EV­ERY­THING UN­DER THE SUN

光伏大国的明天

The World of Chinese - - Contents - BY DAVID DAW­SON

Five years ago, China's so­lar in­dus­try was on “life sup­port,” ac­cord­ing to its own en­ergy ex­perts; Fast for­ward to to­day and the coun­try is a so­lar su­per­power, while prices are lower than ever. What hap­pened?

In late 2012, China’s so­lar in­dus­try was on “life sup­port.” The warn­ing came from Li Jun­feng, deputy di­rec­tor of the en­ergy re­search in­sti­tute of the Na­tional Devel­op­ment and Re­form Com­mis­sion, the de­part­ment which man­ages China’s re­new­able en­ergy pol­icy.

So many so­lar pan­els were be­ing pro­duced that their value was plum­met­ing; Li in­di­cated that a cri­sis was on the hori­zon un­less the world, in­clud­ing China, dra­mat­i­cally slashed pro­duc­tion.

The prob­lem in­ten­si­fied in 2013 with a dis­pute be­tween China and the EU which con­tin­ues to this day. So­lar-panel pro­duc­ers claimed that China was ex­port­ing cheap so­lar pan­els to the EU, sub­si­dized by the Chi­nese gov­ern­ment in var­i­ous ways, and “dump­ing” them in their mar­ket. The EU main­tained this was un­fair com­pe­ti­tion that was de­stroy­ing their own pro­duc­ers.

The ar­gu­ment still hasn’t been re­solved and, this Fe­bru­ary, the Euro­pean Coun­cil de­cided to ex­tend tar­iffs on Chi­nese panel im­ports for an­other 18 months. This was ac­tu­ally seen as a soft­en­ing in the EU stance. The ex­ten­sion was shorter than ex­pected and there are in­di­ca­tions that the tar­iffs could be fur­ther scaled back, as the cost of pro­duc­ing so­lar pan­els has fallen glob­ally.

The EU tar­iffs are one of the few stum­bling blocks still left for a resur­gent Chi­nese so­lar in­dus­try, which, just five years af­ter be­ing at death’s door, is now re­garded as a so­lar su­per­power in a busi­ness worth 100 USD bil­lion glob­ally, and ex­pected to ex­pand by an es­ti­mated 13 per­cent an­nu­ally. In 2016 alone, China was re­spon­si­ble for half the world’s so­lar ca­pac­ity, dou­bling the size of the do­mes­tic in­dus­try, and it’s not slow­ing down.

In 2008, China set a goal of 1.8 gi­gawatts for its so­lar ca­pac­ity by 2020; in 2014, that was dra­mat­i­cally re­vised up­ward to 100 gi­gawatts. The tar­get was met this year, when China in­stalled 10 gi­gawatts in July alone. Reuters re­cently re­ported that its in­dus­try was ex­pected to pro­duce 60 gi­gawatts worth of so­lar pan­els in 2017 alone, a 25 per­cent in­crease on the pre­vi­ous year.

China re­cently un­veiled the world’s largest float­ing so­lar farm, in a flooded coal-min­ing re­gion in An­hui, an ex­per­i­men­tal project which aims to see whether still bod­ies of wa­ter can be uti­lized for power gen­er­a­tion.

That’s far from the only large-scale project re­cently com­pleted. A 250acre farm in the shape of a panda was re­cently un­veiled, along with plans for an­other 100 panda-shaped so­lar-panel farms across Asia. Even this mas­sive project seems mi­nor in com­par­i­son to

the pro­posal pre­sented to the UN by China’s State Grid Cor­po­ra­tion in late 2016, sug­gest­ing the cre­ation of a global grid by 2050. Un­der this am­bi­tious plan, so­lar, wind, and hy­dro­elec­tric power would be gen­er­ated in ar­eas with abun­dant re­sources, and sold across bor­ders to pop­u­la­tion cen­ters that need power.

It’s a hell of a plan, and would have been un­think­able five years ago. But how did this stun­ning turn­around hap­pen?

In­dus­try pub­li­ca­tion the Sci­en­tific Amer­i­can, cit­ing the US De­part­ment of En­ergy (DOE), points to Ger­many, which launched a pro­gram to pro­mote rooftop so­lar pan­els in the late 1990s. The pol­icy proved so pop­u­lar that do­mes­tic pro­duc­tion was over­whelmed by de­mand. The deficit was met by China, with the aid of Ger­man cap­i­tal, tech­nol­ogy, and ex­per­tise. Af­ter Italy and Spain launched their own re­new­ableen­ergy in­cen­tive pro­grams, Chi­nese man­u­fac­tur­ers re­al­ized that there was on­go­ing EU de­mand to be met, and be­gan to seek more over­seas so­lar in­vest­ment—ex­per­tise and ma­te­ri­als, such as polysil­i­con sup­plies, needed to fuel its in­dus­try. They also bought for­eign com­pa­nies, or lured them to work in China with the prom­ise of cheap la­bor and tax cred­its.

The process took decades, as it re­quired build­ing huge, of­ten au­to­mated fac­to­ries, and ac­quir­ing mul­ti­ple tech­nolo­gies, dur­ing which China’s so­lar fu­ture was un­cer­tain. Re­new­able en­ergy de­mand has come in booms and busts, but one con­stant was that China’s so­lar ex­per­tise and man­u­fac­tur­ing ca­pac­ity were mak­ing steady im­prove­ments. As global prices plum­meted, China’s do­mes­tic de­mand started to ramp up. Partly as a con­se­quence of the low prices and ready avail­abil­ity of the tech­nol­ogy, lo­cal gov­ern­ments be­gan of­fer­ing their own vari­ants of the orig­i­nal Ger­man pro­gram, and China was sud­denly in an en­vi­ous po­si­tion.

In the US, the in­dus­try was “show­ing se­vere signs of stress,” Forbes mag­a­zine in 2016 noted. “Given the tricky ac­count­ing and the preva­lence of China-based com­pa­nies among the panel-mak­ers, that stress may very well be un­der­stated.” De­spite once be­ing at the fore­front of so­lar power, the US will now do well to hold the num­ber two spot by 2020, and only by in­creas­ing its in­no­va­tion and then cost-cut­ting, ac­cord­ing to the DOE.

It’s been a strange jour­ney, in many re­spects. If the “panda farm” wasn’t enough, there is still the mys­tery of which Chi­nese en­tity is fund­ing Sene­galese-amer­i­can rap­per Akon’s bil­lion-dol­lar credit line to in­stall hun­dreds of thou­sands of miniature grids in 17 African coun­tries, part of his Akon Light­ing Africa char­ity project.

Then there’s the fate of Sun­tech, once the world’s big­gest pho­to­voltaic­panel pro­ducer, head­quar­tered in Wuxi, Jiangsu prov­ince. Sun­tech may still be a force to be reck­oned with, but hasn’t been the same since 2013, when its busi­ness was brought crash­ing

down to Earth amid al­le­ga­tions of fraud against its Euro­pean joint ven­ture and low mar­gins, which meant Sun­tech de­faulted on US bonds to the tune of 541 USD mil­lion,

The risks as­so­ci­ated with razor-thin mar­gins are just as acute to­day, if not more so. Some Chi­nese com­pa­nies are still for­go­ing the EU’S sales quota and min­i­mum price re­quire­ment. Cana­dian So­lar, Jinkoso­lar, and Trina So­lar were three main­land firms that hap­pily sold into Europe at cut­throat prices, re­gard­less of the steep tar­iffs of up to 45 per­cent im­posed on cheap prod­ucts, sim­ply be­cause they have the ca­pac­ity. Rather than ac­cept­ing the quo­tas and price re­stric­tions, these com­pa­nies are tak­ing the hit sim­ply be­cause they need to off­load the prod­ucts.

But there are other po­ten­tial prob­lems lurk­ing on the hori­zon for Chi­nese so­lar.

It’s not just Europe that has put up re­sis­tance to cheap Chi­nese so­lar dump­ing. The US has been en­gaged in what one Wash­ing­ton Post com­men­ta­tor called “a game of Whac-a-mole” by first ban­ning Chi­nese im­ports, which make up around 60 per­cent of so­lar pan­els in the US, then ban­ning im­ports from other re­gions or coun­tries that China is re-rout­ing its so­lar ex­ports through. Af­ter two US man­u­fac­tur­ers, Su­niva and So­lar­world, com­plained about Chi­nese ex­ports from the main­land, one com­pany re­port­edly moved pro­duc­tion to Tai­wan, re­sult­ing in a ban on Tai­wanese prod­ucts as well. Com­pa­nies in Malaysia, Thai­land, and Viet­nam have also been ac­cused of act­ing as smoke­screens for Chi­nese so­lar over­ca­pac­ity.

But while Su­niva warns that Chi­nese over­ca­pac­ity, helped by un­fair state sub­si­dies and sup­port, are push­ing out prod­ucts at “ir­ra­tional low” prices only they can af­ford in “an in­sane race to the bot­tom,” there are also Amer­i­can busi­nesses that rely on low-cost so­lar pan­els and are lob­by­ing heav­ily against any in­crease in tar­iffs. They claim that tar­iffs could end up crip­pling de­mand down­stream by rais­ing process, ul­ti­mately hurt­ing em­ploy­ment, as well as re­duc­ing the up­take of so­lar pan­els—with an en­vi­ron­men­tal im­pact to match. What­ever de­ci­sion the US author­i­ties make, there are go­ing to be an­gry voices on both sides. Even Akon, in a ram­bling Youtube video, took aim at the US gov­ern­ment over the ex­ist­ing and more lim­ited tar­iffs, claim­ing they were part of a plot by Ge­orge W. Bush to fa­vor the oil in­dus­try and were help­ing to sab­o­tage his ef­forts to bring elec­tric­ity to Africa.

While the fu­ture of so­lar power may still be un­der a cloud, one as­pect is not: China will be at the cen­ter of the storm, for bet­ter or worse.

More than 50 out of 60 house­holds in this “eco-vil­lage” in Taizhou, Zhe­jiang, have in­stalled so­lar pan­els on their homes

This float­ing so­lar farm in Huainan, An­hui prov­ince, is built on a col­lapsed and flooded coal-min­ing re­gion

A drone sur­veys a so­lar power sta­tion for im­pov­er­ished ar­eas near the Three Gorges Reser­voir, Hubei prov­ince

The world's first panda-shaped so­lar farm be­gan oper­a­tion on Au­gust 14 in Da­tong, Shanxi prov­ince

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.