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China, US will grow solar power competition

(China Daily/Agencies)
Updated: 2009-10-26 08:29

The United States and China are in a head-to-head race to become the world's top market for solar power.

Solar panel makers are wasting no time making plans to cash in on the growth promise of both markets despite the global recession.

At the recent Reuters Global Climate and Alternative Energy Summit, Chinese and US solar companies including Suntech Power Holdings Co Ltd, SunPower Corp, Trina Solar Ltd and BrightSource Energy Inc laid out plans to capture their share of what is expected to be explosive demand for solar-generated electricity in the world's biggest and third-largest economies.

The US and China lag far behind Europe in demand for solar power, but are expected to vault ahead in the next few years as both countries work to curb their emissions of greenhouse gases that contribute to global warming.

This year, Washington and Beijing have both rolled out programs designed to grow their fledgling solar power industries and thus boost growth in their economies. Together, they are expected to drive the building of at least 5 gigawatts (GW) of solar installations between 2009 and 2011, according to a recent report by investment firm CLSA.

Thanks to strong government incentives, Germany is the world's biggest solar market and is expected to remain so until 2013, when the United States will become its equal. China will be slightly behind, according to the research firm Lux Research.

In China, recently enacted subsidies for utility-scale solar power projects have prompted a host of plans for solar power plants.

US solar in China

Those plans include the recent announcement of the first major foray by a US company into the Chinese solar sector by Arizona-based First Solar Inc.

That announcement, said spokesmen for several US companies, opens the door for other non-Chinese companies to compete in China's solar market.

"It clearly makes us more bullish on China," said Tom Werner, chief executive of California-based SunPower, which already produces some of its high-efficiency solar panels in China.

"We hope that that will result in us being able to penetrate that market, as well," Werner said.

BrightSource Energy CEO John Woolard said the First Solar deal showed the Chinese were serious about solar. Woolard said his company expects to announce a Chinese partner in about year.

First Solar's announcement also could quell complaints from some European solar companies that Beijing's support for its solar manufacturers was giving Chinese companies an unfair trade advantage over European and US companies vying for market share in the global sector.

"If you announce that we have such a huge need for solar panels that we are even going to put First Solar panels into China, all of a sudden we've gone from this massive threat to maybe we saw it the wrong way around," said Stephan Dolezalek, managing director of the California-based venture capital firm VantagePoint Venture Partners.

"Maybe we should see the size of the Chinese market as this enormous upside potential, and maybe all of solar should be seeing it much more positively," Dolezalek said.

In the United States, economic stimulus funds to fill the solar funding gap left by the financial crisis have been slow to materialize this year.

Nevertheless, companies like Suntech and SunPower expect government funds to boost the market next year, with Suntech saying the US solar market could triple in 2010 from about 350 megawatts this year.

"We do think the United States could be a very, very strong market," Suntech Chief Strategy Officer Steven Chan told the Summit.

The Obama administration's loan guarantees and grants for solar "set the stage for a great 2010", Chan said.

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China's top solar company, Suntech, is setting up its first manufacturing plant in the United States and has narrowed the potential locations to Arizona and various cities in Texas, said Suntech's Chan. Suntech plans to start production at the 50-megawatt plant in the second half of 2010.

US-based SunPower said it would start producing solar panels in its home country next year to be closer to major solar markets like California.

"In terms of megawatts, it will represent a meaningful amount of our panel production, say up to a quarter of our total panel production," Werner of SunPower said. Smaller Chinese companies are looking at the US market, too.

Trina Solar, a solar panel maker based in Changzhou, is actively seeking partnerships with project developers in the United States to join the race for big contracts. "Honestly, we lag behind," Trina Chief Financial Officer Terry Wang said.