China, Solar

China’s booming solar power sector faces stiffer competition

December 4, 2007 (XFN – Asia) – China’s 10 US-listed solar power manufacturers could face new challenges as new international players enter the market, said Todd Glass, energy specialist with the law firm, Heller Ehrman.

 

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“The key to the success of these companies must be the ability to sell their modules at an efficient cost, but some of them are running purely on cheap labor, which is not sustainable, and they will not survive,” Glass said on the sidelines of a conference in Beijing.

China’s leading solar panel manufacturer, the New York-listed Suntech, is likely to be the most successful, because of “its fundamentally good technology and business practice”, but even it will face growing competition, Glass said.

Glass noted that producers from Silicon Valley, traditionally associated with the local computer industry, are now getting involved in the photovoltaic cell industry, and Chinese companies would have to boost efficiency if they are to compete with such firms.

One of the biggest challenges is the relatively slow development of the domestic solar market, Glass said.

“Why isn’t anyone developing utility-sized photovoltaic projects in China?” he said.

“It might be a question of policy or cost, but this really needs to happen,” he said. “A company like Suntech not only needs to be exporting modules, but building projects here in China.”

The bulk of China’s significant solar panel output is sold abroad to subsidized markets in Europe, and industry representatives have called on the government to introduced fixed power tariffs for solar projects that will allow them to compete effectively for large-scale grid connected power projects.

Shi Dinghuan, an advisor to China’s cabinet, the State Council, said at the conference that while China’s solar power companies had already used the international capital markets to develop into competitive enterprises, “they are concentrating on fhe foreign markets because the pricing system in China is still imperfect.”

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