The Chinese solar industry will achieve unprecedented growth in 2012, adding more than 2.8 GW. The strong growth of Chinese solar in 2012 is due to both the 12th Five Year Plan for Renewable Energy Development (2011-2015) and their feed-in tariffs (FiTs).
In February, China’s Ministry of Industry and Information Technology posted a plan that calls for certain polysilicon producers to reach 50,000 tons of annual production capacity by 2015; it also wants solar cell and panel makers to reach 5 gigawatts of annual capacity in the same time frame.
Like the rest of the solar sector the stock prices of Chinese solar companies have declined in the last half of 2011. However, domestic installations are expected to boost Chinese solar companies in 2012.
In 2010 China had only 893 MW of installed solar capacity, that number grew an additional 1.7 GW in 2011. Based on annual installed capacity China is expected to surpass the US in 2012 to become the third largest PV market in the world.
According to the 12th Five Year Plan, targets for installed capacity are expected to be set at 10 GW by 2015 and 50 GW by 2020. This 2015 target implies an annual growth of over 1000%.
The Chinese government said the new 5-year plan aims to promote domestic solar energy use and bolster Chinese manufacturers’ competitive edge in the global market that is marked by intensifying competition and trade disputes.
To make solar more competitive with conventional sources of power, the plan also calls for reducing the price of solar panels to 7000 yuan per kilowatt, or around $1 per watt, by 2015.
As part of the plan China is promoting the development of smaller-scale distributed solar projects in populated areas. This will attract private small and medium enterprises to the installation market, and large players will focus on bigger projects.
To guarantee market demand for the solar power produced, China has mandated minimum prices for FiTs grid operators of at least 15 cents/kWh. This is expected to be paired with clean energy quotas for grid operators.