Lofty PV ambitions in China

Share

The Chinese photovoltaic industry has very quickly embraced its home market, as well as emerging markets in regions like Africa, where the Chinese industry is already well established and grid parity, for example relative to diesel-powered electricity generation, is fast approaching, if not already present.

At last week’s New Energy Finance and Investment Sub-Forum, sponsored by the American law firm Covington & Burling LLP Zhai Yongping, co-chair of Energy Committee, director of Energy Asia Division, South Asia Department of Asia Development Bank (ADB), described ADB’s initiatives to make renewable energy affordable in developing countries.

Zhai sees tremendous potential for Chinese photovoltaic manufacturers to apply their expertise and low cost products in these markets, where new energy power generation has plenty of potential, if they can address the market of diesel-powered electricity generation with its cost window of US$0.30 to 0.40 per kilowatt hour. According to Zhai, only Chinese manufacturers with their existing scales of production are in a position to address this market.

Uncertain future

Covington & Burling’s partner Andrew Jack sees another big opportunity for Chinese companies in the U.S. renewable energy and solar market. U.S. investors have poured a lot of money into U.S. clean energy ventures, but the current financial situation in the U.S. and Europe, combined with the glut in natural gas in the U.S. and the uncertain future of various federal clean energy subsidy programs, has eroded valuations and exit opportunities at these companies.

However, many have valuable technology, which could readily be deployed in the vast Chinese market with its hunger for power and above all clean alternatives. This situation offers ample opportunity for Chinese companies to step in and acquire valuable technology they can exploit in China and other emerging photovoltaic markets.

Large Chinese commercial banks are also mobilizing their institutions and global networks to serve such Chinese pioneers. Yin Hong, vice general manager, Credit Management Department at Industrial and Commercial Bank of China (ICBC), pointed to her bank’s international network of offices in 33 countries to support Chinese companies as they go global and seize such opportunities as mentioned by Jack. At the same time, ICBC is also funding new energy power generation projects in China as the Chinese domestic market for large-scale solar and wind matures and risks for financial institutions are minimized.

Well-positioned

The enormous potential for Chinese companies is already becoming reality at Beijing-based Hanergy. It is the largest privately owned solar power generation company in China.

Interestingly, it started in the hydro and wind power generation business and, in 2009, moved very aggressively into solar. Its hydro business will generate a massive three billion RMB in annual revenues when the final power station (from four plants overall) is connected to the grid. So Hanergy can afford to take the long view, which puts it in a good position to implement its vision of becoming the leading thin film manufacturer in China, as well as a leading utility in the new energy market.

Three gigawatts of thin film production capacity will be in place by the end of this year and, according to Hanergy’s chairman Li Hejun, who spoke in yesterday’s Solar Photovoltaic Energy Sub-Forum, "thin film’s cost can be reduced to RMB 0.5 per kW in the future, believe it or not."

Hanergy wants to take this cost advantage and apply it aggressively at home and abroad. Large solar farm projects have been inked in western China and two pilot building photovoltaic projects are underway in southern China. Funding support is coming from China Development Bank (CDB), which has committed loans totaling RMB 30 billion to fund Hanergy’s business at home. A separate CDB loan facility of RMB 30 million is earmarked for the expansion of Hanergy’s solar project development business in overseas markets.

As if these various businesses were not enough for Hanergy’s dynamic chairman, Li Hejun is also the chairman of China New Energy Chamber of Commerce (CNECC), one of CNEIF’s two organizers along with China Renewable Energy Industry Association (CREIA).

CNECC and CREIA certainly put together an excellent event in Beijing and if Li’s vision of very affordable solar turns out to be the reality in the not-too-distant future, then this Forum might end up as a pillar event in China’s (and the world’s) new energy calendar.

Watch out for the May edition of pv magazine, which will be looking at China’s photovoltaic market.