China's Solar Market Heats Up

Reuters reported last week that the aggregated incentives for solar production could bring $10 billion in capital to the industry over the next three years. This is just a latest piece of the puzzle for western investors to put together to see the whole picture of solar industry in China.

Among the massive economic stimulus plans and clean energy initiatives, China and the US are the top two players. In mid-April, China's Ministry of Housing and Urban-Rural Development announced a stimulus plan for BIPV applications, offering RMB 20/watt for construction material- and component-based BIPV projects and RMB 15/watt for rooftop- and wall-based projects. The ministry accepted applications for an initial round of subsidies until May 15. The number of projects applying for the subsidy has greatly exceeded the government's expectations based on the report from DiGitimes exceeding 500MW in total capacity. The Second round of applications is expected to close by Mid-August.

In terms of mega solar farm projects, below is a list of provinces that announced solar farms:

Qinghai province: the largest solar farm in the world was announced in Jan 2009, China, with a total capacity of 1GW. Suntech Power(STP), Renesolar (SOL) and JA Solar (JASO) are major bidders for a portion of the projects. It is expected most of Chinese solar companies will have a stake in the project, companies such as Best solar, Solarfun Holding (SOLF), Yingli Green (YGE) etc.

Yunnan province: 166MW solar farm was announced in Dec 2008, the $1.3bn facility in the southern province of Yunnan is scheduled to be finished by 2010.

Jiangsu province: This is the latest province to announce a mega solar farm. According to a report from JLM Pacific Epoch, quoting a document released by the Jiangsu provincial government on June 23. The province announced its first 3 -year solar power plan to reach 400MW by 2012. It is expected that local companies, such as Renesola (SOL) and Solarfun (SOLF) will benefit.

Zhejiang province: on June 22, Zhejiang's Hangzhuo city announced a 150MW solar and wind energy project for the next 5 years. As a local solar PV provider, JC solar (acquired by Renesola) will be a tough competitor for the projects.

Australia: Businessweek reports on May 19 that Australia plans a 1GW solar farm as a part of the state's goal of obtaining 20 percent of its electricity from renewable sources by 2020.

Institutional investors have started investment in this green sector, among them is Guinness Atkinson Asset Management which runs funds like the Guinness Atkinson Alternative Energy Fund [GAAEX] and the Guinness Atkinson Asia Focus Fund [IASMX], holds JA Solar, Renesola , Suntech Power, and Trina Solar (TSL). The fund also has a large stake in the largest domestic solar producer, First Solar (FSLR).

Disclosure: Author is long FSLR, SOL, JASO, SOLF.

Comments

[billp37:]

Sunny Days Ahead For Solar Industry Growth

www.manufacturing.net/...

first comment.

We're still trying to figure out if Fast Neutron is right or wrong.

Jun 24 09:34 AM

[Zenfar:]

Good info on the green funds, I had not heard of them before.

What about LDK? I would think they would benefit no matter who wins the bids.

Long STP and LDK

Jun 24 10:37 AM

[Fred W:]

To all of those SA readers that mocked my prediction (Sept of 2008) of a real market for PV in China coming in mid-2009...Who is laughing now?
It is all about keep idle hands busy in China--the alternative is massive demonstrations and then revolution. The Communist party is staving this off but with things like FB and Twitter available to its populace, transformational events can change things so rapidly in China that the party cannot keep up...similar to Iran's problem now but w/o the religious overtones.

Jun 24 11:30 AM

[Road Runner:]

Dead on Fred W. Pun intended.

The number one job for the communist party in China is to keep over 1 billion people busy and feeling that life is getting progressively better. But also, building a solar infrastructure works hand-in-hand with pushing the population toward electric cars, which creates a stronger economy which supports job number one above. Solar and electric cars also reduces air pollution which again supports job number one by reducing health issues and making people feel better about their lives. Plus, developing these 2 alternative energy products, solar and electric vehicles, in China, gives them “new economy” products to sell to the rest of the world leading to higher employment and a more content population.

It's all an interconnected plan. Almost diabolical.

Jun 24 12:40 PM

[HaavBline:]

You got it exactly right, Road Runner.

China is taking this current global financial crisis as a new major window of opportunity to transform and leap frog, as the last one (addicted foreign consumers) have expired.

Invest heavily for the future, when others are bogged down by debt.


On Jun 24 12:40 PM Road Runner wrote:

> Dead on Fred W. Pun intended.
>
> The number one job for the communist party in China is to keep over
> 1 billion people busy and feeling that life is getting progressively
> better. But also, building a solar infrastructure works hand-in-hand
> with pushing the population toward electric cars, which creates a
> stronger economy which supports job number one above. Solar and electric
> cars also reduces air pollution which again supports job number one
> by reducing health issues and making people feel better about their
> lives. Plus, developing these 2 alternative energy products, solar
> and electric vehicles, in China, gives them “new economy” products
> to sell to the rest of the world leading to higher employment and
> a more content population.
>
> It's all an interconnected plan. Almost diabolical.

Jun 24 03:01 PM

[Road Runner:]

Correct HaavBline. I like the phrases you used, "leap frog" and "Invest heavily for the future".

Jun 24 05:42 PM

[Mad Hedge F...:]

Watch this space. I have been covering the solar industry for nearly 40 years now, and for most of this time it has only been economic in space stations. But times are changing. If you look carefully at your electric bill and calculate the cost per kilowatt hours each month as I do, you will notice that the price has been going up for the last ten years. This is partly because of ineptly handled deregulation, but also because our utility, Pacific Gas & Electric (PCG) is mandated by state law to reduce greenhouse gas emissions. Last year, the collapse of the economy and crude prices drove the cost of thin film solar’s primary raw material, polysilicon, down dramatically. The cost curve is falling, the demand curve is rising, and it is only a matter of time before they cross. The gap now is only a few cents per kilowatt, and that can easily be bridged with government subsidies. This industry is on the verge of becoming truly profitable. All it might take is another rise in crude prices, something you can count on. Watch behemoth First solar (FSLR) position itself to cash in, as well as Suntech Power (STP) and SunPower (SPWRB). But also watch the volatility, as this is definitely an “E” ticket ride.

Jun 25 09:03 AM

[billp37:]

Solar electric money will be made.

"PNM spokeswoman Cathleen Garber said the photovoltaic programs help the company meet its state-mandated Renewable Portfolio Standards. PNM is required to generate 6 percent of its retail energy from renewable sources until 2011, when the percent requirement increases to 10 percent. It moves to 15 percent in 2015 and 20 percent in 2020. The standards also requires that wind and solar resources each account for at least 20 percent of the requirement, with non-wind and non-solar resources making up no less than 10 percent. "

www.prosefights.org/pn...

Jun 25 11:31 AM