Monday, February 27, 2012

China Government Pushing for Increased Polysilicon, Solar Cell Production

China's Ministry of Industry and Information Technology posted a new five-year plan on its website last week detailing how "leading" polysilicon and solar cell manufacturers will be required to increase production capacity. This confirms that Beijing's response to falling solar product prices is to increase the production of key polysilicon and solar cell supplies.

The plan provided no details on how many firms will be affected, but it did confirm that it wants top polysilicon firms to increase annual capacity to 50,000 tons, while solar cell manufacturers will be required to produce 5MW of new capacity each year.

The targets increase the likelihood of continued low solar prices following a slump in the cost of solar panels, which has seen prices more than halve over the past year, according to Bloomberg New Energy Finance.

The new plan represents good news for firms looking to install solar technologies, but will also increase pressure on western solar panel manufacturers already facing squeezed margins and intense competition from Chinese firms. The move will both increase the likelihood of consolidation in the solar manufacturing market.

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