Solar dawn


From pv magazine 05/23.

The Renewable Energies in Rural Areas Program was carried out by Germany’s Gesellschaft für Technische Zusammenarbeit (GTZ) – an international cooperation agency – and the Chinese Academy of Science-affiliated, Institute of Electrical Engineering (IEE), with China’s National Energy Administration (NEA) serving as a political counterpart.

The project – covering Gansu, Qinghai, Tibet, and Yunnan provinces – focused on solar because it was part of China’s Brightness Program to deploy PV in 1,066 townships across 11 provinces. Beijing had apportioned around €470 million ($514 million) for hardware purchase from 2002 to 2004 under the Brightness Program.

That program spurred demand and drove more production capacity at established solar players including Canadian Solar, Sungrow, Trina Solar, Yingli Solar, and Suntech as well as attracting new entrants to PV manufacturing. Suntech’s NYSE listing in December 2005 added further market impetus and triggered a wave of overseas IPOs.

Renewables law

Hundreds of solar manufacturers were established in the wake of Beijing’s Renewable Energy Law, introduced in February 2006 at the opening of the nation’s 11th five-year plan. The legislation provided a framework for investment in renewables, particularly from the private sector, and dozens of local authorities saw the employment and tax opportunities offered by the new industry and gave enthusiastic support to remove market entry barriers.

At its peak, China hosted an estimated 550 solar module manufacturers, with industry clusters in Greater Shanghai and neighboring Jiangsu and Zhejiang provinces. The more-than 50,000 solar companies in Jiangsu in 2020 produced around 34% of the world’s solar cells and modules.

The NEA was not keen on the Western model of offering fixed, long-term feed-in tariff (FIT) payments as an incentive and discontinued the approach after two national solar auctions in which state-owned enterprises used their vast assets to shoulder aside privately-owned competitors. The government department instead instituted its National Rooftop and Golden Sun Program but the associated capital subsidies did not attract high-quality equipment, and ownership and maintenance responsibilities of the solar arrays were not clear. Provinces including Jiangsu, Liaoning, Shandong, and Zhejiang – unusually for China – struck out with their own FIT schemes, albeit limited to local champions who secured the available quotas.

Industry strategy

In early March 2011, China’s National People’s Congress laid out a guiding principle for its economy to reach global leadership via an initial made-in-China phase and a second designed-in-China period. The approach concerned seven strategic emerging industries: new energy, energy efficient and environmental protection technology, new energy vehicles, high-end equipment manufacturing, new materials, IT, and biotechnology.

The impact on solar was so startling then-Chinese premier Li Keqiang called for “a prevention of blind expansion” in his “Report on the work of government.” Moreover, in July 2013 the State Council – which oversees provincial governments – in its “Official Opinion” stressed the need for greater PV industry consolidation and to strengthen indigenous R&D capabilities. To date, though, China’s strategic emerging industry plan remains in place.

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Interestingly, numerous provinces including Guangdong, Shanxi, Sichuan, and Yunnan have of late officially released their own “PV Industry Action Plans” which envisage double or even triple-digit gigawatts of annual production capacities by 2025.

During the early years of the 12th five-year plan, which began in 2011, trade disputes threatened the export-oriented Chinese PV industry. A nationwide FIT scheme was introduced in late 2011 as a result but it was abolished a decade later. The FIT program ensured annual installations skyrocketed from 3.5 GW in 2012 to 87.41 GW(AC) in 2022. China appears to be on track to install up to 120 GW(AC) to 130 GW(AC) this year.

Focus on quality

In late 2015, China set in motion its unique, multi-year, quality-driven Top Runner Program, which focused on cell and module conversion efficiency. In essence, compliance with such technical standards enabled developers to bid for gigawatt-scale central and provincial government project tenders.

The Top Runner Program – which took off in conjunction with China’s 13th five-year plan, from 2016 – had a profound impact on the upstream solar sector in particular, resulting not only in ever better-performing components, but also initiating a greater sense of continued innovation within the industry, something that was needed to maintain pole position globally in the longer term. Recently, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) announced the nation exported 575 GW of modules, worth $220 billion, between 2012 and last year.

In 2002, China’s PV industry was in its infancy. The domestic demand created by rural electrification programs, the implementation of the Renewable Energy Law, and the ability to raise capital abroad enabled significant production capacity expansion and booming international markets.

A long-term designated-industry policy and the ever-increasing competition which spurs innovation among rivals has always been considered a high priority in governmental circles, and thus enjoys fast-track approval. All of this, combined with an entrepreneurial spirit, has enlarged China’s global solar footprint at an unprecedented pace.

About the author: Frank Haugwitz is a senior adviser and China representative at global transaction and strategy advisory group Apricum – The Cleantech Advisory.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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