Overview of solar industry in China
Remark: This overview of solar industry is published in September 2007. Although a bit old, it's still worthy reading and referring.
China is the second-biggest supplier of solar panels in Asia after Japan.
Production and exports in the line continue to grow at a rapid rate in China. According to the China Battery Industry Association, the country turned out 460MW of solar modules in 2006 for a 230 percent year-on-year increase.
In terms of exports, exact figures for the line are difficult to obtain because outbound shipments of solar panels are counted together with photovoltaic cells, photosensitive semiconductor devices and LEDs.
Based on projected shipments of 540MW and an average export price of US$3.50 per watt for 2007, however, revenue is expected to reach nearly US$1.9 billion.
The EU remains the primary export destination of China-made solar panels, followed by Asia and North America. (Remarks: Germany, Spain, Belgium...)
Demand comes mainly from Germany, Spain, Japan, Belgium and USA, which together absorb more than 60 percent of the total exports. Combined shipments to these countries exceeded US$1.5 billion in 2006.
Germany is China's single-biggest market for solar panels, accounting for nearly one-third of exports. The three-month period between October and December 2006, however, saw a slowdown in shipments with revenue dropping 40 percent from the previous quarter. This continued in early 2007 when export value fell nearly 6 percent.
The decline coincided with Germany's crackdown on the domestic solar panels industry. The country required strict compliance with standards such as the UL and prohibited the importation of PV modules with an efficiency rating of less than 16 percent.
In addition, the Renewable Energy Sources Act of July 2004, which helped spur China's solar panel exports to Germany, is currently under review. The regulation may be amended to reduce imports in line with efforts to encourage solar panel manufacture within Germany. Suppliers have already boosted production to take advantage of subsidies and other incentives.
Despite these difficulties, China manufacturers of solar panels will still be targeting the EU in coming months. PV technology continues to grow in popularity in other member countries, driven by various programs promoting renewable energy sources. Government support is an important factor in stimulating demand for solar panels since PV power generation costs 15 times more than traditional energy sources such as coal and gas.
In EU, Spain is one of the fastest-growing markets for China-made solar panels, with exports soaring more than 700 percent in 2006.
Shipments in the seven months ending July 2007 have already replicated this impressive growth rate. Customs figures show that China exported US$604 million worth of solar panels over the period, 772 percent higher than a year earlier.
One explanation behind this tremendous growth is Royal Decree 436, which provides favorable feed-in tariffs for grid-connected PV systems. Demand is expected to increase further as a result of the Plan de Energias Renovables en Espana for 2005-2010. The program aims to meet 12 percent of energy needs with renewable energy sources by 2010.
Programs in other countries have also gained momentum in the past two years, helping to propel the growth of China's PV exports.
Japan, the third-biggest market for China-made solar panels, has been implementing programs that promote the use of renewable energy (green energy) since the early 1990s.
Compared with Germany, Spain and the US, however, exports to Japan are growing at a more conservative pace, averaging 40 percent in the past two years. Japan has traditionally been a difficult market to enter, primarily because it is the largest supplier of solar panels in the world. Quality issues and the country's preference for domestically produced PV modules from leading makers such as Sharp, Kyocera, Mitsubishi and Sanyo hamper imports.
Despite this limitation of Japan solar market, China's exports to this market in the same seven-month period surged 39 percent to reach US$131 million. This is partly a result of Suntech's acquisition of a 67 percent stake in MSK, Japan's top PV specialist, which allowed the former to strengthen its penetration of the market.
