China has finalised stricter guidelines on solar manufacturing investment

According to an announcement on the ministry's website, China's Industry Ministry finalised on Wednesday investment guidelines for solar photovoltaic manufacturing projects to curb overcapacity.

Companies are directed to maintain a capital ratio of at least 30% for solar PV project. This standard was previously only applicable to polysilicon projects, while the minimum capital ratio for all other PV projects remained at 20%.

The ministry didn't provide a definition for the ratio. This is the percentage that shareholders invest in their own assets out of the total amount of investment.

However, the rule does not apply to project approvals. It also includes guidelines on energy efficiency and consumption.

It encourages local government to rationally allot manufacturing projects on the basis of local resource endowment.

The guidelines are aimed at structural and technological improvements in the PV sector, according to the ministry.

Analysts say that the announcement comes after a reduction of export tax rebates on solar components, which would result in a slight increase in prices for overseas buyers due to costs being passed along.

Solar panel manufacturers in China have called on the government to intervene and stop over-investment, which has caused a drop in the prices of solar modules and cells. However, prices remain stubbornly low. Reporting by Colleen Potter Editing by Mark Potter

(source: Reuters)