China introduces a series of regulations on solar project investments

ChinaThe Ministry of Industry has published draft regulations aimed at tightening investment regulations Down photovoltaic (PV) cell production projects to address overcapacity in the sector. Under the new rules, projects must have a minimum capital ratio of 30%, up from the previous requirement of 20% for most PV projects and 30% for polysilicon projects. While the ministry did not specify a definition of the capital ratio, it generally refers to the percentage of the total investment contributed by shareholders’ own assets.

The guidelines are intended to guide development photovoltaic industry but will not be binding on project approvals. Albert Miao, head of energy transition and commodities research for Hong Kong and China at Macquarie Capital, described the new rules as a small step in the right direction, noting that future policies from relevant government bodies will be key to watch. He stressed that market-driven supply cuts across the solar supply chain will be necessary to balance the market and drive up prices.

The draft regulations also set minimum efficiency levels for different types of solar panel technologies, with the goal of limiting further capacity expansion, eliminating outdated capacity and promoting sector consolidation. Jessica Jin, principal research analyst for solar photovoltaics at S&P Global Commodity Insights, emphasized that the goal of the measures is to streamline the industry and increase overall efficiency.