Solar prospects dim as subsidies peter out and overcapacity builds
After a rush in installations to pre-empt scheduled subsidy cuts from July 1, analysts turn bearish on the outlook for sector in second-half and next year
“What goes up, must come down.”
That’s the rather stark assessment by one analyst, of the expected fortunes of China’s solar power industry in the second-half, after the number of panel installations scorched ahead by a record 159 per cent in the first six months.
Others say volumes may continue falling moderately next year, too, and remain subdued for the next few years.
The likely easing in the sector’s progress is the direct result of growing difficulties in the financing of new projects, not helped by a reduction in generous government subsidies for new developments.
Many firms are already finding tighter cash flows, too, from growing amounts of still unpaid government subsidies, and of low plant utilisation caused by power grid bottlenecks.
“After a rush in installations [during this year’s first-half] to pre-empt scheduled tariff cuts from July 1, we are now turning bearish on the outlook for China’s solar sector in the second-half and next year,” said Macquarie Capital senior analyst Patrick Dai in a report, in which he even advises investors to shift their holdings to wind power.