Solar energy to become cheaper

The price of solar power in China is expected to drop by 20 percent in the next five years as the country prepares to start large-scale application of the green energy source after 2015, a senior official from the National Energy Administration (NEA) said on Thursday.

"The cost of solar power is likely to drop below 0.8 yuan (12 cents) a kilowatt hour (kWh) by 2015, when the industry will begin large-scale operation, making it economically viable, like wind energy," said Liang Zhipeng, deputy director general of the department of renewable and new energy of the NEA.

The country is planning to have 10 gigawatts of installed solar capacity as part of its 12th Five-Year Plan (2011-2015), according to Liang, adding that the energy plan is still under review prior to approval.

Annual growth of 150 to 200 megawatts (mW) in the solar industry is expected before 2015, Liang said.

China had solar projects totaling 300 mW, as of the end of 2010, after starting two pilot projects in the past two years. The cost of solar-generated electricity fell from 1.09 yuan a kWh in 2009 to 0.99 yuan a kWh in 2010 in the projects, according to the NEA.

The system is collecting 0.004 yuan for each individual consumer to compensate for the cost of solar energy, which has accumulated to 8 billion yuan this year.

"However, the money collected still doesn’t meet the expense," said Dong Xiufen, director of the department of renewable and new energy at the NEA. China is the world’s largest solar panel supplier, producing 50 percent of global output.

With demand decreasing in Europe, China’s largest market for panels, the country is looking at other emerging markets. It recently announced a plan to bring solar panels to 40 African countries.

Asia could be one of the largest solar markets, said Liang. Japan’s "Sunrise Project" intends to lower prices for solar panels by a third from current levels by 2020 and then cut those prices in half by 2030. The government aims to have solar panels on 10 million homes in Japan by 2020.

China is expanding the domestic solar market.

This year, the NEA will start the third bidding session for a solar pilot project totaling 500 MW to 1,000 MW, the China Securities Journal reported.

The NEA is also planning the New Energy City Program, which aims to popularize the solar power system in 100 cities during the 12th Five-Year Plan, Dong said on Thursday.

Experts expect the solar market to take off with the decreasing price of solar panels, making the expensive green source of energy economically viable. Project costs will decline to 12,000 to 13,000 yuan a kW, with the module price dropping to 6 yuan from 10 yuan, according to Dong.