The solar industry is undoubtedly growing, but as demand in Germany wanes, everyone is looking for the next big market. Italy will carry the mantle for a year or two, but not indefinitely. Others are looking at India, with its national solar mission and a desperate need for rural electrification. But, as we mentioned in last month’s PVNews, development there is off to a slow start. As detailed in the SEIA/GTM Research Solar Market Insight report, the U.S. market is growing rapidly, but is too fractured to explode within a single year’s time. Then there is China with its ambitious Golden Sun program. With projected growth rates of approximately 150% through 2013, the country’s installed capacity is set to increase substantially. However, while China shows tremendous promise, if global demand drops substantially, do not expect it to be the industry’s savior market.
The Golden Sun program aims to have over a gigawatt of installed capacity come on-line in the next two years and to add at least a gigawatt every year after 2012. With less than 400 MW of installed capacity in 2010, however, it seems China’s program is not utilizing the massive resources available from the country’s manufacturers. That’s because almost all of the modules being manufactured are being sent abroad. China only consumed about 5% of its production, leaving it well outside of the top five markets in 2010 in terms of installations.
Despite the relatively low utilization of China’s module supply, the Golden Sun program is, in fact, driving development. Under this initiative, the Chinese government subsidizes 50% of solar project investments and connection costs. An additional incentive of RMB 4/W ($0.60/W; RMB 6/W for BIPV) was added this year. As of November 2010, 280 MW worth of contracts had been awarded in the provinces of Xinjiang, Inner Mongolia, Gansu, Qinghai, Ningxia, and Shaanxi. Elsewhere, CNPV just connected a 7 MW project in Shandong, the largest in the province, and Astroenergy announced plans to construct a 10 MW rooftop system at the Hangzhou East Railway Station. 8.2 MW of this installation falls under the Golden Sun program and it will be the largest roof-mounted thin film installation in the world.
At first glance, it would seem that companies based around the world would be scrambling to gain a piece of the action, but this is not the case. The government recently released a list of shortlisted suppliers for the first phase of the project -- all of the companies are Chinese. As seen in Figure 1, Yingli’s winning bid is nearly 10% lower than the ASP of Tier 1 Chinese suppliers and over 20% lower than other global firms. If Sharp, Solarworld, Kyocera, or a similar firm submitted a competitive bid, they would undoubtedly be selling at near zero profit margins or even at a loss. Yingli certainly isn’t selling at a huge margin, either...Subscribe to PVNews to continue reading!
Source: GTM Research