For a long time, the photovoltaic (PV) industry has faced criticism from the outside world due to overcapacity in its production chain. Over the years, excessive capacity has created significant challenges, and during the industry's downturn, this issue became a major burden for many PV companies. Although the industry as a whole has seen a recovery this year—especially in areas like silicon wafers, solar cells, and modules—the market demand has gradually declined, prompting many companies to speed up their efforts to reduce excess capacity and shed the "overcapacity" label.
However, what’s more concerning is that the overcapacity problem is now shifting downstream, particularly with the rapid development of photovoltaic power stations. A clear indicator of this trend is the fact that China currently has over 130 GW of disclosed projects under development, including intentions and contracts—far exceeding the national target set during the "12th Five-Year Plan" for 2015, which was just 35 GW. This massive scale of investment raises concerns about whether these projects can actually be integrated into the grid and operate efficiently.
Behind the rush to invest, one major issue is the uncertainty around returns on investment. More seriously, there is a growing phenomenon of "discarding" solar power plants, where large-scale installations are left idle or underutilized. This is not uncommon in other renewable sectors like wind power, where poor planning led to issues like "wind rejection" and curtailment, ultimately causing financial losses for developers.
Experts note that while the issue of "discarding" solar power plants is not yet widespread in China due to smaller project sizes, it could become a bigger problem as the scale of installations grows. Solar energy is even more intermittent and harder to control than wind, making its impact on grid stability worse, especially in regions with weaker grid infrastructure like western China.
Recent reports from the Ministry of Industry and Information Technology highlight that the timing of PV plant construction and grid development is often mismatched, emphasizing the need for better coordination between power generation and grid expansion.
To avoid repeating the mistakes of wind power, the key lies in carefully managing the growth of installed capacity through well-guided policies, encouraging rational capital investment, and diversifying the domestic market to ensure sustainable development.
On one hand, the 1 yuan/kWh subsidy for large-scale ground-mounted solar projects in western China is expected to decrease as costs fall. As a policy-driven industry, the PV sector relies heavily on subsidies, and countries like Germany and Italy have shown how adjusting these subsidies based on market conditions can maintain stability.
On the other hand, the push for a diversified domestic market is gaining attention. Policies promoting distributed PV systems in urban and rural areas are being actively implemented. While this is a positive sign for investors, many companies still face gaps in policies related to financing, taxation, property rights, and subsidies. The future returns on these projects remain uncertain, suggesting that further policy refinement and learning from international experiences are needed to support the long-term success of the industry.
Heilongjiang Junhe Building Materials Technology Co., Ltd , https://www.junhejiancai.com