Related News
Mixed feelings over US solar project
A PLAN by an American company to build a huge solar power station in China's northern deserts may be a mixed blessing for the domestic industry.
First Solar Inc, the world's leading solar modules maker, earlier this month announced an agreement with the Chinese government to build a 2-gigawatt solar power plant in Ordos in Inner Mongolia Autonomous Region.
The project, while it shows China's commitment to a low-carbon future ahead of a key international climate summit in Copenhagen in December, and while it could significantly contribute to local economic growth, would effectively squeeze the market share for domestic solar module makers, whose manufacturing capacity already ranks as the world's biggest.
First Solar didn't say how much investment would be needed for the project, but a similar plant would cost US$5 billion to US$6 billion if built in the United States.
A 2GW capacity, enough to supply 3 million homes, is about 14 times China's total installed solar capacity as of last year. First Solar said the project will be completed by 2019. Industry officials have said China's target for solar installation would be up to 20GW by 2020.
That means the single project by First Solar could take a 10-percent market share in the Chinese market by then.
"As the project is implemented, it's highly likely that the market share of domestic solar cell manufacturers will be squeezed," said Yu Yaxin, an analyst at Changjiang Securities. "But it could also provide experience for China in building utility-scale solar projects."
The deal was signed in Arizona, where First Solar is based, during a visit by Wu Bangguo, China's top legislator.
Government officials have declined to discuss the potential impact of the project on domestic solar manufacturers, who number in the hundreds. About 10 companies dominate the industry.
A 2GW plant to be built solely by a foreign company may be too big in the domestic scheme of things, said Hu Runqing, associate research fellow at the Energy Research Institute under the National Development and Reform Commission.
Hu, who spoke on the sidelines of an energy forum in Shanghai last week, said she couldn't comment further on the issue on behalf of the commission, China's top economic planning agency.
Wind power
In the wind-power sector, China has imposed a minimum 70 percent local content requirement on equipment, which helped lift domestic makers' market share and prompted foreign players to set up plants here.
Hu said there was no similar requirement yet on the solar front.
Media reports have said domestic solar companies, including Suntech Power Holdings Co and Trina Solar Ltd, had expressed interest in the Ordos project.
In a press release, First Solar said it would "actively review the possibility of module and supplier manufacturing sites in Ordos, and other considerations required to support a First Solar investment."
First Solar's panels cost 87 US cents per watt because of its proprietary CdTe thin-film technology, versus about US$1.40 for other panels, according to Daiwa Securities.
But Chinese solar companies have been mainly focusing on incremental-cost reductions through scale and process improvements, rather than making a big leap by investing in new technology.
The government is sending a "wake-up call" to domestic solar companies by selecting First Solar for the 2GW plant over local players, Daiwa analyst Pranab Kumar Sarmah wrote in a research note.
Domestic solar module makers, who exported 98 percent of their products in 2007 and 2008, are now eager to explore the long under-developed domestic market. This comes amid a pullback in solar subsidies in Germany and Spain, the traditionally strong markets, and a dearth of credit for renewable energy projects amid the financial crisis.
Although China has rolled out several programs to subsidize the installation of solar panels this year to speed the development of the solar sector, the domestic market is not likely to take off in the absence of a national feed-in tariff.
A feed-in tariff guarantees the pricing of electricity produced by renewable sources so that such projects can be viable.
Hu said it took the government six years to decide on a national feed-in tariff for domestic wind-power projects. It will take less time for solar, but it may still take two years to evaluate more projects to better determine the costs.
Her comments may upset the industry.
Shi Zhengrong, founder and CEO of Suntech, said earlier he expects a national feed-in tariff will come before the end of this year.
Industry sources say there is concern within the National Development and Reform Commission about overinvestment and overcapacity should a feed-in tariff be rushed into implementation this year, a situation similar to what happened in Spain and is occurring in Germany.
First Solar said the Ordos project will operate under a feed-in tariff, which will be "critical" to its investment.
The American company is making a solid step in tapping the potentially huge Chinese market, and it's not bad news for all local manufacturers. Super white glass, used by First Solar in cell production, is an example.
Changjiang Securities' Yu estimates the Ordos project will spur demand for US$810 million of super white glass, with the Shanghai-listed industry leader Shandong Jinjing Science & Tech Co expected to be the biggest beneficiary.
First Solar Inc, the world's leading solar modules maker, earlier this month announced an agreement with the Chinese government to build a 2-gigawatt solar power plant in Ordos in Inner Mongolia Autonomous Region.
The project, while it shows China's commitment to a low-carbon future ahead of a key international climate summit in Copenhagen in December, and while it could significantly contribute to local economic growth, would effectively squeeze the market share for domestic solar module makers, whose manufacturing capacity already ranks as the world's biggest.
First Solar didn't say how much investment would be needed for the project, but a similar plant would cost US$5 billion to US$6 billion if built in the United States.
A 2GW capacity, enough to supply 3 million homes, is about 14 times China's total installed solar capacity as of last year. First Solar said the project will be completed by 2019. Industry officials have said China's target for solar installation would be up to 20GW by 2020.
That means the single project by First Solar could take a 10-percent market share in the Chinese market by then.
"As the project is implemented, it's highly likely that the market share of domestic solar cell manufacturers will be squeezed," said Yu Yaxin, an analyst at Changjiang Securities. "But it could also provide experience for China in building utility-scale solar projects."
The deal was signed in Arizona, where First Solar is based, during a visit by Wu Bangguo, China's top legislator.
Government officials have declined to discuss the potential impact of the project on domestic solar manufacturers, who number in the hundreds. About 10 companies dominate the industry.
A 2GW plant to be built solely by a foreign company may be too big in the domestic scheme of things, said Hu Runqing, associate research fellow at the Energy Research Institute under the National Development and Reform Commission.
Hu, who spoke on the sidelines of an energy forum in Shanghai last week, said she couldn't comment further on the issue on behalf of the commission, China's top economic planning agency.
Wind power
In the wind-power sector, China has imposed a minimum 70 percent local content requirement on equipment, which helped lift domestic makers' market share and prompted foreign players to set up plants here.
Hu said there was no similar requirement yet on the solar front.
Media reports have said domestic solar companies, including Suntech Power Holdings Co and Trina Solar Ltd, had expressed interest in the Ordos project.
In a press release, First Solar said it would "actively review the possibility of module and supplier manufacturing sites in Ordos, and other considerations required to support a First Solar investment."
First Solar's panels cost 87 US cents per watt because of its proprietary CdTe thin-film technology, versus about US$1.40 for other panels, according to Daiwa Securities.
But Chinese solar companies have been mainly focusing on incremental-cost reductions through scale and process improvements, rather than making a big leap by investing in new technology.
The government is sending a "wake-up call" to domestic solar companies by selecting First Solar for the 2GW plant over local players, Daiwa analyst Pranab Kumar Sarmah wrote in a research note.
Domestic solar module makers, who exported 98 percent of their products in 2007 and 2008, are now eager to explore the long under-developed domestic market. This comes amid a pullback in solar subsidies in Germany and Spain, the traditionally strong markets, and a dearth of credit for renewable energy projects amid the financial crisis.
Although China has rolled out several programs to subsidize the installation of solar panels this year to speed the development of the solar sector, the domestic market is not likely to take off in the absence of a national feed-in tariff.
A feed-in tariff guarantees the pricing of electricity produced by renewable sources so that such projects can be viable.
Hu said it took the government six years to decide on a national feed-in tariff for domestic wind-power projects. It will take less time for solar, but it may still take two years to evaluate more projects to better determine the costs.
Her comments may upset the industry.
Shi Zhengrong, founder and CEO of Suntech, said earlier he expects a national feed-in tariff will come before the end of this year.
Industry sources say there is concern within the National Development and Reform Commission about overinvestment and overcapacity should a feed-in tariff be rushed into implementation this year, a situation similar to what happened in Spain and is occurring in Germany.
First Solar said the Ordos project will operate under a feed-in tariff, which will be "critical" to its investment.
The American company is making a solid step in tapping the potentially huge Chinese market, and it's not bad news for all local manufacturers. Super white glass, used by First Solar in cell production, is an example.
Changjiang Securities' Yu estimates the Ordos project will spur demand for US$810 million of super white glass, with the Shanghai-listed industry leader Shandong Jinjing Science & Tech Co expected to be the biggest beneficiary.
- About Us
- |
- Terms of Use
- |
-
RSS
- |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证:沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证:31120180004
- |
- 网络视听许可证:0909346
- |
- 广播电视节目制作许可证:沪字第354号
- |
- 增值电信业务经营许可证:沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.