CHINA’S solar industry is likely to set lower expansion targets in 2024, as financial stresses and grid constraints make it challenging to match last year’s explosive growth.

The China Photovoltaic Industry Association held in Beijing its annual conference yesterday, with firms being forced to balance dwindling profits against the government’s push for ever more clean energy.

Although panel prices have dropped steeply, lowering the cost to developers, manufacturers are getting squeezed by overcapacity. Consolidation are on the cards.

China installed 217 gigawatts of capacity last year, more than all the solar panels in the United States, after initial predictions that the figure could be as low as 95 gigawatts.

That would still have been a record, but twice during the year the association was forced to raise its forecasts to keep pace with the flood of new additions, which have set China well on the way to its goal of tripling renewable power by the end of the decade.

China is also struggling to ensure that electricity grids and markets are capable of absorbing all of the extra clean power. BloombergNEF forecasts solar additions to rise just 7% this year.

The centerpieces of China’s solar expansion are the massive renewables hubs being constructed in the desert interior. A rush to meet deadlines for the first batch drove much of the gangbusters growth in solar last year.

The industry is now being forced to reckon with the consequences. Excess capacity and intense competition have driven panel prices to record lows. The average price of polysilicon, a key raw material, fell 74% last year, according to BloombergNEF.

The price war is hitting earnings, forcing some companies to cut production to support margins. But that could ultimately work against their interests as firms can only survive by keeping up sales, despite cratering profits, in order to maintain their customer bases for when prices recover, BloombergNEF said. (SD-Agencies)