Photovoltaic solar energy crisis in China: excess supply causes a spiral of failures

Photovoltaic manufacturers enter restructuring processes or declare bankruptcy due to market prices lower than production costs due to ample supply
A growing number of Chinese solar equipment manufacturers have entered into restructuring or bankruptcy, amid growing oversupply and resulting price wars, which are causing huge financial losses and threatening the survival of many smaller companies. .

A subsidiary of Zhejiang Akcome New Energy Technology was the latest to file for bankruptcy, the equivalent of bankruptcy in China, when a court ordered it to launch reorganization proceedings after a creditor said the manufacturer “could not pay its debts” and “He clearly couldn’t pay his debts.”

China’s world-leading solar PV sector is facing a wave of bankruptcies and company consolidation as overcapacity pushes prices below production costs.

The Chinese Communist Party (CCP) promised to soften the process that allows obsolete and low-quality production equipment to leave the market and prevent unfair competition.

China “must strengthen the market mechanism that allows the superior to win and the inferior to be eliminated,” the CCP said in a statement.

While large companies like Longi Green Energy Technology have so far survived billions of yuan in losses by imposing production shutdowns and implementing layoffs, smaller companies have fewer ways to plug financial holes.

The collapse of Zhejiang Akcome Photoelectric Technology comes after another smaller manufacturer, Gansu Golden Solar, entered a pre-reorganization process in early July.

Akcome has been posting net losses every year since 2019, and last month had to suspend production of solar cells and modules at four of its subsidiaries, including the branch that has now been forced to declare bankruptcy, according to its reports on Actions.

The Shenzhen Stock Exchange ended Akcome’s trading last month after its shares traded below 1 yuan ($0.14) for 20 consecutive days.

Last week, an industry group called on the government to implement measures to facilitate faster consolidation, including not sending financial aid to companies on the brink of bankruptcy. The group also encouraged large companies to buy smaller factories.

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