The government of China is now offering a 50% tax rebate to photovoltaic solar panel manufacturers, effective since October 1, 2013. This is a value added tax (VAT) PV rebate which will end on December 31, 2015.
China has been the greatest exporter of solar panels in recent years, and it is continuing to push this edge it has even further than it is now. The country means business, and it knows that solar PV will increasingly be big business. Its domination of the solar PV manufacturing industry has been so great that it has attracted suspicion of “dumping” from the US and Europe. (Dumping, in this case, is the subsidization of solar panels so they can undercut everyone else’s prices — hence, enabling the country to dominate the industry and put competitors out of business.) The Chinese government denied the dumping allegations, but investigations have found the country guilty of this charge.
Despite their edge, some Chinese solar panel manufacturers are struggling, and this new policy is geared at helping them to survive. (Keep in mind that businesses fail in all industries, especially as industries mature.)
As the BBC notes, China’s solar manufacturing subsidies have already contributed to solar PV overcapacity and net losses for long periods of time, leaving even leading firms with large debts. According to a report from Xinhua, a state-owned news corporation of China, China’s top 10 solar panel manufacturers have up to 100 billion yuan ($16.3 billion) in debt. Xinhua has also said that, despite the new rebate, the outlook is still grim for many solar PV companies.
“Even if the domestic market is expanded, China’s production overcapacity can not be fully digested and some manufacturers must be eliminated, analysts have pointed out, expecting the industry to see drastic eliminations and accelerated integrations in the coming months.”
I suppose a further shakeout is on it’s way!
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