Indian Solar Manufacturers Relieved As China Backs Off On Plan For Price Controls

In an intereresting move, China's anti-monopoly regulator, the State Administration for Market Regulation has stepped in to nix efforts by that country's solar manufacturers to 'self-regulate' or back away from intense competition. This internal competition or involution as it is called in China, has been a consequence of massive overcapacities across sectors, and for India, that has critical significance  for the solar manufacturing and energy storage sectors. Bioth these have been on a domestic manufacturing drive while depending on China for critical inputs and machinery. Recebnt low prices seen in storage tenders are also a consequence of the  sharp drop in battery costs in China. In solar, any signbificant jump in polysilicon prices, as targeted by many manufacturers, would have had a cascading effect on wafer prices, the precursor to cell making, pressuring Indian manufacturers when they are scaling up. 

The Anti-Monopoly Division has based its aegument on the fact that companies trying to facilitate the acquisition of a key poly-silicon manufacturer on December 9th, are simply trying to control production and sales volume to ultimately driving up poly-silicon prices.These moves rosk creating strong monopolies, which will require fresh intervention later. 

The regulator has  instructed companies and associations, notably CPIA, to submit rectification plans by January 20th. These plans should include undertakings not to indulge in any agreement to control production, capacity utilisation, or sales prices.  Besides these, there is also a clear instruction not to share  manufacturing costs, expenses, and margins within any group of competing firms to enable any kind of price fixing.

The move aligns with China's recent push to be seen as a fair global competitor, especially in contrast to the US, which has been as unpredictable as it gets over the past year.  With the shadow of its use of a monopoly in Rare Earth Magnets as a trade enforcement mechanism, maintaining a clean slate elsewhere is important to keep resentment in check otherwise. 

The solar sector, seen as a success story of China's manufacturing prowess and clean energy leadership, has been racked by losses in the past year, something that has become a cyclical phenomenon every 3-4 years. Observers believe it will take a significant technology shift to bring back profits for the sector, considering China's marketshare leadership on both volumes and quality here.  Recent moves like replacing silver in solar manufacturing are already being explored by industry.