Analysis by S&P Global suggests that new power prices in China can bring a stream of new installations to the country in the first half of the year and lead to an increase in prices for solar module first in the interior and then internationally.
A new price price mechanism in China According to analysis of the short -term module, the question could be strengthened in both the interior and internationally by S&P Global.
In February, the Chinese National Development and Reform Commission Announced plans To replace its Feed-in-Tarify system with a fully market-driven price-pricing model for renewable energy that will see all electricity from renewable energy sources that are sold by market transactions.
An S&P worldwide report that analyzes the effects of the policy says that the measure will make the Chinese renewable industry more competitive, but also more volatile.
Experts from the Center for Research on Energy and Clean Air (Craa) have said that they expect an increase in solar installations prior to the formal implementation of the mechanism on 1 June, before developers can still reach a fixed price agreement.
“This urgency to prevent potential income uncertainties under the new policy can lead to a short-term surcharge in the Solar Module demand, which reduces prices,” added Qi Qin, Crea China analyst.
The analysis of S&P Global suggests that due to the size of the Chinese solar market, a domestic increase in module prices can also lead to a global increase.
“The prices of solar module are most likely to get the chance to recover as soon as the demand increases,” Jessica Jin explains, main research analyst of clean energy technology at Commodity Insights. “The global price trend can have a little delay, but will not be the trend in China, except the US and India, who have different supply/supply situations as a result of high rates,” Jin added.
Rising prices can also lead to a higher demand, the analysis of S&P Global continues, if developers want to protect shares at the current price pending further increases. But it adds that some market participants regard the current increase as temporary and do not expect that the trend will take place beyond the third quarter of this year.
The analysis of S&P Global also says that the constant demand growth for China’s solar modules depends on “an extensive improvement of the entire ecosystem of the photovoltaic industry.”
Qin explained that rapid expansion of solar capacity in the past two years has emphasized challenges to effectively integrate solar energy into the grid. “If these challenges – especially related to schedule flexibility and reforms of the energy market – are not tackled sufficiently, they could limit the future growth of solar installation and in turn limit the demand for domestic solar module,” Qin added.
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