Where do local PV companies at the crossroads go?

Summary "winter" in the photovoltaic industry welcome good. On the 19th, the State Council executive meeting decided to promote the "five new policies" for photovoltaic development. Including accelerating industrial restructuring and technological progress; standardizing the ranks of industrial development...
The photovoltaic industry in the "cold winter" is welcoming. On the 19th, the State Council executive meeting decided to promote the "five new policies" for photovoltaic development. Including accelerating industrial restructuring and technological progress; standardizing industrial development order; actively exploring domestic PV application market; improving support policies; reducing government intervention and prohibiting local protection. The core meaning is to promote the terminal market to become bigger and solve the overcapacity through elimination and restructuring. The "5 New Deales" are highly targeted and the positive effects are worth looking forward to.

As we all know, after experiencing explosive growth in the past few years, this year's investment in new energy industries such as China's photovoltaics has cooled sharply, and the overall profitability of the industry has fallen sharply. The "double opposition" of the United States has made this industry even worse. At present, nearly 90% of China's polysilicon enterprises have stopped production, and more than half of small and medium-sized PV module companies have stopped production. It is estimated that China's PV product exports this year will be about 13 billion yuan, down 40% year-on-year. As a result, it is not only related to the over-investment of the Chinese PV industry, but also the inevitable dependence on foreign markets. The problem is that the surplus is already the case, but the merger and reorganization of enterprises is not smooth, which is of course related to the protection and intervention of some local governments. Therefore, the state emphasizes that it is better to use the market's “reverse force mechanism”, and it is the right medicine to start the rescue measures from both ends of limiting production capacity and increasing demand.

At present, 90% of China's photovoltaic products are used for export, and whether the domestic market can be successfully opened is directly related to the “return to life” of photovoltaics. The New Deal has clarified that the value-added tax on photovoltaic power generation is equal to that of wind power VAT, which will significantly increase the investment income of PV power plant projects. The implementation of the policy of electricity subsidy for distributed photovoltaic power generation, and the reasonable reduction of on-grid tariffs and subsidy standards according to cost changes will drive the enthusiasm of downstream investment, and also help to digest the capacity of upstream component suppliers.

It should be pointed out that although the policy orientation has been clarified, the key is still to be implemented, and real money needs to be cashed in time. At present, various policies supporting the photovoltaic industry have been introduced, but many policies, multiple management, multiple standards, and squabbles have also led to the unsatisfactory status of policy implementation. The top priority is the State Council’s “5 New Deal”. "To take the opportunity, classify and refine relevant policies, clarify responsibilities, and make subsidy funds, preferential funds, and grid-connected policies timely, so that investors can get the benefits and prospects clearly, so that the domestic PV market capacity The release has a foundation.

In order to limit production and expand demand, in addition to strengthening support and guiding terminal PV utilization, it is even more important to give full play to the role of market mechanism and to solve the problem of overcapacity through elimination and restructuring. After all, state subsidies cannot replace free competition in the market and the survival of the fittest. The problems that arise in the market will ultimately depend on the power of the market to solve them. Only when market competition can force enterprises to accelerate their transformation, and only form a bankruptcy elimination mechanism with backward production capacity and excess capacity, it is possible to upgrade and upgrade an industry. The premise of all this is to define a reasonable boundary between the hand of the government and the market. The market must be in place and the government should not be misplaced.

The predicament of overcapacity in China's photovoltaic industry is not only due to capital madness, but also to the policy level. Under China's current economic structure, the lure of high profits and the name of high technology have made the photovoltaic industry an important starting point for local governments to attract investment and increase investment scale. Due to the deep involvement of the government, the market is good, the market is easy to go, and when the market is poor, the survival of the fittest is difficult. As a result, the market mechanism lost its elasticity. In fact, it is not the only PV industry. This kind of government-led, investment-driven development of the mode of expansion, seeking for greater and faster in the development of China's industry has a commonality. Therefore, we have seen that China's overcapacity is widespread from the traditional steel and cement infrastructure industries to the emerging industries represented by the photovoltaic industry. If this kind of industrial thinking and development model does not change, not only will the photovoltaic industry's next development be difficult to learn from it, but the Chinese economy as a whole will not be able to eliminate overcapacity and promote industrial upgrading. For this reason, when the State Council executive meeting launched the "5 New Deal," it emphasized that "making full play of the role of the market mechanism, reducing government intervention, and prohibiting local protection" would be of great significance.

With the spring breeze of PV "New Deal", as long as we give full play to the role of the market mechanism, we will strengthen normative guidance, curb blind expansion, and resolutely expand the market, invest in applications, and shift the government's focus from seeking for the fast to the health of the photovoltaic industry. Develop and create a competitive market mechanism and an efficient and responsible service management mechanism to promote independent innovation, enhance competitiveness, accelerate the merger and reorganization of enterprises and promote industrial upgrading. After the pain of survival of the fittest, China's photovoltaic industry will surely usher in another spring.

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