Facing a manufacturing overcapacity and a growing need for clean energy, China announced a plan that could have impacts on both fronts.
To learn more what this would mean for China's domestic solar prospects, we turned to Chris Brown, North America general manager of Asia Cleantech Gateway. Below is how he sees the current market and the challenges ahead.
China’s National Energy Administration (NEA) last week announced it is aiming for the country’s installed solar power generating capacity to reach 15 GW by 2015. This is a 50 percent increase from its previous plan.
This new target marks a new urgency in China’s attempts to create a domestic solar market. Right now China’s production capacity is about 30 to 40 GW. Yet, for this year, China’s market size is about 2 GW. Being an exporter of solar modules while their domestic energy needs are so serious has been a sore spot to Beijing for the last five or six years.
The current PV overcapacity has exacerbated the situation and Beijing is responding with new urgency. China sees becoming a major consumer of the solar products as the best way to address the problem.
How successful China will be developing its solar market is debatable but the intention, focus and allocation of funds is clear. In 2011, China has addressed two of the key needs to creating a strong domestic market — a unified feed-in tariff and a transmission infrastructure that can handle renewable energy.
In July, China’s National Development and Reform Commission (NDRC) announced its plans to create a unified, nation-wide feed-in tariff. There will be problems implementing the FiT. The proposed rate is nowhere near enough for PV projects in many parts of the country.
As part of new solar capacity target plan, the NEA will seek international help in building new a transmission infrastructure. It acknowledged that much of the problem with getting the utility-level renewable energy projects connected to the grid has been a lack of engineering expertise.
Foreign cleantech investment and technological expertise have been welcome but management less so. Allowing foreigners working with Chinese engineers on building new UHV lines shows a new openness and honesty in addressing the transmission problem.
China’s energy market is disjointed and implementing nation-wide renewable energy policy is difficult. Last week’s new solar target, however, is another indication that Beijing is urgently working to become a major consumer of its own solar products.
U.S.-CHINA TRADE DISPUTE
Possible Probe of Chinese Panel Makers: An American senator wants an investigation into how major Chinese solar panel makers were able to access American capital markets and raise billions of dollars.
Growing Complexity of Trade Dispute: Perhaps the biggest question in this standoff is, "Who has more to lose?" China could lose access to the growing U.S. market, but both India and China itself could more than fill the void.
Striking Balance: The global solar industry benefits from healthy competition between the United States and China.
Recent Dispute History: Reuters lists the recent industry trade disputes between the U.S. and China regarding renewable energy and beyond.
IN THE NEWS
Bio Flight From Thailand: Thai Airways has joined the aviation biofuels race with plans to launch what it says is Asia’s first all-biofuel commercial flight on Dec. 22.
Small Hydro in China: Yichang's small hydropower agency has awarded contracts worth $52.8 million to four Chinese groups to build 11 small hydroelectric projects in China's Hubei Province.
Next-Generation Wind: Korea has signed a contract for 2,500 MW of offshore wind power from jet-like next-generation turbines. The agreement is pending government testing.
Solar Data Project: Telecom carrier Softbank Corp. has begun generating electricity at its solar power test plant in Japan's northernmost main island of Hokkaido to collect data on power generation efficiency and antisnow measures. The company expects the data to be used by companies interested in solar power generation.
Deal for Indonesia Geothermal Plant: Marubeni Corp. and Toshiba Corp. of Japan won an order to build a 55-megawatt geothermal plant from Indonesia’s PT Geo Dipa Energi. The plant, to be built in the suburbs of Bandung southeast of Jakarta, will start operating in 2014.
A DEEPER LOOK
Focus on Renewable Energy Is Vital: An energy expert and research scholar from India details the growing importance of renewable energy as his nation looks to further develop its economy.
In India, Solar Power Cheaper Than Diesel: An inside look at India as an emerging solar player and the effect that is expected to have on the nation’s diesel generator industry.
PV Projects Big and Small: PV installations in Tibet and Shenzhen are two of the accomplishments featured by the editors of Photovoltaics World.
Japan Traders Eye $200 Billion Power Market: As Japan continues to reconsider its energy future, among the major considerations is a potential revamping of the power structure itself.
A Mining Monopoly: China’s dominant grip of rare earth minerals is felt in nearly every high-tech sector, including renewable energy.
QUOTE OF THE WEEK
“The Indian market accounts for 20 percent of our global sales and we see it going up to at least 35 percent next year. There is increasing competition from low-cost Chinese machines and also the concern on incentives and subsidies. The market has not really recovered from the financial crisis of 2008 and there is over-supply. This has not affected India that much. But because of oversupply, there has been a big squeeze on margins globally.”
— Ramesh Kymal, Gamesa Wind Turbines
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IN CASE YOU MISSED IT
Dec. 5-12, 2011 Asia Report: Two Views on Durban Deal
Nov. 28-Dec. 5, 2011 Asia Report: Mixed Signals Over Emissions
Nov. 21-28, 2011 Asia Report: China Strikes Back
Nov. 14-21, 2011 Asia Report: Solar Dispute Is Just Part of the Friction
Nov. 7-14, 2011 Asia Report: Fearing ‘Protectionism,’ China May Expand Domestic Market
Nov. 1-7, 2011 Asia Report: China Developer Puts U.S. Plans on Hold
Oct. 24-31, 2011 Asia Report: Energy Solutions from Hong Kong
Oct. 17-24, 2011 Asia Report: China Responds to Solar Complaint
Oct. 10-17, 2011 Asia Report: Intensity Increases Over China Pricing
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