China’s Solar Power to Double in ’13

Beleaguered solar manufacturers in China are likely to benefit as the country doubles its installed capacity for solar electricity this year. So reports The Wall Street Journal.

China will add an additional 10 gigawatts of installed solar power capacity this year, according to Liu Tienan, deputy director of the National Development and Reform Commission. Liu made his comments this week at China’s annual national energy work conference, though he provided few details on how the country would reach this goal.

In 2011, China’s solar power capacity was three gigawatts, Chinese officials said. Last year, it rose to seven gigawatts, Liu said. Its new target puts China close to its goal of 21 gigawatts of installed solar power capacity by 2015, the Journal reports.

The country may now raise its 2015 solar-capacity target to 40 gigawatts, to support local solar manufacturers. The news, reported by China’s state-run news agency, Xinhua, cited Meng Xiangan, deputy board chairman of the Chinese Renewable Energy Society, as the source of the information.

China’s solar manufacturers have been hurt by overcapacity in the solar-panel manufacturing market and shrinking profit margins. Gross margins for solar panels, globally, have dropped from 30% in 2010 to less than 10% today, says the investment bank Maxim Group.

But supporting local solar manufacturers isn’t the only reason for expanding solar capacity. Beijing has set targets for limiting increases in carbon emissions. It plans to cut carbon intensity—the amount of carbon dioxide emitted per unit of gross domestic product—by 17% by 2015.

Aaron Chew, a clean-energy analyst with Maxim Group says he wasn’t sure how China was going to finance its plan. The projects are there, but the financing is not. But China’s solar growth should make its 2015 capacity target easy to beat, Chew says. So reports the Journal.

Chinese solar companies borrowed heavily from 2009 and 2011 in order to expand. But the market fell off, making it hard for them to continue paying their loans. Local banks and governments stepped up to the plate to plug the gap.

Solar subsidies and China’s support of its solar sector has raised the ire of Washington and Europe. In fact the European Union accused China of selling some of the $21.48 billion in solar panels it exported to the EU last year at prices that were well below market, the Journal reports.

China’s State Council says it will reform the industry. It plans to reduce government support, prohibit local governments from supporting failing domestic solar companies, and encourage mergers and acquisitions. It will also promote electricity-price reform, control the expansion of new projects to manufacture polysilicon and solar panels, make it easier to supply solar power to the country’s electricity grid, and encourage the use of independent solar-powered generators.

It’s no coincidence China is raising its solar installation goals just as its solar manufacturers are struggling to stay afloat, Shyam Mehta, an analyst at clean-energy market-research firm GTM Research, wrote last year in a research note.

To read the full Wall Street Journal article, click here


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