Wednesday, November 23, 2011

China solar goes for gold

Giles Parkinson, Business Spectator Pty Ltd

The scale of ambition in large-scale solar took a quantum leap forward this week when two Chinese companies announced they would soon begin construction on a 1,000MW (1GW) solar PV plant. The solar farm, near the Chinese city of Datong, would be by far the biggest in the world, and is being funded by CGN Solar, an offshoot of the China Guangdong Nuclear Corp, and Hong-Kong based polysilicon supplier GCL-Poly Energy.
The solar plant is not the largest ever announced, but it will be the largest when built. (First Solar in 2009 said it would build a 2GW solar PV plant in Inner Mongolia, also funded by China Guangdong Nuclear, but that project has faced delays and will likely now involve just a 30MW demonstration facility). GCL said the plant represented the start of a “golden development era” for solar in China, which aims to have 15GW of solar capacity by 2015, and 50GW by 2020. In 2009, it had next to zero.
The announcement of this gigawatt-sized solar plant comes as Chinese solar PV suppliers reveal a significant new dynamic in the market – China, courtesy of the introduction of its first feed-in tariff in August, is rapidly emerging as a major customer of its own solar PV, not just a supplier of silicon and modules.
Suntech, the biggest solar PV manufacturer in the world, said this week that China now accounted for 22 per cent of its market, up from zero in the first quarter of this year. Yingli Solar said the China accounted for 40 per cent of its sales in the third quarter, up from 4 per cent for the previous financial year.Another major China supplier, Trina Solar, said the China component of its market had risen from zero in the first quarter to 7 per cent in the 3rd quarter. The US market jumped to 21 per cent, while Germany fell by half to 32 per cent of its sales.
Arkx managing director Tim Buckley, whose fund has investments in China solar stocks, says while Germany and Italy have underpinned global growth in the solar market in the past few years, and will now likely decline, four of the biggest economies – China, Japan, India and the US – were likely to grow. ”Their advantage is that they are doing it later, and at a lower cost, and so with less consumer resistance.” Costs of modules had fallen by 25-30 per cent over the past year, and further falls were expected.
Buckley forecasts that the global market for PV will rise to 25GW in 2012 from around 21GW in 2011 (and 7GW in 2009). He predicts the Chinese market will add 1.5GW in 2011, but it could be as high as 2GW, nearly double market forecasts. This would make them the fourth-largest solar installer globally, behind Germany in 2011 (at 5GW), Italy (5GW), the US (2.1GW) and ahead of Japan at 1.5GW, which has renewed its interest in solar after the Fukushima nuclear disaster. Industry analysts NDP Solarbuzz also predicts China may surpass the US market for the first time in 2011 and, with India, will more than offset declines in Europe.
“China recently more than doubled its target for solar to 50GW by 2020 (but) we believe that like each of China’s wind targets set three to five years ago, China will again blow away this 50GW solar target,” Buckley says. He expects China’s install rate to reach up to 4GW in 2012 and then run at 5-10GW a year thereafter – meaning China could have a solar installed base of 26GW by 2015 and 75-100GW by 2020. By 2013, he says it will overtake Germany, Italy, Spain and the US to become the number one market in the world.
He notes that China already manufactures more than 50 per cent of the world’s solar PV, but until this last quarter exported 95 per cent of all its capacity. That dynamic is likely to change dramatically. In contrast, Buckley notes, 99 per cent of all wind turbines manufactured in China are installed within China.
And, Buckley notes, China seems happy with the concept that green energy does create jobs. Trina employs 15,000 staff and GCL 29,000 staff in China. Neither firm existed six years ago. Indeed, a report released last week by the China Council of International Co-Operation on Environment and Development predicted the country could create a net 9.5 million jobs (10.6 million new jobs versus 950,000 lost jobs) over the coming five years if it made a big push into green energy. The council, which recommended spending $900 billion over that time on energy-saving and cleantech policies, is headed by Li Keqiang, likely to become the country’s next prime minister.

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