In 2012, the global photovoltaic (PV) industry experienced a particularly tough year, marked by a deep slump. Europe and the U.S. imposed anti-dumping and anti-subsidy measures, while China's domestic market was still in its early stages of development. Overcapacity in manufacturing, frequent corporate debt crises, and an almost "dead" PV market left many industry players worried. However, as the year drew to a close, signs of hope began to emerge. The Chinese government introduced new policies aimed at rescuing the sector, and emerging overseas markets like Japan and the UK started to show strong growth. Warren Buffett also announced a $1 billion investment in solar power projects, signaling renewed confidence in the industry.
Indeed, the future of the PV industry is seen as a key area for growth, with successive policy support from the government. This is evident in the multiple upward revisions of the "12th Five-Year Plan" targets for PV installations. Initially set at 10 GW in 2011, the target was later raised to 15 GW, then 21 GW, and finally to 35 GW—more than triple the original figure. With the current average cost of PV power plants at around ¥10,000/kWh, this increase could add approximately ¥250 billion to the market. If additional subsidies and tax incentives are implemented, the market could see accelerated growth.
While these targets boost long-term confidence, the immediate situation shows that demand in both domestic and international markets is gradually improving. The fundamentals of the industry are warming up: after nearly nine months of continuous price declines, PV product prices began to rebound. Single-crystal silicon wafers and cells saw significant price increases, and even polysilicon prices showed a slight recovery.
Market analysts noted that leading domestic PV companies were operating at over 80% capacity, with some fully utilizing their production lines and facing urgent order backlogs. Shi Dingyi, director of the China Renewable Energy Society, stated that among the 35 GW of installed capacity, half would come from large-scale plants, and the other half from distributed systems. The government is expected to continue introducing supportive policies to address ongoing challenges in the industry.
Despite the positive signals, the wave of bankruptcies and factory shutdowns continued. Vosges Co., Ltd. became the first A-share listed PV company to announce bankruptcy in September 2012 due to declining prices and weak demand. Less than six months later, Jiangsu Sunshine followed suit, filing for bankruptcy due to financial difficulties at its subsidiary, Ningxia Sunshine Silicon. The latter had a net loss of about ¥250 million in 2012 and was insolvent.
According to ENF Business Consulting, more than 350 companies in China’s PV supply chain shut down or went bankrupt in 2012, with 80% of upstream polysilicon firms affected. Many companies reported losses, with only a few like Zhongli Technology and Tuoxin Xinneng showing modest profit growth. Even those that managed to recover temporarily faced setbacks, such as one company that initially reported a turnaround but later warned of a massive loss.
Despite the recovery in the downstream market, the upstream manufacturing sector remains under pressure. While leading companies like Yingli Green Energy benefit from low costs and competitive pricing, most firms are still struggling with overcapacity, especially in polysilicon production. If the market recovery doesn’t translate into sustained demand, more companies may face bankruptcy.
The policy environment remains mixed. While favorable regulations are in place, they need further refinement to ensure effective implementation. The lack of clarity on distributed PV subsidies and delayed payments for renewable energy projects have created uncertainty. Analysts predict that while the PV market will rebound in 2013, full industry recovery may not happen until 2014. Global module shipments are expected to reach 30 GW, but overcapacity remains a major challenge.
Overall, the PV industry is showing signs of improvement, with investment opportunities emerging across the supply chain. However, the path to full recovery is still uncertain, and the coming years will be critical for the sector.
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