Overcapacity, shrinking external markets dampen profit outlook for Chinese solar companies. They have often been hailed as some of Chinas biggest successes in recent times and champions for their efforts in reducing carbon emissions, creating jobs, lowering technology costs and entry barriers.
But the sun no longer seems to be shining brightly for the more than 500 Chinese solar companies as trade wars and uncertain overseas prospects are threatening to strain growth prospects and profits.Lower demand from Europe, the biggest export market for Chinese companies, and the plans by some European nations like Germany to do away with solar subsidies along with the rising trade complaints filed by US solar companies have triggered much of the current problems for the industry.
Things have also been further compounded as the ongoing debt crisis in Europe has forced many European nations like Spain to halt subsidies for renewable energy projects.Though most of the companies are banking on the largely untapped domestic market to tide over the crisis, that may not be the case, say experts, pointing to a possible industry shakeout and exit of several small- and mid-sized companies.
Even then the problems may be far from over as the solar industry needs to find markets that can account for its huge output capacity. The production capacity of solar panels in China stands at about 23 gW and currently accounts for more than half of the global output.”Though domestic deployment of solar power in China has started to take off, it alone cannot account for the huge manufacturing capability,” says Zhu Junsheng, president of the China Renewable Energy Industries Association.