Tag Archives: solar power

China Gives Another Boost To Its Solar Power Industry


Solar panels in Qingdao, Shandong Province. Photo credit: Xinhua

SIX MONTHS AGO, China’s policymakers set a new goal of more than quadrupling the country’s solar power generating capacity by 2015. The objective came against a background of an industry wracked by overcapacity and falling prices that has pushed companies like LDK Solar and JA Solar to the edge of bankruptcy, and Sun Tech over it. It was intended to restore the ailing industry’s health — more solar power plants will require more photovoltaic panels — and draw the sting from a series of trade disputes. It also fits with an overall goal of diminishing the country’s dependency on polluting fossil fuels.

Now the industry ministry has announced measures to help reach that goal, largely by driving industry consolidation and promoting standardization. It is also pushing the local generation of solar power in small-scale installations not connected to the power grid. That should promote technical innovation, as will R&D into batteries to store solar power. The package of measures is intended to avoid creating the trade frictions with the U.S. and the E.U. that China’s earlier support for its solar exporters caused. It will potentially provide more domestic work for China’s solar companies which together provide more than half the world’s solar panels — and have been accused of dumping them on international markets at below cost. Both the U.S. and the E.U. have imposed anti-dumping penalties.

China’s total installed solar power generating capacity increased by 8 gigawatts (GW) in 2013, of which 6 GW were at power plants and 2 GW were at decentralized installations, according to the China Photovoltaic Industry Alliance. If that initial estimate is confirmed it would mean capacity doubled last year. The raising last July of the country’s goal for 2015 to 35 GW from 21 GW requires another doubling of generating capacity  over this year and next.

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Turning the lights out at Wuxi SunTech

SunTech headquarters in Wuxi, Jiangsu Province
We noted last year how China was looking to provide a helping hand to its struggling solar panel industry by getting local governments to push projects using solar power. Beijing approved $1 billion in subsidies for 100 such projects last November. Now stick is following carrot. It is letting Wuxi Suntech, the main operating subsidiary of Wuxi-based Suntech Power Holdings, the country’s leading solar panel maker, slip into bankruptcy.

A group of eight Chinese banks, including some state heavyweights–Commercial Bank of China, Agricultural Bank of China and Bank of China–has initiated insolvency proceedings in a Wuxi court against the subsidiary (though not the NYSE-listed parent). This follows last week’s default by SunTech on $541 million of its bonds. If the bankruptcy petition goes  ahead as expected–Wuxi Suntech has told the court it will not file an objection to undergoing a court insolvency reorganization–it would represent the biggest corporate collapse in China in recent times, and provide a test of the country’s new bankruptcy law.

Yet more significant to this Bystander is the clear unwillingness of its lenders to keep propping up a loss-maker–SunTech owes the eight banks 7 billion yuan ($1 billion)–and particularly one as prominent as Suntech in an industry designated of national strategic importance. It also sends a signal to other Chinese solar panel makers to get their businesses in order as they struggle with global overcapacity, falling subsidies and international trade disputes–or they, too, will be allowed to go the same way as Suntech and many of its European competitors.

Then what is left of a culled industry will be consolidated into a few viable state champions.


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Bringing Some Sunshine To China’s Solar Power Industry

China controls 70 percent of the world's solar panel production and exports nearly 90 percent of its products to the eurozone and the United States. However, Chinese companies are starting to look to the domestic market as a result of the shrinking overseas markets. (Photo Source: Xinhua / China Daily)
The global solar industry is going through tough times. Excess capacity has caused solar-panel prices to plummet. Chinese solar-panel manufacturers face double trouble because their exports are also under anti-dumping investigations in the EU and the U.S. So Beijing is giving the domestic industry a boost to look inwards.

A report in the China Securities Journal says the National Energy Administration has told all provinces to come up with pilot schemes for local electricity generation using solar power. Plans are due by October 15, implementation by 2015.  Beijing, Shanghai and Tianjin have been told to be in the vanguard. Putting the banks’ money where the policymakers’ mouths are, the China Development Bank is to provide financial support through loans to the top dozen solar companies.

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China To Hold Growing Sway Over World Energy Industry

The International Energy Agency’s latest World Energy Outlook (to 2035) says China’s demand for energy will rise by 75% between 2008 and 2035, accounting for 22% of the world’s energy consumption, up from 17% today. Put another way, China will account for 36% of the growth in the world’s energy demand (see snapshot of IEA graph below). The IEA’s projections are based on the assumption that governments will do no more than meet any commitments already given on energy conservation, greenhouse gas emission reductions and the phasing out of fossil-fuel subsidies. (That so-called New Policies Scenario is the most conservative of the three sets of assumptions about governments’ intentions the IEA makes.)

It is hard to overstate the growing importance of China in global energy markets. [The IEA’s] preliminary data suggest that China overtook the United States in 2009 to become the world’s largest energy user, Strikingly, Chinese energy use was only half that of the United States in 2000….Prospects for further growth remain strong, given that China’s per-capital consumption level remains low, at only one-third of the OECD average.

The IEA also says that China’s growing need to import fossil fuels will have an increasingly large impact on international markets. It will account for half the net growth in global crude oil demand over the period, largely because it will need more fuel for cars and lorries. It will also have a voracious appetite for natural gas, the more so if coal use is restrained on environmental grounds. Its needs are likely to make the oil and gas producing nations of Central Asia such as Kazakhstan, Uzbekistan, Turkmenistan and Azerbaijan which draw from the Caspian basin a significant new energy region. Similarly, Beijing’s push to develop new low-carbon energy technologies could help drive down the costs of those through economies of scale.

In China, energy demand triples between 2008 and 2035. Over the next 15 years, China is projected to add generating capacity equivalent to the current total installed capacity of the United States.

Electricity generation is likely to be at the forefront of the transition to low-carbon technologies. The greatest scope for increasing the use of renewable energy sources in absolute terms, the IEA says, lies in power generation. China is already a leader in wind power and solar photovoltaic (PV) production as well as having become a leading supplier of the equipment thanks to strong government investment support. The IEA says China will add 335 gigawatts of wind generation capacity, 105 gigawatts of nuclear and 85 gigawatts of solar PV by 2035 (and put 8.5 million electric vehicles on its roads).  That said, coal-fired generation will remain substantial in China, with 600 gigawatts of new capacity exceeding the growth of the renewables and exceeding the current capacity of the U.S., E.U. and Japan.

The IEA takes aim at subsidies for fossil fuels, which it calls the “single most effective measure to cut energy demand”. It wants them phased out to end the market distortions that make it more difficult for low-carbon technologies to get development investment. It says that such subsidies amounted to $312 billion worldwide in 2009, though that was down from $558 billion the previous year. China was the fifth largest subsidizer in 2009, behind Iran, Saudi Arabia, Russia and India, at just shy of $20 billion. About half of that went to electricity generated from fossil fuels and most of the rest equally to coal and oil. Beijing has been moving towards more market based pricing for energy, but as the figures show, there is still a ways to go.

The subsidies analysis was done at the behest to the G-20, whose leaders are meeting in Seoul shortly and where climate change and the successor to the expiring Kyoto protocol on climate change will be on the agenda. The IEA lays out how heavily the burden lies on China and the U.S. to cut back emissions if the ideal target of limiting the increase in global temperatures to 2°C is to be hit by 2035: 32% China, 18% the U.S. 50% rest of the world. Low-carbon technologies would need to account, the IEA reckons, for over three-quarters of global power generation by then and plug-in hybrids & electric vehicles for 39% of new sales. That day may not come, or at least not fully, but the era of cheap fossil fuels is over. China is already investing heavily in those areas and giving itself a first mover advantage that the rest of the world may find difficult to claw back.

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