CCID Consulting, China’s leading research, consulting and IToutsourcing service provider, and the first Chinese consulting firmlisted in Hong Kong, released its article on China’s photovoltaicmarket.
Affected by the financial crisis in 2008, the globaleconomy continues to be sluggish. In particular, Europe, the biggestphotovoltaic market in the world, has been hardest hit by the crisis.To address difficulties, various European countries have reduced theirsubsidies to photovoltaic power generation or even abolished some oftheir photovoltaic investment plans.
As the biggestphotovoltaic cell producer in the world, China basically relies onexports to consume its production capacity. The ‘sudden market cooling’abroad has struck a heavy blow to China’s photovoltaic industry.Statistics show that due to a sharp drop in foreign orders in 2008,China now has a photovoltaic cell production overcapacity of at least1000MW.
Thefinancial crisis has also forced China to have new thought on thedevelopment of the photovoltaic industry. Currently, China imports rawmaterials for the photovoltaic industry overseas and then exportsphotovoltaic products overseas.
This has been a major factorwhich restricts the development of China’s photovoltaic industry anddeprives it of the ability to withstand market risks. In the first halfof 2009, the government successively promulgated various policies tostimulate the kickoff of China’s photovoltaic market.
On March23, 2009, the Ministry of Finance in conjunction with the Ministry ofHousing and Urban-Rural Development released The Interim AdministrativeMeasures for Fiscal Subsidy Funds to Support the Application of SolarPhotovoltaic Buildings and The Implementation Opinions on Speeding upthe Application of Solar Photovoltaic Buildings to supportdemonstration projects for solar photovoltaic buildings.
Thegovernment has also implemented the Solar Roof Program to promote theintegrated application of solar photovoltaic buildings in cities andgive fixed-amount subsidies to photovoltaic utilization in buildings inrural and remote regions. In 2009, the subsidy rate is, in principle,set to be 20 Yuan/Wp.
While the Solar Roof Program makes nosubsidies for photovoltaic power generation, the forthcoming Golden SunProject will once again show the government’s determination to greatlypush forward China’s photovoltaic market.
The core part of theGolden Sun Project lies in that it will offer central fiscal subsidiesto support the kickoff of China’s photovoltaic market, planning toimplement 500MW photovoltaic power generation demonstration projectsaround the country in the next two to three years.
Inaddition, the New Energy Industry Revitalization Plan soon to bereleased is likely to raise the previous 1.6GW photovoltaic target for2020 to 20GW, 12.5 times the originally planned figure.
Guidedby the government policies, several large-scale grid-connected powerplant projects were approved between the end of 2008 and the first halfof 2009. These include the 1GW Photovoltaic Power Plant Project inQaidam and the 200MW Photovoltaic Power Plant Project in Golmud,Qinghai Province, and the 500MW Photovoltaic Power Plant Project inWuzhong, Ningxia Autonomous Region.
Currently, the governmenthas only approved three photovoltaic power plant projects, includingthe 1MW Project in Chongming Island, Shanghai, the 255KW Project inErdos, Inner Mongolia and the 100MW Project in Dunhuang, GansuProvince. The newly-started projects still awaits government approval.
However,the implementation of these large-scale photovoltaic grid-connectedpower plant projects shows that the government policies forphotovoltaic subsidies have produced results in driving forward China’sphotovoltaic market.
It is very likely that “an enclosuremovement” similar to the one in the early period of wind powergeneration will occur in China, thus playing a great role instimulating the recovery of the whole photovoltaic industry and thekickoff of the domestic market.
Asthe “enclosure movement” is in full swing, irregular competitions havealso surfaced. For example, during the tendering process of the 10MWPower Generation Project in Dunhuang, Gansu, the concerned company andthe solar cell supplier jointly offered an ultra low price of 0.69Yuan/KWh in order to win the bid. It is understood that the lowest costabroad currently only reaches $0.22/KWh.
Though a big drop inthe price of polycrystalline silicon materials used in photovoltaiccells lowers cell cost, it falls short of the 0.69 Yuan/KWh. This fullyruns against the inherent development pattern of the photovoltaicindustry and does not match with the current situation of the industry.
This is very detrimental to the healthy development of thephotovoltaic industry. To safeguard the healthy development of China’sphotovoltaic industry, it is still necessary to segment the subsidypolicies for the industry.
It is essential to stand at theindustrial height to ensure the interests of photovoltaic enterprisesand the enthusiasm of industry participants and suit the developmentpattern of the industry and the market.
In a word, stimulated bythe relevant national photovoltaic policies, China’s photovoltaicmarket is now showing explosive growth, thus helping to the healthydevelopment of the industry and the further optimization of China’senergy structure.
Figure 1: China’s Solar Cell Output, 2005-2008 Source: CCID Consulting, January 2009.
Figure 2:China’s Installed Solar Cell Capacity, 2005-2008 Source: CCID Consulting, January 2009
Figure 3:Source: Sorted out by CCID Consulting, June 2009