China dominates solar power

2011-09-20 16:30

Shanghai - China's solar power firms are emerging as the industry's dominant force after the collapse of foreign competitors, but the new market leaders are already struggling with low prices and overcapacity.

As the workshop of the world, China has used cheap labour and state support to build a solar industry from scratch in just over a decade as part of a broader strategy to move up the manufacturing value chain from cheap toys and clothes.

China is the world's second biggest oil consumer, and polluting fossil fuels account for 90% of its total energy use, but the country is making large strides forward in clean energy.

Analysts say Chinese firms now have 70% of the growing global market in solar panels, thanks to aggressive pricing and the collapse of three US competitors in the last two months.

"The position of Chinese players has certainly been enhanced this year," said Tang Xiaodong, a Shanghai-based analyst at independent investment advisory firm CEBM.

"Lower costs are the direction of the industry and the advantages of Chinese firms on this front have been manifested more clearly."

Price drop

China's solar panel prices have fallen to around $1.2 per watt of generation, down from about $1.7 in 2010 and much lower than the global average of about $2.0 last year.

But the downward price spiral has hurt revenues across the industry, and Chinese companies are themselves feeling the pain.

"Everyone is facing falling prices, increasing inventories and dire straits," said an official at Yingli Green Energy, one of China's biggest solar companies, speaking on condition of anonymity.

Critics argue that Chinese companies have unfair advantages in the form of access to cheap capital from China's state-run banks.

However, they are not alone in receiving government assistance - the latest US solar firm to file for bankruptcy was Solyndra, which had a $535m loan guarantee from US President Barack Obama's administration.

It joined Evergreen Solar, once listed on the Nasdaq exchange, and high-profile Intel spin-off SpectraWatt.

But even before the collapse of those three US companies, China was already home to the world's largest producer of solar panels, Suntech.


"There is a periodic murmur from industry, trade groups and elements in the US government that unfair subsidies in other countries put the US at a distinct disadvantage in the solar industry," said US-based analysis firm GTM Research in a recent report.

China's Suntech, which is listed on the New York Stock Exchange, counters such criticism by saying consolidation of the emerging industry was natural.

"The recent high-profile bankruptcies of innovative solar enterprises are unfortunate," Suntech said in a statement.

"However, competition among aggressive and innovative companies is critical to driving efficiency, productivity, and industry growth."

Chinese companies are almost solely focused on exports, with as much as 95% of production sold overseas according to some estimates, and they have responded to falling prices for solar panels by ramping up shipments.

But analysts expect domestic demand for solar products to rise with the introduction of a new national "feed-in" tariff - a price the government guarantees to pay to producers of solar power feeding into the grid.

"The days of China's PV [photovoltaic] production being purely for export are coming to an end," GTM Research said, referring to solar power technology.

  • Badballie - 2011-09-21 11:22

    Time to wake up and smell the electric haze people even leaders in the business world have admitted that the capatilist system does not work and has brought the world to the edge of total collapse, governments have systematically printed money which has no backing in any real asset and gold reserves no longer cover cash printed. legalized gambling via the stock exchange etc have been manually manipulated for years and the game is now up.

  • Rider I - 2011-09-22 09:41

    Actually there is major economic espionage and monopolistic control of the resources in the world that are impacting the economy. Not the capitalist system. As if we where using the capitalist system and not the Communist fascist economic model. We would not be having a problem. However, the Communist model means they use monopolies. Capitalism does not. Badballie Rider I

  • Rider I - 2011-09-22 09:41

  • Michael - 2011-10-10 19:23

    Yes, the drop in price of poly-crystalline silicon of 40% made old technology cheaper but this is only a temporary set back. Most of us that follow this subject, "experienced experts" being a rare species in solar conversion, are sure that "Technological-dependent" will replace those that relay in "raw price-dependent" products, from Silicon Valley, Germany or Japan. The same can be said of coal produced electricity but, China will be the first nation to suffer the effects of Global Warming and, when that fact sinks in... I believe Western nations will be, not well but, better prepared to deal with millions of people hit by the consequences of BOTH drought and floods, in the same areas and the same year. How will China deal with Billions in Central Asia left without water? Maybe, they will abandon their High Speed Rail dream and begin domestic production giant cargo planes like the A-400M or the Boeing C-14. The turboprop A400 can land in rough terrain. Muslims in Central Asia, where a Billion live, will bear the brunt and will reconsider fighting wars with fires that produce the most Global Warming CO2, before long. They will have a personal introduction to the worst effects of Global Warming. How long polygamist and anti-abortion practices remain at current levels and admit family size is the biggest issue. China has a "one child" policy, will we follow?

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