SolarFromChina

With ten highly prominent initial public offerings (IPOs) racked up already, China's solar energy industry is poised to make a major impact on worldwide polysilicon capacity and solar cell production. However, determining who will succeed among the new firms in the domestic and international market remains highly uncertain as it is likely that at least some publicly announced plans will not materialize into actual projects.

In the last two years, China’s ten IPOs have raised nearly US$2 billion to meet the world’s growing demand for PV-related products and services. The attractiveness of PV to Chinese industrial policy is also understandable due to China’s internal demand for energy, the exciting global economic projections for the solar industry, and the alignment of PV manufacturing needs with China’s current industrial and technology capabilities. Indeed, China’s domestic market for accumulated PV installation is expected to reach 300 MW by 2010, up from only 80 MW accumulated and 10 MW yearly installation in 2006. But the Chinese PV industry is planning to more than meet its domestic needs.

Since 2004, the country’s solar cell production and capacity have reached growth rates from 100%–400% per year, contributing to the global shortage of polysilicon feedstocks. Cell capacity of 4 GW has been announced for this year and, after growing a projected 40% in 2008 so far, China’s solar wafer capacity is also expected to reach 4 GW. However, how much polysilicon will be available and who will be able to obtain it remains extremely uncertain.

Unbalanced polysilicon supply chain

In response to China’s - and global – demand, a swathe of polysilicon production projects have been instigated. Reports of new polysilicon projects in China have appeared regularly in business, technology and trade press over the last year and in 2007, SEMI identified 27 separate polysilicon production projects that had been announced.

Furthermore, the SEMI analysis of the Chinese PV market is currently in progress and these estimates are preliminary. Investment for these projects comes from a variety of sources, especially silicon manufacturers, traditional energy producers and chemical companies. Of these 27 projects, seven projects will rely upon China-based technologies, while six will source technology from Russia, five from the Europe or the US, and four projects will be a partnered combination of Chinese and international technology. These projects will be located throughout China, with the leading regions being the western part of the country, which will see 11 projects, and the Yangtze delta, with four projects.

However, as of December 2007, 20 of these projects had begun construction and of the identified 27 polysilicon projects that have been announced - equating to nearly 30,000 tonnes of polysilicon capacity by the 2008 year-end - SEMI estimates less than 5000 tonnes will actually be produced this year. By 2010, of the 70,000 tonne capacity that has been announced, SEMI projects that only 30,000 tonnes will reach the market. In response to the discrepancy between announced and expected capacity, nearly all Chinese cell and module manufacturers have entered into long-term, expensive, supply contracts, although these contract prices are still much lower than the spot market prices, which were around $400/kg in December 2007.

Nonetheless, the list of new developments in China continues to grow. This month, for example, the DuPont chemicals company announced it will soon begin construction on a PV research centre in Hong Kong and a manufacturing facility in Shenzhen to support ‘the rapidly growing photovoltaic (PV) solar energy industry.’

DuPont expects growth in the photovoltaic market to exceed 30% in each of the next several years and the company has made significant investments in product development and capacity expansions to help keep pace with the demand.

The company says that expansions in Hong Kong and Shenzhen will provide new offerings to serve the amorphous silicon (a-Si) thin film market, adding that the growth rate for thin film is projected to be approximately twice as high as demand for c-Si. DuPont expects this increase to drive specifications for both new and existing products that serve the thin film industry.

‘Through investments in materials, technology development and manufacturing, DuPont is accelerating its ability to deliver innovations that will improve the lifetime and efficiency of photovoltaic modules, and also have enough production capability to help keep pace with the fast rising global demand,’ said David B. Miller, group vice president of DuPont Electronic & Communication Technologies.

An emerging solar equipment industry

In addition to polysilicon, China will also benefit from localized silicon crystal growth. Xi’an University of Technology, Jingyi and Jingyuntong are all qualified vendors for mono crystal ingot growth equipment. Silicon ingot capacity will reach 20,000 tonnes in monocrystalline and nearly 23,000 tonnes in polycrystalline in 2008. In addition to polysilicon, solar grade wafers and solar cells and modules, China is expected to witness the development of an emerging domestic equipment industry, representing the entire production process including thermal processes, plasma etch, wet bench, PECVD and semi-automated screen printing. Supporting equipment and component vendors are also expected to emerge in China.

Indeed, in April Trina Solar announced that five of its key suppliers have signed investment agreements to establish production facilities in the Changzhou Trina Photovoltaic Industrial Park. The suppliers, which include Guangzhou ChienSong Grind Material Co., Ltd., Hubei Feilihua Quartz Glass Co., Ltd., Ltd., Suzhou Good-Ark Electronics Co., Ltd., and a European manufacturer of PV glass, produce products such as reclaimed slurry, crucibles, junction boxes, and low iron glass used in the production of solar PV modules. These companies are targeting total investments of over US$275 million in Changzhou. ‘We are very excited by the advancement of the Changzhou Trina Photovoltaic Industrial Park and the opportunity to form strong partnerships with each of these key suppliers,’ said Jifan Gao, Trina Solar’s Chairman and CEO.

The five suppliers plan to build production facilities in Changzhou and enter into long-term supply agreements with Trina Solar. Their presence in Changzhou will Trina ensure a steady supply of its key supply chain components, while providing the company with lower material costs, among other logistical advantages.

The business model for many of these new solar energy firms, such as Suntech, Yingli and Jing’ao, follows a vertically integrated path. Some companies such as LDK or CSUN, however, are planning to specialize in a limited number of steps in the supply chain.

In a recent survey of Chinese manufacturers by SEMI, 88% of panel suppliers are set to lower or stabilize prices by reducing waste, with 28% saying this will form part of their strategy, a further 27% intend to increase automation, 25% upgrading management systems and a fifth aiming for vertical integration

Chinese PV manufacturers are also garnering recognition on the global stage. For example, based on its recent analysis of the solar energy development market, Frost & Sullivan recognized Suntech with the 2008 Global Frost & Sullivan Company of the Year Award for solar energy development. Each year, Frost & Sullivan presents this award to the company that has demonstrated unparalleled excellence in design and delivery of high-quality PV, in this case for Suntech’s low-cost, high-quality, innovative, and energy-efficient PV cells and modules and system integration solutions.

‘The company’s pioneering success in developing energy-efficient, cost-effective and customizable building integrated photovoltaic (BIPV) systems and crystalline PV cells, and modules for solar energy conversion into electricity are highly commendable,’ says Frost & Sullivan Research Analyst Mary John, adding ‘It has gone beyond just meeting global energy needs to anticipating them as well.’ The company is export focused and ranks among the top three suppliers in the three largest solar markets – Germany, Spain, and the United States.

In conclusion, while the global PV industry is certain to grow over the next several years, considerable uncertainty surrounds the Chinese market. Polysilicon shortages will remain in effect for the next 18 months and sources of future supply in China have not yet reached high confidence levels. Average efficiency of China-based PV technology is approximately 16–17% and top tier players are expected to improve this to 19% by the end of this year. Aside from materials, human resources will always remain limited in such a rapidly expanding industry. There will be a tough year from second half of 2008.

Even so, China’s solar cell capacity is expected to grow by some 68% in 2008 and with polysilicon constraints set to ease in the second half of 2009.

Chinese solar cell manufacturers need to cooperate with equipment & material vendors to improve the productivity and reduce the cost and the whole industry should collaborate to both advocate government policy to support a domestic market and improve competency in cost reductions.

Nonetheless, regardless of the ultimate scope and nature of the future industry, China’s role in the global industry will certainly grow and - like most industrial segments in China - achieve global impact.

Chinese solar company LDK Solar Co Ltd on Wednesday said it signed a 10-year contract to supply about 400 megawatts of solar wafers to Belgium-based Photovoltech.

The company said it will deliver the multicrystalline solar wafers -- the principal raw material used in solar cells -- from 2009 through 2018.

It did not disclose the value of the contract but said Photovoltech will make a down payment for a portion of the contract's value.

Shares of LDK closed at $38.39 on the New York Stock Exchange on Tuesday.

Wind power plants are attracting increasing investment in China, according to statistics from the United Nations Environment Programme(UNEP).

The newly released UNEP report, Global Trends in Substantial Energy Investment 2008, shows that China's sustainable energy investment increased by 91 percent in 2007 to a record high 10.8 billion U.S. dollars, most of which has flowed to wind power generating units.

The heavy investment enabled China's wind capacity to double to6 GW last year.

Meanwhile, new investment in sustainable energy surpassed 148.4billion U.S. dollars on a global scale, up 60 percent year on year. Funds in the wind power sector became the biggest contributor to the surge.

"At present, wind and solar power have already stood as the hottest spots for renewable energy investment. Alternatives like hydropower and nuclear energy are also coming into the field," said Zhang Shigang, representative of UNEP China office.

Beijing has taken quick action to catch up with the new global trend in clean energy development. Guanting wind power plant, in suburban Beijing, began full operation here on Saturday, supplying wind generated electricity into China's capital for the first time.

With the last 10 wind power generating units officially certificated by Beijing Electric Power Company, the plant has now installed 43 domestically developed wind power units, with a capacity of 64.5 thousand kW.

The plant is expected to supply 100 million-kWh electricity per year, or 300,000 kWh per day, to meet the daily demand of 100,000 households.

Officials with Guanting called the wind power plant a key project for the success of Green Olympics. Statistics from Guanting shows that the power plant could help cut yearly emission of carbon dioxide by 100 thousand tonnes and save 50 thousand tonnes of coal each year.

ET Solar Group Corp, a Nanjing-based vertically integrated manufacturer of photovoltaic products, announced Wednesday it has won a deal to supply 500 kilowatt of PV modules to Techwin, a leading plant engineering and environmental technology development company in Korea.

The ordered 500 kilowatt of PV modules will be delivered to Techwin during the third quarter of this year. This deal is ET Solar's first step to tap into the Korean PV market. Earlier it has won supply deals in Italian and French markets, according to Wang Xinghua, CEO and chairman of ET Solar.

In the next few months, ET Solar hopes to forge some new relationships and become a bigger solar equipment supplier in the booming Korean PV market, said Wang. Sang-IK Park, Senior Managing Director of Techwin, said he expected to further cooperate with ET Solar in the future.

ET Solar provides high quality PV modules. It has two manufacturing facilities in Taizhou, China. It has expanded its business to the world's major solar markets, including the U.S., Germany, Italy, Spain, and Korea. Its products include ingots, wafers, modules, and state-of-the-art dual-axis tracking systems.

San Chih announces solar ingot investment in China

San Chih Semiconductor, the parent company of Green Energy Technology, has announced it will establish a solar ingot sawing production base in China.

San Chih said it will invest US$7.6 million to establish the plant. Industry sources added in saying that the plant is already under construction in Shandong and should be completed during late 2008.

In related news, San Chih also plans to hold an initial public offering (IPO) in Taiwan and is expected to submit its application in the third quarter. The official offering is expected to take place in the first quarter of 2009.

Not In China yet, It's U.S.

Despite the slow economy, venture-capital funding of clean-tech start-ups in the USA and abroad is on pace for a record year, according to a report released Tuesday.
In the second quarter, venture funding for nearly 100 biofuel, solar, wind and clean-water start-ups hit a quarterly record of nearly $2 billion — a 58% jump from the same time last year, says the Cleantech Group, a market research firm in San Francisco.

The rise in clean-tech funding comes despite a limping U.S. economy and weak markets for initial public offerings, mergers and acquisitions — the traditional "exit strategies" for entrepreneurs and venture capitalists hoping to sell their stock publicly or sell to a larger company.

"Interest in clean tech continues to show robust growth, despite the impact of economic headwinds and credit market restraints," says John Balbach, managing partner at Cleantech.

Venture firms, start-ups and corporations are pouring more dollars into clean technologies because of higher energy and commodities prices, tightening supplies of oil, tougher regulations on carbon emissions and other economic factors, says Brian Fan, Cleantech's senior director of research.

At the same time, venture capitalists are shifting more of their assets from the traditional sectors of software, medical devices and biotechnology into the clean-tech arena in the USA, Europe, Israel, China and India.

"Investors and entrepreneurs are making two big bets," Fan says. "How do we replace coal as the primary fuel for electricity generation, and how do we replace oil as the primary fuel for transportation?"

Much of the funding is going to young companies working on:

•Solar thermal technology. Start-ups such as eSolar, SkyFuel and BrightSource Energy are building large-scale, solar thermal technology that creates steam to run turbines.

•Second-generation biofuels. Range Fuels, Aurora BioFuels, Greenline Industries and other start-ups are using algae, cellulosic ethanol and materials other than food crops.

Clean-tech investments and technologies are getting more attention mainly from companies in the auto, transport, shipping and petrochemical industries, which are paying higher prices for raw materials, Fan says.

Clean-tech start-ups still have a long way to go, though. Fan estimates it will take five to 15 years before clean-tech products and services are embraced by mainstream corporations and have a large impact on the economy and the environment.

"We're still in the very early stages of the game," Fan says. "But once growth companies prove their technologies, fine-tune their business models and build sales channels to customers, we'll start seeing a steady progression of acquisitions by large companies."

Kunming has some of the sunniest skies found in any Chinese city. Many visitors to the Spring City wonder why with so many beautiful days each year there aren't more rooftop gardens, cafes or restaurants. One major reason for this is the overwhelming number of Kunming rooftops that are covered with solar water heaters.

A new report by the Worldwatch Institute has declared Kunming to be China's "Solar City", primarily because of the prominence of solar water heaters in the city. The report estimates that more than half of the city uses solar energy to heat its water.

Solar-heated water can be found throughout the city, generally in buildings of 10 stories or lower. Most of the city's newer high-rise apartment buildings and some of the newer high-end residential developments in the city's southwest do not offer solar-heated water.

According to the article, around 30 million households throughout China have solar water heaters - nearly eight percent of those households being located in Kunming. Solar water heaters are becoming increasingly common in other parts of the country because of the growing availability and affordability of solar technology.

Kunming is emerging as a city at the front of China's solar industry - and not just as an end user. Yunnan Normal University is home to the Solar Energy Research Instititute, which was founded in 1971 and is playing an increasingly important role in solar technology research and development.

In recent years the Institute has cooperated with the Ford Foundation via the foundation's Pathways to Higher Education program to expand research, development and use of solar technology throughout Yunnan. The Institute even offers free testing services for Chinese solar companies seeking certification for their products, essentially helping to expedite new products and technologies to the market.

The central government in Beijing is also funding the construction of 30 solar power plants in Yunnan, working through Yunnan Normal's Institute. With a greater number of sunny days than the majority of other Chinese cities, the facilities and manpower at YNU's Solar Energy Research Instititute and a desire by the national and provincial government for cleaner energy alternatives, Kunming is moving toward becoming an alternative energy leader for cities around China and the world.

The increasing global focus on renewable energy could not have come at a better time for Dr. Shi Zhengrong, an Australian citizen and Chinese-trained scientist who says he got into solar power by chance.

Shi, 44, is the chief executive of Suntech Power Holdings, one of the new breed of successful domestic China-based companies with global ambitions.

After spending a year at Sydney-based University of New South Wales' renewable energy center in 1988, Shi found himself at a company formed to commercialize the ideas of fellow researchers.

"I never thought this solar business could take off or become commercially viable. I thought I just needed to concentrate on my research and publish papers to do my job as a scientist," Shi told The Associated Press in an interview.

Regular trips back to his homeland China to lecture on solar power coincided with a global push for renewable energy. He says he saw an opportunity to make a difference in the world's energy industries.

"Solar power and other alternative energy is definitely the answer to sustainable development of human life, especially to resolve this global warming issue," Shi says.

The government of Wuxi, a city on Shanghai's western outskirts with ambitions as a high-tech center, put up US$6 million in 2001 to finance Suntech.

Shi bought out his backers and listed his $225 million (sales) company on the NYSE in 2005 where the company's market cap soared to $5.5 billion. Depending on the company's current share price, his worth hovers around US$2 billion.

Suntech, which started with 20 workers, remains headquartered in Wuxi, but now occupies four sites with a total workforce of 3,500.

The company's photovoltaic systems are used in a wide range of applications, including communications and broadcasting, transportation, housing and military.

Currently under construction in Wuxi is the world's largest energy wall, a curtain of solar cells integrated into the city's airport. It's a large-scale advertisement for the technology of Suntech, but currently the biggest market for it's products is Europe.

A major exporter to the rest of the world, Suntech's aim is to reduce the cost of production to a point where China actually uses a far greater share of current sales.

Only about 10 percent of Suntech's 2006 sales of US$599 million were in China, with 80 percent of Suntech's products going to Europe, in particular Germany.

"We use the energy in China to manufacture these things, so we take the blame for using the energy in China then we ship them out of the country," says energy analyst James Brook.

But Shi is working on changing that and is committed to becoming the "lowest cost per watt" provider of photovoltaic solutions to customers worldwide

"When the cost comes down a little bit more, the market will be booming in China," Shi says.

China is working on three industry standards for solar power generation, state media reports. The new standards will focus on the "fundamentals, components and materials, generation systems and technological design", Li Aixian, Director of the Sub-Institute of Resource and Environment Standardization of the China National Institute of Standardization, was quoted as saying. So far, there are 15 national standards for the solar water-heating sector. China sees itself as one of the leading manufacturers of photovoltaic cells. However, exports of solar generation products are still subsidised to make them profitable.

An international architectural design competition for the so-called "Sun-lit Schools" was launched here Wednesday, to seek solutions for solar-fueled school buildings in the countryside.

The contest is co-organized by the International Solar Energy Society (ISES) and the China Renewable Energy Society.

Contestants are required to design "Sun-lit" school buildings with reference to climatic conditions in earthquake-hit areas such as Maerkang and Mianyang, both in Sichuan Province.

Energy-efficient design is revolution for the architecture sector, a major energy consumer, according to Zhong Jishou, the organizing committee executive chairman.

"We want to make a breakthrough in building schools in the quake areas," he said. "Moreover, we also want provide a new model for rebuilding programs in these areas."

Professionals from domestic and overseas architectural institutions, universities and research and manufacturing companies related to solar energy are eligible applicants.