China’s Ministry of Industry and Information Technology has finalized new investment guidelines for solar photovoltaic (PV) manufacturing projects to address persistent overcapacity and stabilize the industry.
The guidelines, announced on November 20, 2024, increase the minimum capital ratio for solar PV projects to 30%, up from 20% for certain projects. This threshold, previously reserved for polysilicon manufacturing, aims to ensure financial discipline within the sector.
While the guidelines are not mandatory for project approvals, they outline expectations for efficiency and energy consumption. The ministry also encouraged local governments to allocate projects judiciously to support industry upgrades and structural adjustments.
These measures align with China’s broader strategy to manage overcapacity, which has contributed to declining prices in the sector. Despite these efforts, oversupply challenges are expected to persist for up to two years, as noted by solar manufacturer LONGi Green Energy Technology. The guidelines follow recent reductions in export tax rebates for solar components, which could lead to slight price increases for international buyers as manufacturers pass on the costs.
LONGi Green, the world’s largest solar wafer producer, reported a net loss of 5.24 billion yuan ($739 million) in H1 2024, compared to a net income of 9.2 billion yuan in H1 2023. The loss was attributed to a supply-demand mismatch that caused a steep drop in product prices. Despite these setbacks, the new guidelines aim to promote long-term sustainability and innovation within the PV sector.