price dilemma.

It added that market share for “high-quality capacity” in the sector would grow more quickly after “outdated” capacity is phased out.