Buyers of solar modules from China may have to get used to higher prices. According to a report by the German newspaper Frankfurter Allgemeine Zeitung (FAZ), China’s solar companies have merged into a kind of cartel. The agreement aims to limit production in that there should be quotas based on the market share of the participating groups.
Experts say the initiative is similar to OPEC, the organization of oil exporting countries, just for solar modules.
A total of 33 companies, which account for around 90 percent of China’s production of solar modules, have agreed to reduce their production, the FAZ quoted by the Chinese business newspaper Yicai. Other reports also mentioned lower prices. The corporations apparently even agreed on an enforcement mechanism. The industry association will visit the factories to determine the exact capacities. Anyone who wants to start new factories in the future must shut down old ones.
In addition, penalties were agreed for breaches of contract. Companies that were among the early signatories of the pact would be favoured and receive higher production quotas. The German paper, however, also points out that the reports and industry rumours are currently not verifiable.
The move by China’s PV sector follows a similar move by its wind energy majors, who have also promised to collaborate to weed out ‘irrational pricing; from the market for the broader good of the industry, as per Business Times Singapore.
China’s solar majors dominate the global PV sector as well have faced a series of strong headwinds in the past 15 months, facing a perfect storm of overcapacity, followed by high inventory levels, price crashes and now, protective tariffs in many key markets, notably, India the US and possibly Europe soon.
It won’t work. Each of those companies isn’t going to actually cut production, just sell the excess on the grey market. Private company cares about profits, the real plan is to have someone else to cut production and raise prices
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It won’t work. Each of those companies isn’t going to actually cut production, just sell the excess on the grey market. Private company cares about profits, the real plan is to have someone else to cut production and raise prices