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Sun set to shine on solar industry in China
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09:22, June 25, 2009

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As the world's largest solar-panel producer for the last two years, China already is a major solar player. But now, some industry experts say, it's expanding from being mainly a solar-panel supplier to also becoming a substantial customer.

"China, which already is important in production, is also going to be a large solar market," Gerhard Stryi-Hipp, head of energy policy for the Fraunhofer-Institute for Solar Energy Systems, said last week at a roundtable to discuss trends in advance of the Intersolar North America conference next month. That's an exciting prospect, as China -- with its population of 1.3 billion -- is soon expected to overtake the United States as the largest energy consumer in the world.

New Chinese policies are spurring the transition, Stryi-Hipp says. The country in March approved a subsidy for building-mounted photovoltaic systems which could pay up to 20 yuan per watt for systems larger than 50 kilowatts. For ground-mounted projects, the government is paying a feed-in tariff for the electricity generated, instead of a subsidy based on the projects' capacity. It has settled on a price of 1.09 yuan per kilowatt-hour for a 10-megawatt ground-mounted project in Dunhuang, the first in a series of ground-mounted projects, says Jenny Chase, manager for New Energy Finance's solar insight service. That's better than it could have been -- some companies actually bid at a loss for the project -- but still far lower than the European feed-in tariffs, she says.

While New Energy Finance forecasts that the rooftop subsidy is only likely to drive 50 to 100 mW of solar installations, Chase says the provinces could end up driving additional demand by offering their own installation incentives. Jiangsu province, for example, has announced plans to install 260 megawatts of solar through 2011.

On top of all this, the country has what Polly Shaw, director of external relations for Suntech Power, called the "most aggressive" renewable portfolio standard in the world. It aims to get 20 percent of its electricity from renewable sources by 2020, with some 100 gigawatts of wind capacity and 1.8 gW of solar. The country is already rethinking its solar target, and will "probably" revise it to 10 or even 20 gW this year, Shaw said. "Significant attention is being paid to solar in China," she said. "I think we're going to see a massive market starting up there, just like in the US."

Altogether, Chase expects to see 150 to 300 mW of new photovoltaic installation in China this year, up from 40 mW last year, and predicts the market could "easily" exceed 1 gW in 2010. "We do believe China is on the cusp of becoming a major solar market, though I suspect entirely for domestic producers," she said, adding that the market growth still won't be enough to counterbalance the current oversupply of solar panels and increase prices.

Of course, we've been hearing about China's enormous solar potential for years, and -- so far -- it's remained just that. Other analysts, including Paula Mints, a principal analyst at Navigant Consulting, says China will take more time to take off. After all, cheap coal plants are still fairly easy to start in the country, she says.

Source:China Daily/Agencies

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