An in-depth look at China's PV market
01 February 2012
Posted in News - SPVI news
As the PV market expansion slows in Europe, the demand outside Europe will play an increasingly important role
As the PV market expansion slows in Europe, the demand outside Europe will play an increasingly important role. Analysts predict that growing demand in North America, China, India and Japan will shape the PV landscape in the coming years. There is a wide expectation that China will become a top PV market driven by its recently introduced FIT scheme last year, as well as other favorable policies designed to implement the newly-stipulated 12th 5-year plan (12-5 plan). In 2010, China's PV installation was about 500 MW while in 2011 the number is estimated to be 2.9 GW by NPD Solarbuzz in a recent report. Nonetheless, the PV market in China faces many serious challenges, and the growth forecast is rather difficult. Here, in a series of articles, I would like to present in-depth look at China's PV market so that business people as well as investors can have a good picture on its current status and reasonable expectation for what is going to happen next.
While there is a consensus that PV is ideal for on-site, off-grid and micro-grid power-gen sources, the high energy storage costs along with costs for spare power-gen reserves make the large-scale off-grid PV deployment unrealistic. Therefore, in the foreseeable future, the majority of PV installations will still be grid-based, and China is no exception. So far, the existing PV installations are dominated by the large solar farms in the western provinces, especially in Qinghai. As the evolution of a PV market is directly linked to its electricity utility market in most countries of the world, factors such as electricity demand and pricing, current power generation structure, power grid and power distribution, all impact the PV demand.
To understand the role of PV in current power-gen, one has to analyze the composition, the direct and environmental costs, the quality, feasibility and sustainability associated with various power-gen forms. The rise in the awareness of air pollution, especially the PM2.5, will also play an important role as government is facing more and more pressure on environmental issues. So far, the cost of solar PV has come down enough so that building solar farms in the west is generally profitable with the help of state FIT program. Another powerful force in the development of renewable energy is the national power grid, now dominated by the State Grid Corporation of China (SGCC). The priority of SGCC is to ensure the stability of the grid and the intermittency nature of
There were recent forecasts for 2012 PV demand given by CEOs of two prominent manufacturers, Zhengrong Shi from Suntech and Jifan Gao from Trina. Shi predicted 4GW+ while Gao said 5GW. Previously, Renesola CEO Xianshou Li said he was seeing a booming China PV market in 2012. However, given the recently announced proposal of capping the installation in the FIT program to 3GW, and the difficulties in the rooftop PV market, as well as a host of other issues, I am less optimistic than the CEOs. There is no doubt, that the China PV market will continue to evolve and more favorable policies are required for it to blossom.