Two years after China passed a comprehensive renewable energy law, its solar energy industry is poised to enter the world market in a big way.
"Thin film will be the future," solar energy markets expert J. Peter Lynch told United Press International, referring to an emerging type of solar technology that relies on much thinner solar panels than the traditional black panels on many rooftops today. "As more and more Chinese (thin film) companies (go) public, they will drive prices down and shrink margins."
"The thin film guys will be the big winners, since they can sell product below silicon producers cost and make money," Lynch said.
The scarcity of solar-grade refined silicon has driven up traditional photovoltaic prices, and the shortage is not expected to ease until 2008.
"I would definitely foresee (China taking a bigger role in the world solar market)," Yong X. Tao, a professor and Undergraduate Program Director in the Department of Mechanical and Materials Engineering at Florida International University, wrote to UPI in an e-mail.
Tao also serves as project director for the ongoing Future House USA project in Beijing, which includes a solar system application.
"Right now, Suntech is the only significant player from China in the world solar market: its market is outside of China. Many small companies wanted to do that as well," Tao said. That company "signed sales agreements with (Germany's) Conergy AG to provide the German firm with photovoltaic modules for its global projects next year for a total value of around $270 million," earlier this month, the Xinhua News Agency reported.
One of the smaller companies has already started making international waves -- in January, China's Solarfun Power Holdings Ltd., which is listed on the NASDAQ, announced "a significant new sales agreement," the company said.
"Under the terms of the agreement, Solarfun will sell approximately 140 megawatts of photovoltaic modules to UB Garanty Project S.L. in Spain over the next three years. The contract is expected to have an estimated value of between $40 million and $50 million in 2007," Solarfun said.
Solarfun emphasizes that the goal here is international growth: "We believe (the deal) will expand our existing market share and enhance our brand name in Spain and we are confident that Solarfun will continue to penetrate high growth (photovoltaic) markets such as Spain, Italy and other emerging markets in Europe," the company's chairman and chief executive officer, Yonghua Lu, said via a company statement.
China gets about 7 percent of its energy from renewable sources, according to news reports. The 2005 Renewable Energy Law called for the country to increase its renewable energy consumption to 10 percent of the total by 2020, according to a report by China's People's Daily Online.
"The main reason for (the Chinese interest in) solar energy is, of course, the impact of energy utilization on the environment," Tao wrote.
"A few wise men in Chinese government listened to the scientists and made right decision to push the policy. The 2008 Olympics (slated for Beijing) is another reason," Tao said, citing the rapidly developing country's need for a lot of energy, and quick.
"Again, that turned the 2005 National Energy Policy into a top down, must-do approach," Tao said.
The government "supports (solar) in many ways," Tao said. They provide "research grants to universities, which leads to limited technology transfer."
"Local government investments -- provincial, county or municipal -- play a very important role. The central government mainly gives green lights through some policy changes such as the 2005 Energy Policy (Law).
Not all observers agree with this positive outlook, however: "Manufacturers are expanding their capacity, but I don't see a major drive to install solar power domestically," Wang Xing, a senior program officer for electricity and renewable energy at the China Sustainable Energy Program, told the news agency AFX earlier this month.
"Right now there is not a very strong incentive program for solar power," he said. "Most domestic manufacturers are gearing production toward the export market while looking to tap the public investment in projects such as rural electrification programs," the AFX report went on to quote Wang as saying.
Florida International University's Tao doesn't quite see it this way, and says the Chinese solar domestic market, which is mostly focused on solar water heaters, is doing quite well.
"Chinese (solar) companies are doing well domestically because of the maturity of the technology and market needs -- saving (money) is big in Chinese minds."
The 2005 law required all new smaller buildings to install solar water heaters.
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