New capital requirements

China wants to curb overproduction of solar installations

In future, solar companies will need a minimum capital ratio of 30 percent.

(Bild: (c) www.VIENNAREPORT.at)

China wants to limit the overproduction of solar installations in the country with stricter capital requirements. To this end, the Ministry of Industry published a new regulation on Tuesday, according to which solar companies must have a minimum capital ratio of 30 percent. 

This applies to expansions and new production facilities, it said. Previously, the requirement was 20 percent. The ministry did not provide a narrower definition of the capital ratio. In addition, new specifications were also made regarding the efficiency of the various types of solar module production. Comments on the draft law can still be submitted until July 15.

Jessica Jin, analyst at "S&P Global Commodity Insight", sees this as an attempt to prevent the credit-driven expansion of solar production. In addition, there are obviously plans to consolidate the sector and shut down outdated capacities.

China dominates the global market
China dominates the global market for solar installations. Experts estimate that China will be able to cover global demand until 2032 with its existing and planned factories. The current overproduction has led to a fall in prices, which has recently fueled the solar boom.

However, Chinese dominance has also been viewed critically in Europe for years. EU import duties have done nothing to change this. Plans to secure at least the remnants of the remaining production in Europe have not yet been implemented.