Solar Energy

When I was visiting southern part of China couple of months back, one of the key things that I picked up was the potential of solar energy. With heavy government backing, Chinese solar companies are quickly to becoming global leaders.

Since 2007, about 54 gigawatts – about 7% of the nation’s electricity-generating capacity – of coals and oil-fired power plants have been closed down as part of the effort to reduce carbon emissions. It plans to reduce energy consumption per unit of its GDP by 20% of 2005 levels by the end of next year.

According to some estimates by China Greentech Initiative and the American Chamber of Commerce, China’s market for green technology could reach $1 trillion annually, or about 15% of the country’s forecast 2013 GDP. China plans to install more than 500 megawatts of solar pilot projects in two to three years. It might not be a huge, but it sends a strong signal that China is serious about developing its domestic solar market.

In July, the central government said it would subsidize 50% of investment for solar projects as well as transmission and distribution systems that connect to grid networks. The subsidy rises to 70% for independent photovoltaic power generating systems in remote regions of the country that have no power supply.

One problem, however, is that businessmen are not just benefiting from the growing market of the mainland. Many are now building factories in the United States as it seeks to expand its presence in the US solar market – thanks to the generous subsidies it receives from Beijing.

Some call this as China’s dumping strategy and companies like Conergy and Solarworld – two German solar companies – have called on Western governments to protect the solar industry with import tariffs on Chinese products. But so far, there has been no action on the part of US and European governments.

Chinese government on the other hand, sets a requirement that 75% of the content of government-purchased solar panels to be Chinese-made. And at the same time, China recently took a big step to enhancing cooperation with Western solar companies by signing a deal with the Phoenix-based First Solar to build world’s largest solar plant – 2,000 megawatt complex in Ordos City in Inner Mongolia in 2019.