Photovoltaic industry replanning effectively regulated as a problem

Recently, the Sino-European photovoltaic dispute involving the largest amount of trade disputes in the history of Sino-European trade, after arduous and meticulous negotiations between the two sides, “turned back and forth,” and finally reached a commitment scheme “with export quantity and price limits”. Then, how will the quota of export quantity be distributed among domestic enterprises and how will the distribution method affect the whole industry?

"631" Distribution Plan Released

The annual export volume stipulated in the price commitment agreement will be divided into three parts and then distributed, which respectively account for 60%, 30% and 10% of the total amount.

From August 6th, 94 companies promised to export anti-dumping duties to EU wafers, batteries, and components according to the requirements of the price commitment agreement. Other non-commitment companies exporting these products to the EU will be levied 47.6% (non-promised Responding to business) or 67.9% (non-suitable) anti-dumping duties. According to the relevant EU law, in order to prevent artificial manipulation of market prices, China and the EU will not publish specific figures on the minimum price and the export quota. However, according to a reliable channel from the “China Electronics News” reporter, China’s PV products exported to the EU each year will not exceed the 7GW quota, and the price cannot be lower than 0.56 euro/watt.

How will these 7 GW quotas be distributed among enterprises? The Chinese Chamber of Commerce for Mechanical and Electronic Products Importers and Exporters (hereinafter referred to as the Electrical and Mechanical Commerce Association), which is responsible for organizing domestic enterprises to participate in negotiations and formulating quota allocation standards, once stated: "The allocation quotas of 94 enterprises are internal to the industry. We did not have the need to make it publicly available.” However, the reporter of “China Electronics News” still obtained from the relevant companies the Measures for the Implementation of the Price Promise for Exported Photovoltaic Battery Products to the European Union (hereinafter referred to as “Measures”) promulgated by the Electrical and Mechanical Commerce Association. This includes the highly-qualified quota allocation criteria.

However, the "Measures" only announced the approximate percentage of quota allocation. The Electromechanical Chamber of Commerce stated that it is based on the principles of “fairness, reasonableness, transparency,” “whoever responds, who benefits, who responds more, and who benefits more” to determine the number of exports of the company in the current year, formulate a distribution plan, and submit all price commitments to the enterprise. The review was passed, and all involved products were implemented according to this principle.

The Measures stipulate that the annual export volume stipulated in the price commitment agreement will be divided into three parts and then distributed. The first part is 60% of the total, in accordance with the company's share of the EU's exports of photovoltaic cell components to China's share of exports of photovoltaic cell components to Europe. Among them, 30% are calculated according to the EU's export share of the anti-dumping investigation period (July 1, 2011 to June 30, 2012), and 30% according to the export share from July 1, 2012 to March 31, 2013.

The second part, which accounts for 30% of the total amount, will be allocated as an incentive and key support share to participating in industry defense enterprises. The third part, the remaining 10%, will be prioritized to support smaller-scale export enterprises, and make up to 2MW for enterprises with annual share of less than 2MW according to the terms; the remaining part is used to support private brands, high technology content, Photovoltaic battery exports in good financial condition.

Accelerate domestic business integration

The allocation of 60% quotas according to historical conditions means that there are many large companies and small businesses. As a 30% quota for encouragement, it is mainly for large companies.

"Implementing the quota system is itself a step backward. This is a planned economy, not a market economy," an industry expert told reporters.

“We were rejected by the relevant organizations as 'the number of enterprises participating in the defense should not be too much'.” A small and medium photovoltaic company representative complained to reporters. “At that time we did not play with us. Now it's good, 30% share. We didn't play."

"As long as most companies agree on the principle of distribution, small businesses do not agree and there is no way. A 10% share for small businesses is just like this," said another representative of the photovoltaic company.

We have to admit that the above problems do exist. 60% of the quotas are allocated according to the historical status of the EU's exports to the EU, which means that there are more large companies and fewer small firms. As an encouraging 30% quota, it is still mainly for large companies, because active defenses and more powerful ones are also large companies. Relatively speaking, most small companies are not able to produce high-efficiency components with a high premium of 0.56 EUR/W in terms of both cost and technology, so it is of little significance to make up for 10% of the 2MW share of small companies. .

However, we must also see the positive impact of this distribution method. Under the background that there is no fundamental change in excess capacity, ensuring a more competitive market share for large enterprises will further accelerate the integration of domestic PV companies. It is also in line with the Guiding Opinions of the State Council on Several Opinions on Promoting the Healthy Development of the Photovoltaic Industry on July 15 in the “Accelerate the Advancement of Mergers and Reorganizations of Enterprises”. At a photovoltaic forum recently held, the Deputy Director of the Department of Renewable Energy of the National Energy Administration, Liang Zhipeng, publicly stated: “We have too many companies. We have hundreds of photovoltaic manufacturers. This is not necessary. There are five or six companies. It's enough."

The reconciliation of disputes between China and EU in photovoltaic trade has not come easily. As Shen Danyang, spokesperson of the Ministry of Commerce, said: “We hope that Chinese PV companies can cherish the outcome of the negotiations, effectively implement the price commitment agreement, and maintain a good export order for photovoltaic products.” Since the “Measures” are in line with the general direction of the healthy development of China's photovoltaic industry, It has also been recognized and approved by most companies. The next step we should consider is how to implement it.

Effective supervision is not easy

Businesses will strive to obtain quotas regardless of their ability to complete the corresponding export volume. Does the situation of reselling quotas between enterprises appear?

The "Measures" show that the Electromechanical Chamber of Commerce will be responsible for organizing and coordinating the implementation of price commitment agreements by enterprises, and organizing the election of companies to produce price commitments and price commitments. The former is responsible for organizing the implementation measures, quantity distribution plans, and deployment opinions of the company's review of price commitments, which are then organized by the Electromechanical Chamber of Commerce. The latter's main functions are to supervise price commitments and carry out relevant work and put forward relevant opinions, to accept corporate complaints and to reflect the company's demands, and to investigate and punish violating companies, which is also organized by the Electromechanical Chamber of Commerce.

Although it has been clarified that the company will participate in the management and supervision of the work related to the price commitment in the whole process, representatives of the industry experts and some of the photovoltaic companies expressed their concern to the reporter. Since the quota scheme exists, companies do not have the right to exchange their quotas. Regardless of their ability to complete the corresponding export volume, they will strive to obtain quotas. For small businesses, what if they can get 2MW quota and cannot complete the export, how to allocate the unfinished export amount to other companies in time, and whether there will be an inter-enterprise quota of resale?

How to achieve effective supervision becomes the most worrying issue in the industry. Meng Xianyi, deputy director of the China Renewable Energy Society, even bluntly stated: "This is a huge test for the management capabilities of the Ministry of Commerce and the Electrical and Mechanical Commerce Association."

As we all know, the EU has always been the main digesting market for China's photovoltaic products, and currently five times the total quota capacity will inevitably lead to fierce competition on quotas. Those who get quotas have the world, and the fierce competition for quotas in the future can be imagined. Against this background, it will inevitably breed resale quotas and other unpleasant phenomena. According to relevant EU law, in order to prevent artificial manipulation of market prices, China and the EU will not publish specific figures on the minimum price and the export quota. Therefore, specific quotas will only be released to enterprises and will not be announced to the public. Under the premise of this "black box operation", how to avoid "power rent-seeking" should also cause the relevant departments to think.