In early July, China’s Ministry of Industry and Information Technology (MIIT) submitted a revision of the “Photovoltaic Manufacturing Industry Normative Conditions” policy for public consultation as prices remain low across the entire solar value chain. 

The policy, originally issued in 2013 and subject to additional revisions in 2015, 2018, and 2021, outlines requirements for new construction and expansion projects across all photovoltaic (PV) manufacturing segments, including polysilicon, ingots, wafers, cells, modules, and inverters. Of note is an amendment to increase the minimum capital ratio for new construction and expansion projects in the PV sector to 30%. While this percentage remains unchanged for polysilicon manufacturing projects, the minimum capital ratio for other PV manufacturing projects will increase by 10%. The amendment reportedly aims to curb investment impulses and reduce corporate debt and leveraging ratios as the PV industry struggles with overcapacity.  

In addition, the photoelectric conversion efficiencies of multicrystalline silicon cells, p-type monocrystalline silicon cells, and n-type monocrystalline silicon cells must reach at least 21.4%, 23.2%, and 25.0%, respectively, and those of multicrystalline silicon modules, p-type monocrystalline silicon modules, and n-type monocrystalline silicon modules must reach at least 19.4%, 21.2%, and 22.3%, respectively. New requirements have also been included for the degradation rates of PV modules and the electricity cost levels for PV manufacturing projects. The average comprehensive electricity consumption for cell projects has been limited to less than 50,000kWh/MW, while that for module projects has been limited to less than 70,000kWh/MW.  

Unsurprisingly, energy consumption standards have been adjusted downward across multiple production stages. Previously, existing polysilicon projects were required to operate at reduced specific energy consumption of less than 60kWh/kg and reduced comprehensive energy consumption of less than 80kWh/kg; however, these figures have now been revised to 46kWh/kg and 60kWh/kg, respectively, for existing polysilicon projects and 44kWh/kg and 57kWh/kg, respectively, for new construction and expansion projects. Additionally, the water recycling rate for polysilicon projects has been revised from a minimum of 95% to a minimum of 98%, and water consumption for wafer projects has been revised from 1,300t per million pieces to 900t per million pieces.  

Throughout the first half of the year, prices have dropped persistently across the entire solar value chain, and the country’s polysilicon sector is now estimated to be operating at a loss. The industry has been struggling with rapid capacity expansion and fierce competition, and recent trade conflicts pose a potential threat to China’s export market. The abovementioned revisions will support the industry’s long-term sustainability by promoting high-quality development and technological innovation, reigning in disorderly capacity expansions, and eliminating outdated capacity. However, while the amendments have the potential to accelerate industry consolidation, they will favour the most advanced and efficient players.