Despite being the global leader in both photovoltaic manufacturing and power plant installations, China's photovoltaic industry still faces uncertainty regarding its long-term sustainability. While the U.S. market's recent 'double anti-dumping' decision against Chinese PV products has been resolved, India is quickly emerging as a formidable competitor. As a trade deficit country, India poses a significant challenge, and from a broader geopolitical standpoint, China lacks substantial leverage in negotiations.
In terms of application, while China's domestic installed capacity is growing rapidly, the actual power generation efficiency lags behind. For instance, in 2016, U.S. photovoltaic power plants generated around 58 billion kWh with an installed capacity of approximately 28 GW, whereas China’s cumulative installed capacity stood at 77 GW but produced only 66.2 billion kWh. This discrepancy highlights the disparity in equipment utilization rates, which are significantly higher in the U.S.
The relatively low component prices provide China with a competitive edge, yet challenges such as high financing costs, low electricity generation, and delayed subsidy payments remain pressing issues. The U.S. and India have both shown renewed interest in protecting their domestic industries. The U.S. imposed a countervailing duty rate of 17.14%-18.3% on Chinese PV products, while whispers of similar actions from India persist. India, now China's largest export market for photovoltaic modules, has seen exports grow by 84% in just the first four months of 2017.
India's ambitious solar energy targets aim for a 100 GW installed capacity by 2022, creating a massive opportunity worth over $40 billion for PV module companies. However, the lower pricing of Chinese products is often supported by government subsidies and favorable financing conditions, which local manufacturers struggle to match.
Trade dynamics reveal a concerning imbalance: China-India bilateral trade totaled $71.5 billion, with India importing $61.3 billion and exporting only $10.2 billion, resulting in a staggering trade deficit of $51.1 billion. This economic disparity adds pressure to the ongoing trade tensions.
In terms of power generation efficiency, the U.S. boasts impressive figures, with average utilization hours reaching 2,200 annually. In contrast, China’s best-performing PV power stations in the west barely exceed 1,500 hours, while eastern regions average closer to 1,200 hours. The U.S. also demonstrates a diversified rooftop installation model, with residential rooftops comprising half of small-scale distributed systems.
History serves as a cautionary tale. The 2012 'double anti' measures in Europe and the U.S. dealt a severe blow to China's PV industry, causing widespread losses and corporate collapses. The subsequent recovery was fueled by domestic demand and emerging markets. However, the rapid expansion of the domestic market has created imbalances, exacerbating issues like delayed subsidies and oversupply.
Given the current global landscape, with emerging markets offering promise but limited capacity to absorb excess supply, the PV industry remains vulnerable. A repeat of the 2012 crisis could occur if the U.S. and India simultaneously impose restrictions while domestic demand falters. Thus, the industry must address structural inefficiencies and adapt to evolving market dynamics to ensure long-term growth.
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