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News - Editor, 27 March 2013

China's Solar Energy Supply Outstrips Demand



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China's solar panel industry is facing a dilemma as supply continues to outstrip demand, resulting in solar panel prices dropping up to 66 percent over the last two years. Industry estimates reveal that the current global demand for solar power is 30-35 gigawatts (GW), while supply is 50-60 GW, with most of this coming from China.

Based in Wuxi, Jiangsu Province, Suntech Power Holdings is currently facing bankruptcy and local authorities are reportedly planning to bail the company out - a short-term solution which presents its own problems and doesn’t resolve the issue of decreased demand for solar panels. As prices and demand drop in a sector that was once booming, authorities reportedly fear that the loss of tens of thousands of jobs as a result of the bankruptcy will spark unrest in a population already feeling the pinch of economic hardship.

Another factor dragging the solar power industry in China down is the fact that a number of governments are withdrawing, or cutting, their incentives and subsidies to home and business owners to switch to solar power. Under pressure from the euro zone crisis, Germany is among the countries that have cut subsidies that were in place to incentivize home and business owners to make use of renewable power sources. Moreover, the United States has imposed anti-dumping duties on solar panels from China, and there is talk of the European Union following this route.

Beijing has introduced measures to encourage the use of solar power in China and aims for the city to have a total 35 GW of solar energy by the year 2015, with the goal of 100 GW by 2020. This will include energy generated by solar farms and on-site solar panels for factories. Nevertheless, coal-generated power remains far cheaper and more reliable than energy generated from the sun via solar panels, and without significant subsidies, solar energy simply cannot compete.

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