China's First Round of Solar Project Applications

China announced its first national solar subsidy program. The government is offering subsidies of 20 yuan (US$2.9)/W for projects with a minimum installation size of 50KW. According to Tanwain's DiGitimes report, the first round of application deadline was May 15, 2009, and a total of 500MW of projects were submitted by Chinese solar companies. That is roughly US$1.45B subsidies which will be granted. There are estimated to be over 50 solar companies in China, however 95% of the projects will be built by less than 10 big players, and they are Suntech Power (STP), Yingli Green (YGE), Renesola (SOL), Solarfun Power Holding (SOLF), Trina Solar (TSL), JA Solar (JASO), JC Solar, China Sunergy (CSUN) and Best Solar. Canadian Solar (CSIQ) may not be eligible as it is headquartered in Canada, government likely treat it as a foreign company in the same category of First Solar (FSLR), Sunpower (SPWRA), Q-Cells (QCSLF.PK) and Qimonda (QI).

The following is the estimated MWs of major companies based on their production capacity in 2009 and report from Digitimes:

Co.	projected MWs applied	2009 production Capacity(MW)	Market cap.($M)
Suntech	170	1000	2900
Yingli	50	500	1900
Renesola	45	400	320
Solarfun	45	400	450
Trina solar	30	300	700
JA solar	40	400	800
JC solar(acquired by Renesola)	40	300	NA
China Sunergy	20	200	210
Best solar	60	1000	NA
TOTAL	500	4400

We should expect details from the energy department before July 2009 as the government has started receiving the second round of application (deadline in August 2009).

Disclosure: Author is long FSLR, SOL.

Comments

[kewlhand:]

What would you estimate the production capacity is for 2009 of the combined SOL/JC Solar? and how much overlap do you think there is in their bids? It strikes me that the best case scenario (ie no overlap) would show SOL still has a very low market cap for it's probably future earnings compared to its peers.

Jun 07 09:03 AM

[wind4me:]

my focus is on the China Wind growth coming by 30,000MW's by 2012, the big potential of APWR is going to overwhelm long term investors with the General Electric joint partnership

Jun 07 02:43 PM

[frflyer:]

wind4me

China recently upped their intentions for wind energy, from the 30 GWs that you mention, to 100 GW by 2020.
I am bullish on APWR also. I got my foot in the door at about $6.75 and so far haven't regretted it.

Jun 07 04:14 PM

[tginomorebush:]

JASO............ BEST MANAGEMENT...........!!!

Jun 07 05:21 PM

[longancr:]

JC Solar 300MW???? Do you mean 300 employees???? Please do some DD before write. "JC Solar is located in the Yixing Economic Development Zone of Wuxi City, Jiangsu province, and is an established cell and module manufacturer. JC Solar has approximately 300 employees with current annual cell production capacity of 25 MW and annual module production capacity of 50 MW."

Jun 07 11:55 PM

[Michael Boyter:]

The Chinese subsidy program will set a good example that I believe will aid in the acceptance of solar and wind power into the power grids of most industrialized nations. If the Chinese can make such a commitment I believe many nations will follow their example. China's growing population and their dependence on coal make fast deployment of clean energy a must, if they are going to reduce the amount of Co2 their power industries are emitting. This opens up opportunities for American technological innovations. I look for some disruptive breakthroughs in the near future to get a boost from being utilized by China's rapidly expanding Renewable Energy Industries.

Jun 08 12:05 AM

[bartpr:]

isnt the total buildout 180mw and it is restricted to builtin pv. meaning it will go to new construction only. where are you getting your numbers. there are very few suppliers in china that handle built in for new construction.

Jun 08 08:04 PM