Oct 12, 2005

BEIJING - The solar energy industry is seen as having good prospects in China, which has issued a Renewable Energy Law and signed the Kyoto Protocol limiting carbon dioxide emissions.

The Chinese government has promised that renewable energy will make up 10% of the country's total installed capacity of power generation by 2020. Among them, the photovoltaic system will have a capacity of 450 megawatts (MW).

With international oil prices repeatedly setting record highs, it has become increasingly urgent to find a substitute for gasoline, and many countries are taking measures to save energy and developing new energy sources at the same time. China's policy concerning the development of new energy sources has aroused increasing concerns. For all these reasons, solar technology has attracted considerable attention.

The solar energy sector has generated two major industries, that is, the solar energy heat utilization industry and the solar energy photovoltaic industry. The solar energy heat utilization industry mainly produces solar water heaters. China's annual production of solar water heaters has reached 10 million sets, saving the equivalent of 10 million tons of coal annually. Chinese sales of solar water heaters are 10 times more than that of Europe, and China now ranks first in the world in terms of solar water heater production and ownership.

However, this sector only accounts for a small part of solar energy industry as a whole. The most important part is the photovoltaic industry, which has been one of the fastest-growing industries in the country since the 1980s. The development of China's photovoltaic market in 2004 has surpassed any leaps in the history of industry, growing at an annual rate of 60.4%, and reaching 12 gigawatts (GW) of total production capacity.

China is promoting the application of solar energy on a large scale, mainly in western areas that cannot be connected to national power grids, such as Tibet, Inner Mongolia and Ningxia. The solar energy industry has entered a phase of rapid growth and profitability since 2003. In the foreseeable future, Chinas solar energy industry will achieve success because of policy support and successfully marketized operations.

At present, China has 10-plus silicon solar cell enterprises, which mainly produce crystalline silicon solar cells; it also produces non-crystalline film solar cells. In terms of quantity, the production of mono-crystalline silicon solar cell is a bit bigger than that of multi-crystalline silicon solar cell at present, but the multi-crystalline silicon solar cell boasts an advantage in cost because its photoelectric conversion efficiency is close to that of the mono-crystalline silicon solar cell, while its production costs are lower. So the production of multi-crystalline silicon solar cells is increasing gradually, and will ultimately exceed that of mono-crystalline silicon solar cells, conforming to the trend of the solar industry internationally. In this sense, multi-crystalline silicon raw materials for solar cell use have a broad market space.

The majority of Chinese solar enterprises are engaged in assembling solar cells, whose profit margins are very thin. However, upstream crystalline silicon processing and silicon cell production produces much healthier profits. Due to the shortage of silicon processing resources, China has had to import silicon raw materials in bulk every year. So solar companies which can participate in every stage of the solar cell industrial chain should be positively regarded by the market. China has obtained mature commercial photovoltaic production technology, and some companies have already put it into production.

China Nanbo Group Co Ltd is an important player in the renewable energy movement, having signed a memorandum of understanding to build a "green energy industrial park" in Dongguan, located in southern China's Guangdong province. With three main types of projects - solar cell projects; solar glass and ultra-white glass projects; and energy-saving building glass projects - the industrial park aims to develop in an all-round way the energy-saving and renewable energy industries, which are now particularly encouraged and supported by the state. With total investment intended to reach four billion yuan, the park will cover an area of more than 700 mu (46.7 hectares). At completion, the park is expected to generate an annual output value of nine billion yuan.

In general, the development of China's solar energy industry has been considered slow, but overall development prospects are nonetheless seen as bright.