China: solar panel industry to consolidate in the coming year

SHANGHAI : China’s solar panel industry is set to consolidate further in the coming year as companies merge or simply go out of business.

This is despite the Chinese authorities’ recent measures to help the export-focused sector grow their domestic market.

The industry has been hit by excess manufacturing capacity and slowing foreign demand.

Chinese solar panel firms are also facing anti-dumping tariffs in the United States as well as cuts in green subsidies by European countries.

Solar energy accounts for less than 0.1 per cent of China’s current power supply, according to China National Energy Administration.

And this is produced mostly by large solar power plants.

Smaller-scale solar power plants and buildings with own solar panels installed are few and far between given the restrictions on access to the national grid.

Under a pilot programme, one building in Shanghai’s Tongji University is connected to the grid.

During the day, solar power generated may be more than what’s needed.

Excess power will need to be uploaded to the grid but when no power is produced at night, the building will have to tap power from the grid.

Access to the grid is therefore important for the efficient use of solar energy.

From November this year, China’s State Grid said it would provide a free connection service for small- and medium-scale solar power producers, or so-called distributed photovoltaic solar power producers, located near customers.

The government will also waive certain charges and offer subsidies.

This is expected to open up a huge domestic market for China’s solar panel manufacturers who now export over 90 percent of their production.

Still, industry players say these measures won’t be enough.

Jason Liao, Deputy General, Manager, Suntrix, said: “China used 2 gigawatts of solar power last year. With the new policies, usage may double to 3 or 4 gigawatts this year. In 2013, once everybody gear up for it, this figure may rise to 5 gigawatts, or even 10 gigawatts. But that’s still a lot less than China’s current production capacity of 40 gigawatts. About 50 to 60 percent of the present capacity is excess, and it has to go, which means many factories will go bankrupt or be merged. These big changes will happen in next year, or year and a half.”

But experts say companies that survive will be well-placed to tap on the growth potential of China’s domestic solar power industry.

Professor Tan Hongwei, Director, Green Building, New Energy Research, Tongji University, said: “China is vast. There’s huge market potential, particularly with the growing pace of urbanisation. A lot of buildings are under construction and many existing ones require renovation. In the western region, there’s is ample sunshine. I believe this region has better conditions to focus on setting up solar power stations.”

On top of new construction, industry observers believe existing buildings with wide rooftops, like factories, large-scale public facilities and residential buildings in less dense areas will be the first to adopt solar technology.

Source: Channel News Asia

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