Tuesday, October 11, 2011

Solarbuzz: China's FiT Feeds "Explosive" Growth

China's national PV feed-in tariff launched this summer was expected to accelerate solar project development, and now the nation's PV pipeline stands at 14GW, says Solarbuzz in a new report.

There are 1007 nonresidential projects in China in some form of installation or development, including those tender-processed and planned without tenders. Of those, 707 are >1GW. Nonresidential PV project activity is now evident in 29 Chinese provinces. The report says the Northwest region, notably the provinces of Qinghai, Gansu, Ningxia, Inner Mongolia, is ripe for utility-scale projects, home to 'intense solar radiation' not to mention vast amounts of land, and thus currently accounts for two-thirds (66%) of that pipeline.

The report doesn't adequately take into consideration the drive, connections effectiveness of local leadership in explaining why Qinghai, Gansu, Ningxia, Inner Mongolia is 'ripe for utility-scale projects'. Take Ordos, Inner Mongolia as an example. The Ordos mayor's office and municipal government's power is the main reason the First Solar utility-level PV project is located there. The Northwest's 'intense solar radiation' is a factor but nothing compared to the provincial and municipal leadership's ability to steer projects their direction.

When analyzing why one region of the country has a strongly developing solar industry and another doesn't, politics is key. The problem is those connections are very opaque. Having said that, they are not impossible to uncover and understand. Just as Kenneth Lieberthal revolutionized China watching by introducing the xitong paradigm*, the time is ripe for someone to think originally about the relationships between the center and provincial NDRC's, municipal officials, specific solar companies, Ministry of Finance and everyone else involved in renewable energy projects in China.

The Solarbuzz report acknowledges that most leading project developers are state-owned, with the top 10 firms accounting for 8.7GW of the total pipeline. I don't blame the Solarbuzz analysts for not emphasizing politics enough in their analysis. It is incredibly difficult to get good info on the inner workings of the multiple party and government institutions. Solarbuzz's main point that the earlier-than-expected release of the national PV FiT policy has opened the door to explosive growth in project development activities in China is extremely sound.

More importantly, that strong growth in domestic demand is a great opportunity to Chinese module suppliers. There are still major questions about how the FiT will be implemented. However, Solarbuzz is spot on with its analysis that module suppliers Suntech, Yingli, GD Solar and Shanghai Aerospace Automobile Electromechanical, and Sungrow Power Supply in inverters will increasingly be selling the domestic market and their business plans will no longer be so reliant on exports.

*Anyone with even a passing interest in China's politics needs to have read Kenneth Lieberthal's "Governing China: From Revolution Through Reform". Plenty of people have poked holes in his argument but he broke ground and made us look at China differently. Hopefully there are PhD dissertations being written right now that will shed light on the renewable energy decision-making process, allocation of funds and personal connections involved.


dianamngo said...

Great article Chris. PVs haven't been on the radar in China as much as wind energy in the past years, but it hopes to provide more local access in the future-particularly in post-earthquake Sichuan Province.

To look deeper into the political side of Solar PVs, you might want to look into city partnerships that the U.S. Dept. of Energy and the Chinese government have created over the last 2-3 years. Essentially, it is an effort to help Chinese cities learn how to implement renewable technologies from U.S. success models. Solar PVs are also part of this and shows both central and local initiative on the Chinese side (http://www.enn.cn/en/news/pr_20110519_774883.html).

- Diana Ngo

Asian Energy Blogger/Analyst

P.S. I also agree with you that Kenneth Lieberthal's "Governing China: From Revolution Through Reform" is a great primer for Chinese politics. I was assigned the same book from a professor at Hong Kong University's Politics and Public Administration Department while studying abroad there in 2006.

Chris Brown said...

Thanks for the comments, Diane

Funny you mention Sichuan. The Solarbuzz report I was referring to lumped the province in with the Northwest region. I deliberately left it out since not only is Sichuan geographically not in Northwest but it is a very separate case. I unfortunately don't much about the province's renewable energy policy structure or solar market. Do you have any recommendations for studies or sources of information for Sichuan solar?

Thanks for the info on the USDOE-Chinese government city partnership. Is JUCCCE involved with this?

Great to meet you, Diane, and I look forward to further discussions.

dianamngo said...

Hi Chris,

I want to respond to your questions, however, the information might be a bit sensitive. Would you mind if I emailed you?

- Diana

Chris Brown said...

Hi Diane,

Sure, here is my email address: chrisbrown@asiacleantechgateway.com


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