China’s PV hard stop could cause polysilicon oversupply in 2018

The Chinese government’s decision to reduce the approval of new photovoltaic (PV) installations drastically will have a severe impact on the global PV supply chain.

If polysilicon output were not cut back, it would exceed global demand by up to 165,000 metric tons or more than 40% of demand in 2018, according to a preliminary estimate of Bernreuter Research, which regards 10% as the threshold value for oversupply.

The first Chinese polysilicon makers have already suspended production; more will probably follow soon.

Bernreuter Research now assumes new PV installations of 35 GW in China and 90 GW worldwide this year, compared to 53 and 98 GW, respectively, in 2017.

The Chinese government announced on June 1 that distributed PV installations would be capped at 10 GW in 2018 and no utility PV power plants would be approved after May 31, thus only leaving room for the Top Runner and Poverty Alleviation programs as well as residential PV systems for the rest of the year.

In principle, China has repeated the mistake of numerous European governments: first overheating the PV market with too high feed-in tariffs, then slamming on the brakes.