Chinese solar industry gears up following EU-China deal

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Chinese solar industry gears up following EU-China deal

(Xinhua) 18:00, August 06, 2013

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As the solar panel dispute between China and the European Union (EU) lessened last week with the agreed minimum price and quota set for Chinese imports, the country's photovoltaic (PV) industry faces a task of structural upgrading.

According to a statement published Saturday by the European Commission, or the EU's executive arm, the EU endorsed the price undertaking submitted by a bloc of Chinese solar panel exporters, as well as a quota for their total exports to the EU. The agreement takes effect on Aug. 6.

The deal came after weeks of intensive talks following the EU decision in June to impose hefty provisional anti-dumping tariffs on solar panel imports from China.

Meanwhile, concerns are growing over whether Chinese domestic PV companies are braced for the change of climate and to which direction China-EU solar PV trade will head under the quota and price restraints.

In spite of China's huge presence in the solar industry, the country is so far a processing industry, an assembly line for the world's solar products, said Zha Daojiong, energy expert and professor at Peking University.

"A lack of core technologies has deprived China of a competitive edge in the international market," Zha said, suggesting Chinese companies tackle the challenges through innovation and upgrading.

Chinese solar panel production reportedly quadrupled between 2009 and 2011 to surpass the entire global demand. As a result, the EU accused China of dumping its solar panels in Europe at below-cost prices, involving20 billion U.S. dollars of trade between the two powers.

Cai Duwei, chief analyst at Chinese PV industry observing website Solarzoom, forecast that the EU market will become a high-end one, friendly to companies with high-efficiency, high technology and inevitably, high costs.

"The solar PV market used to be flat and centered on a low-price market," Cai was quoted in Tuesday's edition of Shanghai Securities News as saying. He added that major PV markets including China, the United States, Japan and the EU will start to differentiate.

The key for PV companies to succeed lies in seizing the high-end market by brand and quality, said the Solarzoom analyst.

In fact, some small market players have quickly responded to the shifting demand with their featured products, according to Zhao Yonghong, secretary general at the PV industry association in Hangzhou, capital city of southeast China's Zhejiang Province.

With its popular solar tile products priced between 0.8 euro (1.06 U.S. dollar) and 1 euro per watt of the produced power, Zhejiang Heda Solar Technology Co., Ltd. is one of the small companies that are unperturbed by the EU-China price arrangement of 0.56 euro, according to Zhao.

The PV market has entered a phase of differentiated products, which provides opportunities for cash-strapped small companies, said Zhao.

Meanwhile, hopes not only lie in the international market, but are also pinned on the expansion of domestic demand, which analysts believe has not been fully tapped into by investors.

Besides the often-talked-about approach to incorporate PV power stations into the State Grid system, Zha regards the application of PV facilities for China's millions of homes in urban and rural areas as another effective way to cut the industry's idle capacity and tap the country's vast potential.

China has been emphasizing the importance of the PV industry amid the country's initiatives to upgrade its industrial operations and energy structure.

The State Council, China's Cabinet, issued a statement on July 15 that targets an annual installation of 10 GW of solar energy between 2013-2015, with total installed capacity exceeding 35 GW by 2015.