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The photovoltaic industry threshold will once again accelerate industrial integration will accelerate
Since September 2013, the Ministry of Industry and Information Technology (MIIT) introduced stricter standards under the "Regulations on Photovoltaic Manufacturing Industry." Recently, the MIIT officially announced the first batch of enterprises that met these regulations, with a total of 109 companies nationwide. Among them, Jiangsu Province had the highest number, accounting for 34%. Industry experts believe that the PV sector is showing signs of recovery due to both policy support and market demand. However, to prevent outdated production capacity from resurging and avoid repeating past overcapacity issues, industry thresholds are expected to rise further. This year, some outdated production lines may be phased out, and mergers and acquisitions will likely dominate the sector.
During the one-month public review period, the MIIT conducted random inspections at several enterprises. Out of 25 companies nationwide, five in Jiangsu failed to meet the final criteria due to various compliance issues. As a result, 80% of the companies passed the audit. Major players like Trina Solar, Yingli Green Energy, and Artes Energy successfully obtained the "Certificate of Pass."
Wang Shijiang, a researcher at the China Photovoltaic Industry Alliance, emphasized that only high-quality enterprises meeting the standards can access financial and policy support. Those with outdated technology or low capacity must be weeded out to promote industry consolidation and sustainable development.
The main reasons for failing the audit include: failure to pass environmental impact assessments, insufficient production capacity or utilization rates, lack of independent R&D capabilities, and non-compliance with product quality, water, and energy consumption standards.
Lu Jinbiao, Vice President of GCL-Poly Energy, noted that many polysilicon firms that didn't meet the requirements had already reduced or halted production in 2012, operating below 50% of their capacity. With increasing industry concentration and a more competitive environment, the adjustment process in 2014 is expected to be even more intense.
Unqualified companies may face significant financing challenges. The "Conditions" set strict requirements on production scale and technology. Companies must allocate at least 3% of annual sales or at least 10 million yuan for R&D and process improvements. Failure to meet these criteria limits access to policy benefits, making it difficult for many to survive.
According to reports, passing the standard review is crucial for obtaining bank loans and government tax rebates. Enterprises that fail to meet the standards may struggle with high costs and limited support, increasing the risk of closure. Some unqualified firms may not survive, pushing the industry toward consolidation.
Industry insiders suggest that companies failing to meet the criteria must either merge, restructure, or upgrade their technology to comply with national guidelines. This reinforces the trend of integration in 2014. The MIIT plans to conduct additional audits in the coming months, but only a limited number of companies will qualify, leading to higher industry concentration and lower manufacturing and application costs.
As the photovoltaic sector accelerates its restructuring, the pace of mergers and acquisitions is expected to increase. According to a recent report by CCID Research Institute, global PV module output is projected to grow from 40GW this year to 43GW in 2014. China's PV module production is expected to rise from 26GW to 28GW. Despite this growth, concerns remain about potential overcapacity if local governments continue to push for rapid expansion without proper oversight.
With policy support and market demand driving recovery, the industry is experiencing a positive shift. As of January 5, 40 listed PV and wind power companies released 2013 performance forecasts, with 70% showing improved or stable earnings. Meanwhile, the construction of domestic solar power plants is boosting overall industry growth, and maintenance of downstream equipment has become a new revenue stream for renewable energy firms.
Given these dynamics, controlling overcapacity has become more critical than ever. The MIIT is currently working on draft guidelines for the merger and reorganization of photovoltaic enterprises, engaging with local governments and financial institutions to encourage early consolidation. It is clear that mergers and acquisitions will be the top priority for the industry in 2014.