Beijing list turns screw on PV firms

Chinese PV manufacturers deemed not worthy of further policy support in a list published this week by Beijing have not been handed an immediate death sentence – but the noose is quickly tightening, according to Trina Solar.

China’s Ministry of Industry and Information Technology this week published a list of 109 Chinese solar companies that remain eligible for domestic support measures, including favourable treatment by banks and the ability to engage in public tenders for the country's growing portfolio of mega-PV projects.

The roster – slimmed down from a preliminary 139-company list published in November – was drawn from about 500 applicants, meaning roughly four-fifths did not make the cut.

“We can’t say [the companies not on the list] are sentenced to death,” says Trina spokeswoman Yvonne Young. “It’s still too early to make that conclusion.”

The list – which is based largely on technological sophistication and production capacities – will be updated on a semi-annual basis, meaning that some companies may manage to crawl back on.

But repeatedly failing to make the cut means that “you will gradually be thrown out of this space … either from financing or policy support”, Young tells Recharge.

In addition to securing bank financing, companies not on the list “might have a problem with tax refunds from the government”, Young claims.

Most of China’s biggest PV names on a global basis are included on the list – including profit-making Trina, the country’s second-largest producer of modules.

Notable exceptions are debt-saddled LDK Solar, bankrupt Suntech, and Suntech’s would-be rescuer Shunfeng.

Shunfeng, which reportedly did not apply for inclusion on the list, did not immediately respond to a request for further detail.

Having successfully transformed its PV sector into the world’s dominant manufacturer from cells to modules, China now seeks to streamline the industry by weeding out insignificant companies or merging them with larger players.

Beijing also aims to build a competitive homegrown polysilicon sector, while also becoming the world’s largest generator of solar energy.

Experts are predicting that this weeding-out process will ultimately leave no more than a dozen or so players in each segment of the value chain.

To make the final list, polysilicon companies needed to produce more than 3,000 tonnes per year – leaving roughly 30 players – while ingot manufacturers needed a minimum annual production capacity of 1,000 tonnes.

Crystalline PV module makers needed to produce at least 200MW per year – relatively small by industry standards – while thin-film PV manufacturers needed a proven production capacity of at least 50MW.

Young says the list's publication may lead to further consolidation in 2014, "and hopefully the industry will be trending towards a more balanced supply-and-demand situation in China".

"We're looking forward to seeing how the policies further support the bigger players," she adds.