- China is proposing a new tendering process for solar equipment to counteract falling prices caused by overcapacity.
- The revised system will consider factors beyond price, such as product quality and environmental impact, to stabilise the solar industry
In response to the significant decline in solar equipment prices, the China Photovoltaic Industry Association (CPIA) and the Ministry of Industry and Information Technology in China are proposing reforms to the power plant tendering process. The current system has contributed to a price drop that has negatively impacted manufacturers, leading to financial losses in the solar sector.
The issue of overcapacity in China’s solar panel production has led to extremely low prices, prompting producers to call for government intervention to stabilize the market. These low prices have not only affected domestic manufacturers but have also drawn criticism from international trading partners concerned about China’s overproduction’s impact on their industries.
To address these challenges, the CPIA announced on Monday via WeChat that it is advocating for a revised tendering process for solar equipment procurement. This proposal, developed during a meeting held on Thursday, August 29, 2024, seeks to overhaul the existing tendering mechanism, which the CPIA attributes as a significant factor in the relentless drop in solar product prices.
The proposed new approach includes a more comprehensive two-stage tendering system. This updated process would evaluate bids based on various criteria beyond just price. Factors such as product quality, reliability, technological innovation, and the environmental and social impacts of the supply chain will be considered. This approach aims to shift the focus towards more sustainable and high-quality solar solutions.
The meeting, convened under the Ministry of Industry and Information Technology, brought together key stakeholders from the industry. State-owned power producers like Huadian Group and Datang Group, alongside major solar panel manufacturers such as Longi Green Energy, participated in the discussions.
The CPIA’s WeChat post emphasised that the current tendering mechanism is a significant driver behind the ongoing decline in solar product prices. By adopting the proposed reforms, the CPIA believes it can help mitigate the adverse effects of overcapacity, support manufacturers, and encourage a more balanced and sustainable solar market.
The proposed changes reflect a strategic move to stabilise the solar industry by addressing the root causes of price declines and promoting a more nuanced and holistic approach to procurement.