While Chinese manufacturers now dominate the world’s solar production, they have yet to see their panels shine on rooftops in their home country in any meaningful scale. European markets, led by visionary Germany, have absorbed most of the photovoltaic (PV) installations so far, with the U.S. emerging (for a couple of years now) as the second potential market. That may be about to change, according to a group of solar experts speaking for a session titled “Future Market Prospects across Asia” during the 2011 Intersolar North America Tradeshow and Convention last week in San Francisco. Solar opportunities are beginning to rise like the morning sun in not just China, but also throughout Asia.
Frank Haugwitz of Solar Promotion International GmbH, China, was the moderator and one of the speakers at the seminar. Haugwitz has worked in China since 2002 and has closely witnessed the development of the solar industry there over the past decade.
“In China, poly-silicon power plants popped up like mushrooms the last few years,” said Haugwitz.
According to Haugwitz, China’s PV industry has a 100 percent growth rate since 2006.
Haugwitz said the Chinese government set a goal in 2006 to have 15 percent of the country’s final energy come from non-fossil fuel by 2020.
China has also implemented a Golden Sun Program since July 2009. The program targets one gigawatt of solar energy in 13 demonstration zones, among which Jiangsu Province is expected to lead the rest by reaching 400 megawatts before the end of 2011.
Haugwitz called the Chinese government’s latest five-year plan “the greenest,” as it aims at a low-carbon economy that will reduce CO2 by 17 percent per unit of gross domestic product (GDP), and decrease fuel energy by 16 percent per unit of GDP.
China’s key initiatives in renewable energy include setting provincial targets in remote areas, identification of regional solar bases, establishment of 100 new energy cities, establishment of green counties that will derive 80 percent of their energy from renewable sources, and encouraging green buildings.
However, China still has no national feed-in tariff for solar projects. Instead, there are four zones that have individual feed-in tariff policies.
Haugwitz analyzed the situation and named the following reasons:
- - Solar energy at this point constitutes an insignificant share of China’s overall energy mix because it is four times more expensive than coal power.
- - The six percent inflation rate in China keeps the government cautious about the high generation cost of solar energy.
- - The Chinese PV industry is so far export-driven and already generates decent profits.
- - The Chinese PV industry is privately owned, and that makes the government wary of the market overheating.
- - It is difficult to determine an acceptable feed-in tariff level.
Despite the lack of a national feed-in tariff, a total of $1.4 trillion investment from the government and the private sector is foreseen in China, according to Haugwitz.
“China wants to get rid of the image of selling low-priced, low-quality products,” said Haugwitz.
To improve solar product quality, and to reduce dependency on foreign equipment, Haugwitz said China has intensified research efforts, mandated patents to be owned by Chinese companies, and created clusters of manufacturing bases. It has also worked on international branding by tapping into new markets such as African countries and financing solar projects abroad.
“Even so, opportunities for foreign [solar] companies still exist in China,” said Haugwitz. “It just takes patience for a long-term investment.”
China currently leads global PV wafer and cell sales, followed by Taiwan. The number-two supplier of PV wafers and cells has a world-famous track record in high tech, and plans to create another success in green tech, according to L.J. Chen, president of AU Optronics Corporation in Taiwan.
“We are small but strong,” said Chen, citing a 33 percent growth rate in Taiwan’s solar and wind power from 2008 to 2010.
Chen said Taiwan mainly derives its energy from coal at present, but plans to have 12 to 15 percent of its total power from renewable sources by 2030.
The Taiwanese government launched a Sunrise project in 2009, targeting a $15 billion PV output revenue by 2015. So far a pilot plant has been built in Kaohsiung, a major city of southern Taiwan, with the capacity of one megawatt. Also in Kaohsiung is the World Games Stadium, which generates solar power for 75 percent of its own use.
Chen said Taiwan’s next step in the PV industry is to establish R & D centers with the recruitment of international talents.
Among Asian countries, Japan currently has the most pressing need to expand its solar industry. As a result of the March 11 earthquake, prime minister Naoto Kan announced the shut-down of Hamaoka Nuclear Power Plant on May 5, and that makes power shortage inevitable this summer.
Hiroshi Matsukawa, chief consultant of RTS Corporation in Japan, spoke about the current power restrictions in Japan. He said Japanese electricity users whose demand exceeds 500 kilowatts are obligated to reduce usage by 15 percent between 9 AM and 8 PM, or they will be fined one million yens for every hour of violation.
“PV is a solution for the restrictions,” said Matsukawa, explaining that those who have solar panels installed may remain unaffected by the policy.
Matsukawa said Japan plans to raise the share of renewable sources in power generation to over 20 percent, and that means a growing demand for PV products, as the Japanese find wind energy much less feasible.
“We get typhoons,” said Matsukawa. “Winds are not stable in Japan.”
According to Matsukawa, a Japanese feed-in tariff for solar projects is expected to start in 2012, but it depends on political stability to happen.
Unlike Japan, South Korea aims to have 10 percent of the global market share in wind power by 2020. But the Korean government encourages solar development at the same time. Official data forecast a total of 100,000 Korean households to be powered by solar energy by 2012, up from 14,500 houses in 2007.
While quoting the data, Minkyu Lim, senior executive vice president of OCI Company Ltd in Korea, said most of Korea’s solar energy is shipped overseas rather than consumed domestically.
“About 70 percent of our PV revenue comes from exports,” said Lim, explaining that Korea’s strong semiconductor background helps the country gain recognition in the global PV market.
Lin said his company switched to poly-silicon manufacturing in 2008 and has won over 30 long-term clients since.
According to Lim, Korea aims to be the number-one manufacturer of poly-silicon by 2013.
Compared with East Asia, Southeast Asia is slower in the technological development of solar energy, but offers more encouraging policies to foreign PV investors.
Wattanapong Rackwichian, professor of Asian Development Institute for Community Economy and Technology in Thailand, said the Thai government gives renewable energy projects a tax break for eight years and then a 50 percent reduction in income tax for the next five years.
He added that there is also a feed-in tariff for 10 years.
The Philippines is expected to legislate a feed-in tariff on solar projects in August 2011, according to Tetchi Cruz-Capellan, president of Philippine Solar Power Alliance.
Cruz-Capellan said the Philippines already offers a seven-year income tax break and duty-free importation for 10 years as fiscal incentives to the PV industry.
“Solar energy is technically viable in the Philippines,” said Cruz-Capellan. “It will especially benefit our 41 off-grid areas, which now depend on diesel.”
India is another country with many off-grid locations that can use the help of solar energy.
“We have 25,000 villages where grid power is not feasible. The market size is close to 100 megawatts,” said RabindraKumar Satpathy, president of Reliance Industries Limited-Solar in India.
Satpathy said 64% of India’s electricity is on mini grids, and that means strong potential in the PV industry because PV products can be retrofitted to most mini grids.
According to Satpathy, India is expected to have one gigawatt of PV grid power by 2013, and 20 gigawatts by 2022. In terms of incentives, there is a feed-in tariff for 25 years.
“The market size will be $2 billion over the next three years in PV,” said Satpathy.
As the PV industry is on the rise across Asia, even the oil-producing Gulf desires solar energy for reducing oil dependency.
Nikolai Dobrott, managing director of Apricum GmbH in Germany, said his company finds Saudi Arabia and Gulf the most attractive solar markets in the Gulf.
“There’s a six percent power shortage during peak hours in Saudia Arabia,” said Dobrott. “PV can address the peak load.”
According to Dobrott, Saudi Arabia will need a capacity of 20 gigawatts by 2020, and that generates a strong motivation for the Saudi government to invest in solar energy.