The latest annual reports from domestic listed solar power companies have been released, marking a significant shift from last year’s struggles. This year, around 70% of the companies reported profitability in the first half, signaling a positive turnaround. While traditional component manufacturing remains sluggish, many companies are now seeing growth driven by their involvement in domestic solar power plant projects—projects they previously avoided due to uncertainty and financial risks.
According to data from 30 companies that issued interim reports or performance forecasts, 22 of them reported pre-profit results for the first half of the year, representing 70% of those who announced their 2013 mid-year results. For instance, TBEA reported a gross profit margin of 17.35% for the first half, up 0.6% year-on-year. Sunlight Power also saw a massive increase, with revenue reaching 723 million yuan and net profit hitting 540 million yuan—an impressive 99.6% and 19.53% year-on-year growth, respectively. Several other firms, including aerospace and electromechanical companies, have also exceeded expectations, citing solar power plants as a key driver of their improved performance.
Shenyin Wanguo New Energy analyst Yu Wenjun noted that companies are shifting focus toward power plant projects to alleviate pressure from the struggling component business. With government support, these projects are delivering better-than-expected returns. He expects continued growth in the second half of the year as policies continue to evolve.
Earlier, many solar firms were hesitant to invest in domestic power stations due to an immature market, unclear policy directions, and payment collection issues. However, with the economic slowdown and clearer policy guidance, more players are entering the sector. Not only solar companies but also non-solar enterprises are now eyeing the potential profits from power stations. In just the past two months, several new entrants such as Songliao Automobile and Jiangsu Lida have joined the solar industry, bringing the total number of listed solar companies in Shanghai and Shenzhen to 34.
Qian Jing, Director of Jingjing Solar Global, emphasized that more companies entering the market is a positive development. It not only boosts demand for components but also helps promote solar energy. He pointed out that power plants in well-illuminated western regions can achieve yields of nearly 20%, while even eastern areas can reach over 8%. The profitability of these projects is crucial for the industry.
Distributed photovoltaic generation has become a major focus, especially as international markets face resistance from both Europe and the U.S. The Chinese government has strongly supported this segment, recently issuing a circular on electricity subsidy policies for distributed photovoltaics. Under this policy, subsidies will be provided based on actual power generation, with grid companies paying them according to billing periods. This approach ensures transparency and efficiency, which experts believe is essential for long-term sustainability.
Comparing foreign experiences, the success of distributed generation in the U.S., Europe, and Japan relies on clear subsidy distribution and accounting standards. Li Junfeng, deputy director of the China Renewable Energy Society, stressed that the key to future development lies in effective policy implementation.
Previously, the Golden Sun project was a major government initiative, offering subsidies directly to equipment suppliers. However, this led to issues like fraud, low-quality installations, and delays. The new distributed model, which subsidizes based on actual electricity generated, is more sustainable and reduces the risk of misuse.
While the current policy focuses on distributed generation, it does not include integrated building photovoltaics. Industry insiders suggest that building-integrated systems are currently inefficient and not economically viable. As Qian Jing put it, “It's like taking an exam—you do what you can, and if it's not ready, it's better to wait.â€
This year marks the first large-scale launch of the domestic solar market. According to plans, the average annual installed capacity from 2013 to 2015 will be about 10 million kilowatts, reaching 35 GW by 2015. Additionally, a 50% value-added tax reduction for PV power plant projects is expected to be clarified soon. This could lower the on-grid electricity price by 0.02–0.04 yuan per kilowatt-hour, increasing the power rate by 1–2%, directly benefiting operators.
Although the exact subsidy amount is still under discussion, Lin Boqiang from Xiamen University believes that the initial PV access price being higher than regular electricity prices will boost enthusiasm among companies and support the industry's overall growth. Tariff adjustments can be made later based on real-world conditions. Many in the industry expect a strong second half for the solar sector.
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