Search
  Insight Tool: Save | Print | E-mail   
Solar panel makers to make foray into domestic market
Last Updated(Beijing Time):2012-02-24 14:28

By Huang Xiaofang, Ma Hongchao


After going through the industrial recession since the second half of last year, photovoltaic companies have finally heard some comforting news. On February 1, the Ministry of Finance published the Notice on Making A God Job of the Golden Sun Demonstrative Program in 2012, estimating that the market volume in this year would exceed the scale of 600 megawatt of last year; later, statistics published by research institute Wind Information show that of the 48 public companies in solar power sector that have published their annual reports of 2011, only 15 are estimated to suffer loss, significantly lower than market expectation. 

 


Is the crisis over for the photovoltaic industry, which has long been dependent on foreign markets and following a path of expanding production capacity, buying equipments, processing and export? Or will the process of industrial integration, transformation and upgrade continue?


The photovoltaic industry plummets


- Over independence on foreign markets and excessive investment within short period of time are potential causes of the sharp drop of the industry


In the past decade, China's photovoltaic industry has developed at a vehement pace. By 2007, China had become the world's biggest producer of photovoltaic batteries and modules. However, over 90 percent of the products have been exported, sowing the seed for the rapid decline of China's photovoltaic industry. With the worsening of the European debt crisis, European countries have no choice but to tighten fiscal expenditure, cutting photovoltaic subsidy, leading to the rapid shrinking of the photovoltaic market.


In February 2011, Germany passed a photovoltaic grid electricity price reduction plan, stipulating that only when the yearly installation capacity is less than 3.5 GW would the price of photovoltaic grid electricity not be decreased; otherwise, each extra installation of 1GW would lead to an extra 3 percent reduction of photovoltaic subsidy. In May, 2011, Italy approved a new solar energy photovoltaic power generation subsidy act, limiting the annual subsidy amount to between 6 and 7 billion, and linking the subsidy to installation volume.

 

As the volume of photovoltaic installation in the European market accounts for more than 70 percent of the world's total, the abrupt brake in this market brings dramatic impact on China's photovoltaic industry. Demands for photovoltaic products in Japan, the second biggest market, have also slowed down due to the big earthquake. In addition, the USA and India and other countries have launched anti-dumping and anti-subsidy investigations against Chinese photovoltaic companies. The once roaring photovoltaic industry is now faced with the situation of seriously excessive supply.


In China, due to the profit-seeking nature of social capital and the unrealistic industrial guidance of local government, excessive investment has been made in China's photovoltaic industry within a short period of time, resulting in seriously excessive production capacity. In 2008, China had less than 100 photovoltaic enterprises, but now there are more than 500, with an aggregate production capacity of 30-40 GW. In 2011, the global photovoltaic installation volume was only 21 GW. 


It is imperative to tap the domestic market


- China has promulgated a series of policies to boost photovoltaic demands in the domestic market since the end of last year


In a bid to strength the domestic market's guidance for the demands of solar power on policy level, China has for the first time included solar power generation into its energy development plan in this year, and set the specific goal of 3GW. It is estimated that the eventual market volume may be slightly bigger than that.


Meng Xian'gan, deputy council chairman of China Renewable Energies Society, suggests that Chinese photovoltaic enterprises cannot depend on foreign markets for ever, and that they must attach more importance to the exploration of the domestic market.


In the past, China generally constructs large photovoltaic power stations in the west, transmitting electricity to across great distance to load centers in the east through major grids.


Meng Xian'gan says that during the 12th Five-year Plan, China's photovoltaic power will attach more importance to the development of distributed photovoltaic power stations. Such distributed photovoltaic power stations are more efficient economically, and have rather small interruption on major grids. 90 percent of photovoltaic electricity in foreign countries is distributed energy. Current operation shows that it is rather stable.


The study report published by Bank Sarasin in Switzerland recently also thinks positively of solar energy demands in the Chinese market. According to the report, the solar energy market in Europe will shrink at an annual rate of 5 percent from 2011 to 2015, but due to the development of emerging photovoltaic markets such as China, demands in the global photovoltaic market will increase by 20 percent in this year, and the annual growth rate of the global photovoltaic market from 2010 to 2015 will be 18 percent.


On policy level, China has promulgated a series of policies since the end of 2011, to continue to expand demands for photovoltaic power in the domestic market and promote photovoltaic companies to pay more attention to the Chinese market. It is worth mentioning that the finance industry also supports the development of major photovoltaic companies in various ways, including providing credit and loans. In last November, China Development Bank provided RMB30 billion Yuan of strategic credit to Hanergy Group.


Breakthroughs in two aspects


- Self-construction of photovoltaic power stations and integration of solar energy and buildings


Industrial participants point out that major effort should be made to achieve breakthroughs in two aspects for the photovoltaic industry to kick off domestic demands. 


First, self-construction of photovoltaic power stations. Study reports point out that, in the perspective of the photovoltaic industrial chain, power stations are still the link in the photovoltaic industrial chain that has the highest investment returns rate. Downstream power stations that are supported by policies may become stable sources of cash flow for photovoltaic companies in the future. At present, Hanergy Group and some other photovoltaic companies are extending to power generation, developing into complete industrial chains that integrate manufacturing and R&D of equipments, battery production, and solar energy generation.   


Second, integration of solar energy and buildings. Integration of solar energy and buildings does not occupy extra land, and power consumption in situ can reduce investment and loss in electricity transmission. Besides, the generation peak of photovoltaic power generation systems basically overlaps the electricity consumption peak in buildings, helping to ease electricity pressure. It is a good direction in the development of distributed energy. In 2011, Hanergy Group has invested in such bases as Shuangliu in Sichuan, Heyuan in Guangdong, and Changxing in Zhejiang, and will establish a production capacity of 2GW in this year.


In addition, the cost of photovoltaic power generation continues to go down. According to experts, the development of photovoltaic technology may result in low-price grid connection in the future. In the opinions of Charles Gay, president of Applied Solar, thanks to China's advantages in supporting facilities such as intelligent grid, China will be able to achieve low-price grid connection around 2018.


In light of the nearly 40 GW production capacity of the photovoltaic industry in China, the development goal of 3 GW in China this year appears very small. Meng Xian'gan suggests that China's solar energy industry will go through a difficult adjustment period in the short term, but in the long run, the prospect of the photovoltaic market is still promising.  

Source:CE.cn 
Tool: Save | Print | E-mail  

Photo Gallery--China Economic Net
Photo Gallery
Edition:
Link:    
About CE.cn | About the Economic Daily | Contact us
Copyright 2003-2024 China Economic Net. All right reserved