China is also the biggest emitter of carbon, according to most estimates, although it remains far behind Western nations in per capita terms. More than 90 per cent of its electricity comes from coal-fired power plants.
The ruling Communist Party’s public commitment to reining in the rapid, environmentally blind growth of the last two decades made the development of renewable energy essential.
It wants dozens of new solar power, wind power, hydro and nuclear plants to meet a target of reducing China’s carbon intensity per unit of gross domestic product by 40 to 45 per cent by 2020.
Yet as dozens of solar energy firms across China have jumped into the market or launched huge expansion plans, the central government has been forced to intervene and try to control an industry that many regional governments are still actively promoting.
"China is heavily dependent on the export markets because there is no domestic market at the moment," Frank Haugwitz, a China-based renewable energy consultant, told dpa.
Many small-scale schemes are under development to feed into provincial grids or cover urban rooftops, but they are unlikely to have any immediate impact on the overall pattern of energy consumption, Haugwitz said.
"PV even in the mid-term won’t make a difference unless costs come down so much that they just cover whole areas [with solar panels]," he said.
Up to 300 Chinese firms make about 40 per cent of the world’s PV cells, with dozens of new production lines opening last year. About 97 per cent of the PV cells are exported, while some 20 provinces have solar power schemes that could eventually absorb much of the growing overcapacity.
The government aims to increase China’s solar power generation capacity from 50 megawatts in 2008 to up to 20 gigawatts in 2020.
The annual polysilicon production capacity has risen to about 20,000 tons with plants under construction potentially able to produce another 80,000 tons per year, state media reported.
"Conflicting plans between central and local governments caused over-investment in the new energy industry," Liu Shiyang, a China-based researcher for the Samsung Economic Research Institute, wrote in the China Daily newspaper recently.
Liu accused local governments and businesses, spurred by a national economic stimulus package, of "reckless investments and production expansions."
Some analysts said the rush for growth was also spurred by the listing on the New York Stock Exchange of Suntech Power Holdings, the world’s largest maker of PV cells, and production plans in the United States by both Suntech and Yingli.
The glut of local production, and other problems such as transmission of power from often remote sites, also make competition tough for international firms in China.
In November, US firm First Solar Inc signed an agreement to build what could become the world’s largest solar power plant in the Ordos area of China’s Inner Mongolia region, a 2,000-megawatt plant scheduled for completion in 2019.
Ordos represents what could be the future of large-scale solar power production in China, if the transmission problem can be solved. It lies on the southern age of a vast area of desert and semi-desert loosely know as the Gobi.
"If they could cover 10 per cent of the Gobi desert, they wouldn’t need anything else," Haugwitz said.
But despite the publicity value of the Ordos project, other Western renewable energy firms are concerned that government subsidies, regulations and local protectionism make it difficult for them to compete with domestic firms in China.
Those complaints of unfair competition, and concerns that government subsidies making exports of Chinese photovoltaic panels cheaper, lead some Western analysts to forecast that solar energy could become another sector for trade disputes with China.
In another move that could have a lasting impact on the solar power market, BYD, best known for its development of electric vehicles and lithium ion batteries, has announced plans for a series of initiatives in the northern province of Shaanxi, all backed by the local government.
BYD is run by Wang Chuanfu, who was listed as China’s wealthiest person last year. It plans to diversify into a network of silicon smelting plants, solar battery production and solar power stations in Shaanxi, the Cai Xin financial magazine reported.
The ambitious BYD scheme relies on subsidies of almost 50 per cent of the total cost and on reducing the cost of generated electricity to almost one-third of competing schemes, the magazine said.
"That’s something that’s going to shake up the industry, even here (in China)," Haugwitz said of BYD’s plans.
Source: DPA
