China
Nation's solar companies push homeward
By Meng Jing (China Daily)
Updated: 2010-10-08 07:50
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Meng Xian'gan, vice-chairman of the China Renewable Energy Association, said the nation's photovoltaic industry shouldn't simply rely on overseas markets because it will "make the industry fragile".
Many manufacturers in other industries, such as textiles, have dominated the global market because they use cheap labor and resources. But rising costs for resources and labor have hit many hard.
Meng said China accounts for about 40 percent of the global output of photovoltaic devices that convert the sun's energy into electricity. More than 95 percent of China's photovoltaic products are exported. China is the world's largest producer of solar cells with Japan in second with 14 percent.
The problem is that domestically in China, the usage or employment of solar energy technology is miniscule. The European PhotoVoltaic Industry Association said the global capacity of solar-generated electricity reached more than 22 gW last year. China's consumption, according to the association, accounted for 1.3 percent. This represents about 0.2 percent of China's total power consumption. One percent of the world's energy usage came from solar-generated electricity.
Yang Hongtao, a sales manager with Luoyang Gao Peng Solar Technology and Science Co, also said that Chinese companies should not rely on overseas markets.
"We need to explore the domestic market. But the problem is that Western countries can afford solar energy, China cannot," he said.
While manufacturing seems to be a success story, Shi Jinchuan, an economics professor at Zhejiang University in East China, said China's solar industry has had to import half of its components to make solar cells. Key technologies and equipment are also imported.
Sun Guangbin, director of the solar products department with the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said that since 2000, Japan owns 45 percent of the solar energy patents worldwide.
The United States holds 20 percent while Germany has 10 percent. China is fourth with 8 percent.
Qiao Debo, a former employee of SunTech Power Holdings Co, a producer of silicon solar modules, said that at least 30 percent of the production lines in the company are imported.
Qiao, who now works for Shandong Keming Solar Energy Co, said Chinese-made solar products are 20 percent cheaper than those made in Europe. He said solar energy use in many European countries is growing thanks partly to incentives in these countries.
Germany, for example, has an installed capacity of about 10 gW, including 3.8 gW that came online last year. It's the world's largest solar energy market, the European PhotoVoltaic Industry Association said.
But Germany recently reduced its subsidies for the solar industry. This may lead to a decreasing demand for Chinese solar products.
In early September, the biggest industrial labor union in the US called for an investigation into China's support for its renewable energy industry. United Steelworkers, which represents about 850,000 workers, urged the US trade representative's office to confront China over what it says are violations of World Trade Organization rules.
Shi Zhengrong, chairman of SunTech, said China's photovoltaic industry will suffer if the US imposes tariffs on Chinese-made solar products.
"The US market consumed 1.2 gW of solar products so far this year, of which 50 percent were from China," Shi said.
At present, solar-generated power costs two to three times higher than the power generated from fossil fuels. But the industry is hopeful that the domestic market will grow dramatically as China aims to produce 15 percent of its power from renewable energy by 2020.
"The cost of solar power and fossil power will be around the same level in 2015 as the price of fossil power keeps increasing and the price of solar power keeps decreasing," said Wei Zhaowen, regional manager of Linuo Solar Power Co in Shandong province, East China.
But there are signs the domestic market is growing, he said.
"In 2008, 95 percent of our solar panels were shipped overseas, but in 2009, the percentage dropped to 80 percent," he said. "It is not like we don't want to use solar energy. It's simply because we cannot afford it, unlike in Europe."
Wei said more preferential government policies are the key.
Analysts from the Semiconductor Equipment and Materials International (SEMI), an international industry association headquartered in California, said solar power installation in China is closely linked with government policies.
A national subsidy program was introduced in March last year to promote the construction of integrated photovoltaic applications and rooftop systems. The program would give a fixed subsidy of 15-20 yuan per watt of installation.
A second national subsidy initiative, the Golden Sun Program, followed four months later to subsidize 600 mW of photovoltaic projects over the next two to three years.
"The two programs have activated the domestic market," Yu Tiantian, an industry analyst with SEMI. "As much as 160 mW of solar power generation capacity was installed in 2009. That is about 4 percent of the solar products made in China that year. The number was just over 1 percent in 2008."
Another problem is that although solar power is regarded as clean and renewable, the production process is not.
Fei Weiyang, from the Chinese Academy of Sciences, said in July that including the production of polycrystalline silicon, the primary material in solar cells, as much as 2.2 million kW of electricity is consumed for every 1 mW output of solar cells.
"The process also leads to the hazardous byproduct silicon tetrachloride," Fei said.