Better oversight of solar energy sector in offing to fight monopolies, gouging

More efforts are expected to strengthen regulation of the fast-growing photovoltaic industry to curb problems such as overexpansion, industrial convergence and vicious competition so as to foster healthier development, according to a government notice released on Wednesday.

The notice, released by the Ministry of Industry and Information Technology, the State Administration for Market Regulation and the National Energy Administration, called on stepped-up efforts to guide the expansion pace of the PV supply chain's upstream and downstream companies, supervise capital to reasonably participate in the burgeoning market, avoid problems such as monopolies, and crack down on illegal activities such as price gouging.

China's rapidly developing PV industry is increasingly attracting investment and market participation, backed by the country's goal to peak carbon emissions by 2030 and reach carbon neutrality by 2060.

In the first seven months, investment in solar power generation projects surged 304 percent year-on-year to 77.3 billion yuan ($11.26 billion), said the NEA.

The notice said the solar power industry is now facing problems such as imbalances between supply and demand, price volatility, resource stockpiling, forcible investment and pressure to purchase products from local companies in various regions.

"Currently, many mid-stream and downstream suppliers are complaining about polysilicon whose prices continue to rise, because upstream suppliers are constantly squeezing profit margins of mid-stream and downstream suppliers. In cases when upstream manufacturers jointly increase prices, many manufacturers hope the government will take action," said Zhao Tianyi, an analyst with BloombergNEF.

"Originally, the government wanted the market to regulate itself, but it turned out that the market mechanism didn't work," Zhao said.

To deal with the problems and support high-quality development of the PV industry, the notice called on relevant departments to plan and manage the development of the local PV industry in a scientific way, and steadily promote PV market construction in an orderly way. It said more efforts are needed to strengthen the role of regulations and norms to guide the industry's development and optimize regional industrial layout.

"In addition, the development of the distributed PV industry is very slow, mainly because many local governments require project developers to invest in relevant industries within the region and even share dividends. Facing soaring supply chain costs and pressure from local governments, distributed PV developers found it difficult to put forward projects," Zhao said.

Accordingly, the notice also urged supervision departments across the country to strengthen regulation of hoarding and selling resources such as power stations, forcibly requiring investment in PV-related industries as well as purchasing local products, and step up efforts in cracking down on illegal activities such as price gouging, monopolies, and the manufacture and sale of counterfeit and shoddy products.