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19 December 2019

Solar shipments ready to “accelerate” on three key bits of news

There are a handful of announcements made this week that may shift solar into overdrive in 2020, or not.

The first is that US democrats are trying to tie the recently introduced Green Act to a government appropriations bill that will see tax credits for solar extended into next year. This bill will either make it or not prior to Christmas.

The second is that come the New Year every home in California is set to be built with a solar panel or two, from the present rate of just 20%. This is a year old mandate of updated building codes and even multifamily units below three stories must also adhere to it. If it catches on the entire US may have followed suit, or at least 20 States, by 2021.

But ahead of both of these coming into action, the head of China’s solar industry association has stood up in front of 800 representatives from the solar community in China, to re-assure them that the National Energy Administration plans to publish formal rules for 2020, which will see Chinese installations back up above 40 GW again.

No-one is quite sure where the domestic Chinese home solar market will end up for 2019, with a span of between 20 GW to 30 GW, being the limits on estimates. This is after 44 GW in 2018, and significantly more a year earlier.

Wang Bohua, secretary-general of the China Photovoltaic Industry Association (CPIA) talked about a “policy vacuum” existing in 2019, which was essentially China’s moment to try to push solar parity, and largely eliminate solar subsidies. He says a new, clear policy will be announced “any day now,” which will “clarify,” the situation for next year.

Others have reported that this clarification will means the end of large scale solar subsidies in China, and even some retroactive re-assessment of subsidy payments for existing projects in 2020. But Bohua insisted it would mean 40 GW once again in 2020.

The shock hit this year with 5 GW in Q1, and little more in Q2, before any subsidies were announced at all. Reports have solar under 20 GW of Chinese installations right up to the end of October. Panel manufacturers simply pushed more panels overseas, in particular into Vietnam and Spain.

The CPIA has said that even with rapid Q4 installations the total figures for China could not be over 30 GW, and many think the outcome will be far less.

In total during 2019 Chinese solar manufacturers exported 58 GW of capacity in the first three quarters of 2019, with earnings from international sales rising by 25%. Europe accounted for 34.9% of this export, while the tariff-ridden US only took 0.2% of these sales.

If the US also relented on its tariffs (or these was a resolution of the trade war) during the early part of this year, just as the tax credits get extended, and Beijing begins order more solar, then capacity may have to accelerate.

Solar manufacturers in China are ramping up their production capacity at full speed – output is set to double between 2018 and 2021. With a 30% trade tariff in the US soon to be extended to include bifacial modules, solar manufacturers will start to follow their unwritten obligation to fulfill the rising demand in their own country.

All of this may come to nought. Wang may be talking out of optimism, the democrats may find an impeached President unworried about sending the government staff home without an appropriations bill, and California may ship just a few more 100 MW, on the back of building reg changes. But we would not bet on all three being damp squibs.

China’s new national solar policy is expected to include the removal of province quotas for grid parity projects and auctions to subsidize some capacity finally getting off the ground.

Bohua went on to say that from January to October 2019, the output of polysilicon, silicon wafers and cells has exceeded the full-year output of 2018; and that export volume in the first half of 2019 beat the previous full year.