Commentary:China government needs to create projects with sufficient IRRs to save solar industry Nuying Huang,Taipei;Jackie Chang,DIGITIMES[Tuesday 19 June 2012]Some China-based solar firms have been falling into bankruptcies since the market downturn in 2011.Many polysilicon firms in China have been shutting down production.The China government has been trying to support the industry but efforts have not yet turned into positive results.
Industry sources noted that the government in China knows if the financial problems in the solar industry lead to a collapse of confidence,the entire supply chain will fall like dominoes.In addition,the solar supply chain in China has to worry about the anti-dumping and anti-subsidy investigations and duties from the US,and possibly from Europe and India.
Industry sources added that 80%of China's polysilicon firms have been halting production mainly due to lack of competitiveness as the spot price of polysilicon falls below US$35/kg.The current spot price of polysilicon is below US$25/kg,meaning there is little chance for the firms to resume production.
Furthermore,China's large-size solar firms have been influencing the government in policies to eliminate and marginalize small-size firms.
The China government needs to create enough effective domestic demand to save its industry from collapsing as bankruptcy rumors have been circulating.Despite having supporting policies and programs such as the 12th Five-Year Plan and Golden Sun Demonstration Projects,the internal rate of return(IRR)of the projects are limited.Participating firms will not benefit much from the projects and can still suffer from financial troubles.
China government needs to have projects with profitable IRRsPhoto:Jackie Chang,Digitimes,June 2012
