The Chinese government has ordered a halt on the construction of new solar projects, announced by the nation’s National Development and Reform Commission, the Ministry of Finance and the National Energy Administration.
In the announcement, made on 1 June, the establishments also confirmed that the government had reduced tariffs on clean electricity by ¥0.05 (US$0.0078) per 1KWh.
The “2018 Solar PV Power Generation Notice” prevents any new solar projects from recieveing government incentives and subsidies in a bid to stop overcapacity.
Since the news, Sungrow Power and LONGi Green Energy Technology have seen a drop in stock prices.
Sungrow, China’s largest manufacturer of solar and wind power inverters, has had its stock fall by the daily limit of 10% on 4 June, hitting ¥12.56 ($1.96).
Following the 10% drop, the firm is now anticipated to be in line for a seven-day 23% decline.
The silicon wafer company, LONGi, saw its stock share fall to ¥20.12 ($3.14).
“The contraction in the photovoltaic industry will intensify competition in the short term because of the policy’s sudden brake,” remarked Gong Yongfeng, Citic Securities’ Analyst.
“The prices of the industry chain will come under big pressure. Industry consolidation may last for six to 12 months.”