As China’s solar industry transitions into an era of new technology and practices, it will take time for the consequent excess capacity to be absorbed by the market, said the country’s top energy official at a press conference on Thursday.“The upstream of China’s photovoltaic industry is dominated by private firms, and competition is sufficient among them. As the future of the market looks bright, they have chosen to expand production,” said Zhang Jianhua, director of the National Energy Administration (NEA).“The coexistence of old and new production types during the technological conversion period has pushed up the total capacity of the industry,” he said.Amid intensifying criticism from Western politicians over China’s overcapacity in new energy – they argue the East Asian giant’s cheap exports have strangled their own manufacturing – Chinese authorities have made a concerted effort to counter that narrative.NEA officials vowed at the conference to provide guidelines for rational planning in the sector, and avoid the redundant construction of low-end production.The balance between supply and demand is relative, and imbalance is often the normZhang JianhuaZhang said any issues with production capacity should be viewed with the principles of a market economy in mind, and in the context of economic globalisation.“The balance between supply and demand is relative, and imbalance is often the norm,” he said.These asymmetries can happen in any economy that implements a market-oriented system, Zhang said, adding a moderate oversupply will contribute to the technological progress of the industry and reduce production costs.“Solving these problems mainly relies on the market to adjust according to the law of value,” he said.China has more than 100 listed companies involved in the photovoltaic industry, according to NEA figures. Last year, China’s newly installed capacity of renewable energy accounted for more than half of the world’s total.“There is indeed intense competition in China’s photovoltaic industry,” said Li Chuangjun, director of the NEA’s department of new energy and renewable energy sources.“We will work with relevant departments to organise industry associations to release information on industry scale, capacity utilisation and market demand in a timely manner … avoid repeated construction of low-end production capacity, and strive to create a good market environment,” Li said during the press conference.As trade barriers targeting China’s green products build up, Li said, the country will consolidate domestic demand.He referred to a stable domestic market as the “ballast stone” for the sustained development of China’s photovoltaic industry.As China accelerates the pace of its green energy adoption, the integration of wind and solar power – both of which are volatile enough to put enormous pressure on the overall power grid – has created a bottleneck.Last month, Beijing unveiled a new plan that allows for wind and solar curtailments of up to 10 per cent in “areas with better resource conditions”, compared with the previous rate of 5 per cent.Analysts said the move signals China is not going to allow grid integration issues in the near term to slow its march towards decarbonisation.
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