Lower costs facilitate Chinese PV firms to develop domestic market
By Hepeng Jia/Beijing, China
Despite the global financial crisis, optimism is spreading across China’s emerging photovoltaic (PV) industry.
In a report published in the newspaper China Electronics News in late April, Shi Jun, president of Shanghai-based solar energy research firm Pro-enertech, concluded China would become the first country to commercially supply photovoltaic power.
The optimism came amidst historically record losses made by Chinese PV firms. Jiangsu Province-based Suntech, the world’s largest PV product maker, reported a significant loss of US$65.9 million in the fourth quarter of 2008.
Other Chinese PV firms - such as Jiangxi Province-based LDK and Jiangsu Province-based Solarfun - which are also listed in the United States, reported notable losses too.
Although China is the world’s largest producer of PV modules, 98 per cent of its products - equivalent to power installment capacity of 2,000 megawatts in 2008 - are for export. The dwindling demand in the international market due to the financial crisis has led to dramatic sales declines.
The main material for the PV module, polysilicon, has seen a dramatic price slump from US$400 per kilogram to US$100 per kilogram, and is expected to further drop thanks to newly added production capacity in China.
The price plummet and the reduced foreign demands could prompt China to speed plans to install PV power supplies, according to Shi.
On 24 March during the tendering process for China’s largest demonstration PV station - a 10 megawatt power station in Gansu Province - a consortium formed by Hebei Province-based Yingli Group and the State-owned SDIC Power offered a low power generation cost of 0.69 yuan (10 US cents) per kilowatt, only slightly higher than the coal-based thermal power in China.
Two years ago, the authoritative China PV Industry Development Report predicted the PV power generation cost would decline to 3 yuan (43 US cents) per kilowatt by 2010.
’With our own production of main PV materials and the extensive measures to lower costs, Yingli is expected to realise commercial supplies of PV power soon,’ says Li Wei, communication director at Yingli.
Although the extraordinary low price offered by Yingli has aroused suspicions the industry, Shi says in terms of costs, China’s PV industry is close to commercial operation. He estimates that the average power generation costs in China could be around 1 yuan per kilowatt within a year.
’But to realise commercial operation, the government needs to offer moderate subsidies and stipulate obligatory rules for grids to receive PV power. Technologies to store solar power to avoid weather fluctuations also need to develop,’ Shi told Chemistry World.