MIIT issues action plan to promote innovation in smart solar industry

  • China’s authorities seek to drive technical advancement in solar value chain by 2025
  • Key areas include automation, efficiency, digitization, green manufacturing, and recycling of aging products
  • Policy support for broad application of solar among different industries.
  • Flat Glass (6865.HK) stands to benefit from sustained solar glass demand

China’s Ministry of Industry and Information Technology (MIIT) issued on Jan 4th an action plan to promote significant technological advancement within the solar value chain by 2025. The ministry also plans for China to develop a comprehensive solar ecosystem encompassing polysilicon, wafers, modules, materials, and related instruments.

Action 1: Raise the overall development of the solar industry in China

The notice mentioned many points for improvement along the solar value chain. Key themes include promoting automation, reducing material wastage, and improving product tracking with digital solutions. For solar cells, the MIIT specifically emphasized its support for R&D to improve efficiency ratios. Environmental management for the solar industry was also a key concern. The MIIT seeks to minimize water usage, pollutants, and the overall carbon footprint of solar manufacturing. The ministry also supports the recycling of aging solar modules and/or materials. 

Action 2: Support the development of intelligent electric grid system

MIIT seeks to advance the integration of solar with 5G internet, artificial intelligence, and big data. By 2025, a significant proportion of China’s solar components should have computing capabilities to optimize their performance. Key examples include solar panels which could automatically adjust to maximize light exposure and self-diagnose problems such as “hot spots.” Within the power grid, innovations in transformers, energy storage, tracking/monitoring, and other instruments will continue to be promoted. 

Action 3: Support various industries to achieve peak carbon and carbon neutrality

In this section, the MIIT notice reiterated support for solar usage in various industries. In manufacturing, factories are encouraged to raise the proportion of renewables in their energy mix. For transport, MIIT will promote installation of solar panels on highways, parking lots, petrol stations, and ports, among others. For construction and property, there will be continued support for rooftop solar, building integrated photovoltaic (BIPV), and energy storage solutions. Other applicable industries mentioned include telecom and agriculture. 

Stock call: Flat Glass (6865.HK, BUY, TP HK$48)

The latest action plan reaffirms China’s policy support for the broad application of solar. In particular, the encouragement to develop smart solar systems on buildings, transport infrastructure, and agricultural land provides a supportive demand picture for solar products. All players along the value chain will benefit from strong demand. Among counters under our coverage, Flat Glass Group (FGG 6865.HK, BUY, TP HK$48) should continue to benefit from sustained demand for solar glass. In addition, those players with strong R&D capability and technical-know-how, such as Longi Green Energy (601012 CH, NR) will also ride on such technology development.