By D.A. Barber
Over the past two years, China’s frenzied pace at which it has been expanding its domestic installation and construction of solar power projects reflects its acknowledgement for a need to reduce its reliance on costly fossil fuels imports and cut environmentally detrimental carbon emissions.
China currently gets about 55.8 percent of its oil from imports, compared with 51 percent in 2008. Statistics from BP's 2011 World Energy Review show that based on China's reserves and its use in 2010, the country’s coal reserves will be exhausted in 35 years, while oil will be used up in 9.9 years and natural gas in 29 years. The government plans to increase the share of non-fossil energy to 11.4 percent by 2015 from 8.3 percent in 2010. During 2010, China invested over $47.31 billion in renewable energy, according to the Committee of Population, Resources and Environment of the CPPCC National Committee.
China’s Energy Plan
China recently revised the photovoltaic industry portion of its 12th Five-Year Plan through 2015. China's Ministry of Industry and Information Technology (MIIT) released a revised 12th Five-Year Plan for the nation’s PV industry in mid February 2012. Part of the plan calls for the largest polysilicon producers to reach 50,000 tons of annual production capacity and the largest PV cell makers to reach 5 gigawatts of annual capacity by 2015. By 2015, the cost of PV modules is projected to be lowered to about $1,100 /kW and the cost of PV power generation is expected to fall to $0.13/kWH.
That 5-year plan actually began in 2011, when China upped its solar energy installation goal from a 10GW set after Japan's nuclear disaster in March 2011, to a cumulative 15GW by 2015. (At the end of 2010, installed solar power in China was less than 1GW.)The Chinese government said the new 5-year plan aims to promote domestic solar energy use and strengthen China’s competitive edge in the face of intensifying competition and trade disputes.
Other government goals for 2015 include 21 percent efficiency for monocrystalline silicon cells, 19 percent for polysilicon cells, and 12 percent for amorphous silicon thin films, as well as greater R&D in energy storage and grid integration.
Also in February 2012, China’s government established the China National Renewable Energy Center (CNREC) to conduct research and create a "developmental roadmap" for renewable energy policies, as well as carry out cooperative programs with the international community. Liu Qi, deputy head of the National Energy Administration, is slated to be the first chairman of the center which is funded by the Sino-Danish Renewable Energy Development Program, a five-year joint project of the Chinese and Danish governments.
Meanwhile, China’s National Development and Reform Commission also implemented a quota-based system for provinces and cities that mandates the amount of renewable energy to be consumed and produced.
China’s Big Solar Players
Of the world’s top five PV module manufacturers, four are Chinese companies. Suntech, Yingli, Trina and Canadian Solar - considered a “Chinese” supplier because the majority of its operations are China based. The U.S.-based thin-film supplier First Solar ranks as #2, behind Suntech.
Suntech, which became the first to ship over 2GW of modules, announced in February 2012 that they had entered into a joint agreement with U.S.-based DuPont to focus on technology advancements and DuPont’s Tedlar polyvinyl fluoride film supply for protective backsheets on Suntech’s PV modules. The two companies have worked together in the past with DuPont providing its Solamet PV metallization pastes for Suntech’s PV cells.
Baoding-based Yingli Green Energy Holding Company Limited has a wider strategy: The company is involved with the entire spectrum of solar power, from the production of polysilicon, ingot casting and wafering, to PV production and module assembly. Currently, the company has a production capacity of 1.7GW per year with expansion plans for an additional 750MW under construction in Haikou, Tianjin, Hengshui and Baoding. When those plants are at capacity by the third quarter of 2012, the company's total capacity will reach 2.45GW. The United States is a big part of Yingli’s market and in February 2012, Yingli Americas renewed its strategic partnership with Oakland-based non-profit GRID Alternatives to supply 1MW to low-income families through a combination of donated and fair-market priced PV modules.
China’s Solar Hot Spots
As of the beginning of March 2012, installed PV generating capacity in China's Qinghai province had reached over 1,000MW with 42 PV power projects approved in 2011 alone. Qinghai province is home to the Gobi Desert and has an annual radiation level averaging 5,800 to 7,400 megajoules per square meter. The basin has been targeted as the ideal location for such solar projects since it has 100,000 square km of what has been described as “wasteland.”
In the next decade, Qinghai Province plans to expand its PV power capacity to 4,000MW, making up 15 percent of Qinghai's total energy production. The western city of Golmud alone has 23 PV power companies that have built power stations with a gross installed capacity of 570MW, which is expected to top 1,000MW by the end of the year. Astronergy, a subsidiary of Chint Group, finished work on a 20MW PV project in November 2011 near Golmud and is considered one of the largest to date in China.
Suncore Photovoltaics, a joint venture between Emcore and San’an Optoelectronics, just completed phase I of construction of its new manufacturing facility in Huainan and has begun producing CPV modules for a 50MW installation - also in Golmud. Once completed, this project will be the largest CPV installation in the world. Suncore, founded in July 2010, broke ground on the Huainan facility in February 2011 and will now work towards completing its phase 2 and 3 construction. The Huainan facility has an annual production capacity of 200MW for CPV modules.
Canadian Solar and the Ningxia Electric Power Group finished work in January 2012 on a 10MW PV project in the Hongsibao district of Ningxia in northwest China. The joint project is part of a larger 50MW plant and will generate around 13.5 GWh of electricity a year using an 8MW fixed system and a 2MW tracking system.
The Gansu Province in west China is reported to be host to over 100MW of planned or completed solar power projects - over one eighth of China’s currently installed solar capacity. In January 2012, JinkoSolar connected China Guangdong Nuclear Solar Energy Development’s 18MW PV power plant in Dunhuang to China’s grid. The plant consists of 76,000 of JinkoSolar’s modules and brings the company’s stake in the Gansu region up to 15 percent.
China’s JA Solar was also recently tapped for its PV modules in a 23MW installation in Lingwu, also in Ningxia province, a project developed by the Angli Group and state-owned China Datang Corporation.
China’s Growing Domestic Market
China produces the majority of the world's solar PV cells and about 45 percent of the world’s polysilicon. While the glut of solar energy equipment caused PV panel prices to plummet by 50 percent in 2011 and forced several manufacturers to close factories or file for bankruptcy, China remains serious about long-term manufacturing expansion and increasing its own domestic use of solar energy. Despite such hurdles as overcapacity in China's PV industry and difficulties in connecting their renewable power to the grid, clean energy technology remains a strategic investment for nation’s government, not only for environmental reasons but also for energy security.
China has nearly one-fifth of the world population and the world's second-largest economy, but had less than 1GW of installed solar power at the end of 2010. The total size of green energy installations in China to meet their future energy needs over time will be huge.
But China's Ministry of Industry and Information Technology admits that the country still relies on more technically advanced equipment from other countries for PV production because it lags behind in polysilicon and thin film production technologies. The country’s solar manufacturers have already entered into strategic partnerships with some of the Western companies that still have the upper hand when it comes to advanced technologies. And with such a huge potential domestic energy market developing within China, such partnerships will no doubt provide additional windows of opportunity for other non-Chinese companies with certain expertise. For example, in January 2012 the Austrian inverter manufacturer Fronius announced it was expanding into the flourishing Chinese PV market by establishing a wholly-owned subsidiary in Shanghai and has already secured a 1MW project in Chongming. And a few U.S. companies, such as Applied Materials, have established solar research operations within China. NuvoSun, a start-up CIGS manufacturer currently based in California's Silicon Valley, has also announced plans to move its operations to China later this year.
Conclusions
China's domestic PV panel market has attracted investment from both state-owned and private companies resulting in the country becoming the third-largest solar market in the world for new solar installations during 2011. With another roughly 25GW of projects planned and China's recent announcement of a solar generation feed-in tariff, it should be expected that this utility-scale development trend will continue, especially in the northwest region.
At the start of the 5th World Future Energy Summit, held in Abu Dhabi on January 16, 2012, Chinese Premier Wen Jiabao was confident when he said that China plans to stay on a sustainable development path and stick to the goals of its 12th Five-Year Plan.
Since China is serious about increasing its own use of solar power as well as maintaining its global solar market position, the government’s continued support for long-term manufacturing expansion makes sense. Not only will it continue to push advances and competition within the global solar industry, it will go a long way to ease some of the nation’s massive environmental problems. In December 2011, China’s National Energy Administration said that power generated by all clean-energy sources including solar will equal what the country would produce using 480 million tons of coal between 2011 and 2015. And the China Council of International Cooperation on Environment and Development said in November 2011 that by 2015, China will spend an estimated $900 billion to improve energy efficiency and protect the environment.
As China continues to ramp up solar installation within its own boarders, its exports of PV panels around the world could slow in the future in order to meet their own domestic demand. But that is not likely to happen anytime soon since so many western markets depend on China’s inexpensive PV panels.
China controls about 50 percent of the U.S. PV panel market totaling $3.1 billion last year in sales, according to the U.S. Commerce Department - the U.S. government agency that decided in March 2012 to impose tariffs of 2.9 to 4.73 percent on such imports after concluding the Chinese government had been subsidizing PV manufacturers. Additional “anti-dumping” tariffs are expected to be announced on May 17, 2012. While some U.S. PV manufacturers applauded the tariff decision, the U.S. companies that install the panels said tariffs will do nothing but simply slow down growth of PV installations in the country. The U.S. solar industry installed a record 1,855MW of PV capacity in 2011, more than doubling the 887MW record set in 2010, according to the latest U.S. Solar Market Insight report from the Solar Energy Industries Association. SEIA is one of the groups that have down played the tariffs - and China’s subsides - as not big enough to have any major effect on the solar market. In fact, stocks of Chinese solar companies rose in response to the virtually meaningless size of the U.S. tariffs after they were announced. And some Chinese firms are still looking to expand into the United States: Hmin Solar Energy Group, which is developing solar projects in Dezhou, is currently eyeing sites near Phoenix, Arizona, and Los Angeles for possible manufacturing facilities.
As China continues to increase its domestic installation of solar power, its major PV manufacturing companies should enjoy a steady global demand for their products both domestically and globally. The potential is that the global solar industry as a whole should reap the benefits of scale in both lowered prices and increased efficiencies, particularly from R&D collaborations with additional western firms willing to establish a presence in China. In fact, those firms that can help China with its PV-grid connection issues will be particularly well positioned since reports from the AsiaSolar 2012 conference in March suggest that of the 2.8GW of PV projects finished in 2011, less than half are actually connected the nation’s grid.
