China's New Focus on Solar

Jane Burgermeister
May 22, 2009 | 9 Comments

China's government has announced generous support for its photovoltaic companies, which are aiming to become market leaders and be the first to supply solar power at just US $ 0.10 per kilowatt-hour (kWh).

Subsidies are coming at just the right time for the country's flagging solar companies as well as for companies in countries like Germany and Canada, looking for new export opportunities.

Because exports account for about 98 percent of Chinese photovoltaic (PV) companies' revenue, they have been especially hard hit by the drop in demand due to the current global financial turmoil, forcing the government to take steps to "rebalance" the industry as reported by Lou Schwartz on April 13th.

According to a report in the English edition of China's "Digitimes" on December 8th, 2008, there were 350 Chinese PV companies doing business in mid-2008, but at least 200 of those companies had stopped production or folded altogether by the end of the year.

By introducing subsidies and a raft of other incentives to develop a domestic solar market, China's government is now giving its home-grown industry a much-needed shot in the arm.

Subsidies for solar modules on buildings of at least 50 kW were announced in March. These could be as high as 20 Renminbi Yuan (RMB; around US $3.00) per watt capacity according to the Ministry of Finance and the Ministry of Housing and Urban-Rural Development. That is enough to cover the entire production costs of solar modules in China, leaving only the installation costs to be met.

Solar modules will, however, have to measure up when it comes to efficiency standards: monocrystalline solar cells will need to have an efficiency of at least 16 percent; polycrystalline solar cells an efficiency of 14 percent; and thin film of 6 percent.

Solar energy to power hospitals and schools and government buildings will get special incentives under the government scheme.

Furthermore, rural households in remote regions will be helped to harness energy from the sun. A total of 80,000 solar panel "micro systems" are to be installed in remote villages in the southwest province of Sichuan, and many people will have a supply of electricity to light up their homes, cook their meals and power electric devices for the first time. Canadian Solar won the contract in April 2009. A total of 1.6 MW is to be installed.

The Chinese government has been slow to introduce solar energy subsidies, but has entered the fray after a fall in the price of polycrystalline silicon. Though the subsidies for 2009 are modest in scale at just US $60 million and there is an initial cap of 20 MW, the amount will be reviewed every year and experts say that it may be substantially increased.

However, China's solar energy industry has signaled the subsidies are just a stepping stone to reaching its strategic goal of producing lost cost, reliable solar energy that can compete with conventional sources. According to a report in China.org.cn, leading Chinese companies aim to reduce the cost of producing solar energy to 1 RMB or about US $0.15 per kWh by 2012.

However, two companies, Yingli Green Energy and SDIC Huajing Power, have submitted a bid to build a 10-MW solar power plant to provide electricity to the national grid at a price of RMB 0.69 per kWh or US $0.10 cents per kWh. At that price, solar energy will be just about as cheap as coal when it comes to producing electricity in China.

To achieve their ambitious solar goals, Chinese companies are partnering with German ones. In April, Germany's Q Cells and China's solar wafer manufacturer Solar LDK announced a joint venture partnership to develop large-scale solar power plants in Europe and China. The first projects, including a 40-MW power plant, are already in the pipeline.

The scale of the funds that the Chinese government is investing in clean energy and in upgrading its national electricity grid for renewable energy has taken the world by surprise. According to a report by the Center for American Progress, China's green stimulus spending is six times higher than the equivalent amount that the U.S. government is investing as a percentage of their respective economies.

However, China has a lot of catching up to do.

About 50 MW of installed solar capacity was added in 2008, more than double the 20 MW in 2007, but still a relatively small amount. According to some studies, the demand in China for new solar modules could be as high as 232 MW each year from now on until 2012. The government has announced plans to expand the installed capacity to 1,800 MW by 2020.

By way of comparison, 3,800 MW of solar capacity are estimated to have been installed in Germany in 2007.

If Chinese companies manage to develop low cost, reliable solar modules, then the sky is the limit for a country that is desperate to reduce its dependence on coal and oil imports as well as the pressure on its environment by using clean, renewable energy.

Jane Burgermeiser is a writer based in Austria.

9 Comments

william cormeny
July 3, 2009

China will want their own engineering firms to produce more revenue for its politicians.Furthermore,it is acutely aware of public relations since the building of the Three Gorges Dam created such an outcry.
Therefore, it should send its engineering students to European, Asian,Israeli,American,Canadian,and South African universities to learn the latest techniques for producing the cheapest methods.
There's no question the availability of Chinese solar power is enormous since the Gobi Desert is uninhabited and much of the population lives in a subtropical climate.Transmission issues can be overcome since they do not respect provincial rights.
The largest problem might be the demand created when railroads and automobiles shift toward electricity and away from coal generated power stations. Coal will be needed to produce far more steel,but the recent serious polution crises prompts the government to find clean coal solutions from these universities.

frederick hsing
June 3, 2009

Watching China's development in nuclear, aerospace as well as other technologies in the past 30 years, I believe they can do it. As one of the commentator said that the Chinese government can do things we can't in the U.S. There are no roadblocks, per se, companies/people do whatever the government wants them to do. The Chinese scientists and engineers are pretty smart too.

ANONYMOUS
May 28, 2009

WIth the cost of energy and labor in China, it is probably feasible that prices could approach $0.10/ kWh. With PPA's (power purchase agreements) in the US, after rebates, tax incentives, depreciation, and selling the Solar RECs (Renewable Energy Credits), it's realistic to get below $0.15/kWh, but that depends upon the state and how strong the market rates for the SRECs are. It's very expensive in the US to structure the contracts, deal with the leagl issues, etc., so our costs will always be higher.

William Hughes - Evergreen Solar already produces string ribbon solar cells, and I assume they use their own panels to provide substantial power for this process, but it still uses a large amount of energy to melt the "sand" and run the process, and I wouldn't expect them to ever be "off grid".

Thomas Schmidt - I would disagree on the solar industry being able to stand on their own --- it will happen, but we'll still need incentives for a while. With greenhouse gases "supposedly" leading to increased ocean sea levels, and air pollution contributing to health and environmental issues, and much of our oil coming from semi-friendly nations, I wouldn't be surprised to see the oil companies finding it easier and cheaper to become solar panel manufacturers than exploration, drilling, refinery, and distribution companies. It's a wonder that oil is as cheap as it is!

And fireofenergy -- energy is neither created nor destroyed, right? So we take the heat from the desert sun, heat some water to create steam, turn a turbine, generate electricity, then capture some waste heat, and create big cooling towers to create clouds in the desert? Then we have a water problem! Also, if we manufacture everything in China, they'll need the energy before we do, because installation jobs only last during the installation, while manufacturing jobs tend to be more permanent -- not a long-term solution for US success I'm afraid.

william cormeny
May 27, 2009

I think outsiders forget the Chinese government's power over right of way issues and grid priorities.Almost every other nation has enormous legal and financial problems getting right of way clearances.This single cost probably triples the cost of each and every renewable alternative.
In a recent Parliamentary move to avoid litigation the English tried to avoid local government protests and start nuclear plants in strategic locations around the country.
Renewable advocates know the utilities oppose them because they refuse to connect with existing grids owned by these companies.What is needed is a simpler more direct approach across the globe to right of way issues.

John Vig
May 27, 2009

How much of the sunlight is absorbed by air pollution on a typical day in Beijing? Perhaps, once solar panels are installed throughout China, the Chinese government will pay more attention to controlling air pollution.

Mike Holly
May 27, 2009

The US is losing another renewable energy technology to Germany and China.

Thomas Schmidt
May 27, 2009

China's government the first to supply solar power at just US $ 0.10 per kilowatt-hour (kWh).
the current global financial turmoil, forcing the government to take steps to "rebalance" the industry
China's government is now giving its home-grown industry a much-needed shot in the arm
To achieve their ambitious solar goals, Chinese companies are partnering with German ones.
However, China has a lot of catching up to do.
By way of comparison, 3,800 MW of solar capacity are estimated to have been installed in Germany in 2007.
Though the subsidies for 2009 are modest in scale at just US $60 million
That is enough to cover the entire production costs of solar modules in China, leaving only the installation costs to be met
Solar energy to power hospitals and schools and government buildings will get special incentives under the government scheme
rural households in remote regions will be helped to harness energy from the sun.
a fall in the price of polycrystalline silicon.

Isn't amazing how just taking a few statements out of text can create an intirely different impression? I didn't even try that hard to be convincing. The same thing can be done with the math. With the amount of constantly changing varibles surrounding the production of electricity from photovoltaics, $0.10 per KWh is pure speculation derived from averages derived from forecasting. I could take the exact same math but be less favorable and make the outcome show $0.25 per KWh. Get real people. Your selling a pipe dream and you know it. The really sad part is, that theres enough weak minded people out there so eager to give into the spin, that the industry in general is still making billions of dollars a year and still asking their respective governements for more money!

It would seem to me that the PV industry will never be able to stand on its own. It will always and forever need/want government (taxpayers) money.

Thomas Schmidt
May 27, 2009

China's government the first to supply solar power at just US $ 0.10 per kilowatt-hour (kWh).
the current global financial turmoil, forcing the government to take steps to "rebalance" the industry
China's government is now giving its home-grown industry a much-needed shot in the arm
To achieve their ambitious solar goals, Chinese companies are partnering with German ones.
However, China has a lot of catching up to do.
By way of comparison, 3,800 MW of solar capacity are estimated to have been installed in Germany in 2007.
Though the subsidies for 2009 are modest in scale at just US $60 million
That is enough to cover the entire production costs of solar modules in China, leaving only the installation costs to be met
Solar energy to power hospitals and schools and government buildings will get special incentives under the government scheme
rural households in remote regions will be helped to harness energy from the sun.
a fall in the price of polycrystalline silicon.

Isn't amazing how just taking a few statements out of text can create an intirely different impression? I didn't even try that hard to be convincing. The same thing can be done with the math. With the amount of constantly changing varibles suround the production of electricity from photovoltaics, $0.10 per KWh is pure speculation derived from averages derived from forecasting. I could take the exact same math but be less favorable and make the outcome show $0.25 per KWh. Get real people. Your selling a pipe dream and you know it. The really sad part is, that theres enough weak minded people out there so eager to give into the spin, that the industry in general is still making billions of dollars a year and still asking their respective governements for more money!

It would seem to me that the PV industry will never be able to stand on its own. It will always and forever need government (taxpayers) money.

william hughes
May 27, 2009

I've always wondered why monocrystalline silica is so expensive. After all, it is just purified beach sand. Surly one could develop a continuous zone purification system using extremely clean focused solar energy with doping at the last melt stage and churn out meters per hour of silica to be sliced into the necessary wafers. What is the great expense in this process. This seems to be the stumbling block to getting solar panels down to the necessary $1.00US per watt, at which point they will sweep the world.