Shares in Sungrow Power Supply and GCL-Poly Energy Holdings led Chinese solar power stocks lower in mainland China and Hong Kong on Monday, after the government moved to rein in the expansion of the industry, by suspending the construction of new farms and cutting subsidies in a surprising decision.
Sungrow Power, the country’s biggest maker of inverters for solar and wind power, tumbled by the 10 per cent daily limit to 12.56 yuan in Shenzhen, capping a decline of 23 per cent over the past seven days. LONGi Green Energy, a manufacturer of silicon wafers, also plunged by the same amount to 20.12 yuan in Shanghai.
GCL-Poly, the world’s largest producer of solar wafers used to make solar panels, slumped by 9.2 per cent to HK$0.79.
A joint statement put out on Friday by the National Development and Reform Commission, Ministry of Finance and National Energy Administration said the allocation of quotas for new projects had been halted until further notice, and tariffs on electricity generated from clean energy will be lowered by 0.05 yuan per kilowatt hour, a cut of 6.7 to 9 per cent depending on the region, effective June 1.
Daiwa Capital Markets’ Dennis Ip predicted the move will cut China’s solar power installation by 15 per cent to 45 gigawatts this year. Installation rose to a record 53GW in 2017.
Frank Haugwitz, the founder of Asia Europe Clean Energy (Solar) Advisor, slashed his forecast for this year’s solar installation in mainland China to between 30 and 35GW, from 40 to 45GW. He also cut his annual volume projection for next year and 2020 to between 20 and 25GW.
Friday’s announcement is the most aggressive paring back of state support for solar power, and comes close on the heels of another policy announcement last month, which stated that the awarding of all new wind farm development rights would be subject to competitive bidding.