Wednesday, May 23, 2007

Solar's Rosy Assessment

Research group sees good news in mass production, global competition.
May 22, 2007
By Andrea Quong

Solar power is poised to become a large-scale, affordable energy source within three to five years, the president of the Worldwatch Institute said Tuesday.

Chris Flavin, who heads the Washington, D.C.-based environmental research organization, based his comments on a forecast suggesting that surging production of photovoltaic cells—the building blocks of solar panels that turn sunlight into electricity—will drive prices of those cells down by 40 percent over the next three years.

The forecast, by the Prometheus Institute, a Cambridge, Massachusetts-based think-tank, suggests that the solar industry is poised to overcome a major impediment to bring sun power to the masses.

"You're going to see this emerge for the first time as an economical and large-scale energy source," said Mr. Flavin. "The dramatic growth that's going on now and the technological evolution is going to break down the costs in the next three to five years."

High production costs have meant that sun-generated electricity is much more expensive to rate-payers than conventional electricity. While subsidies have brought that down to $6 per peak watt, prices need to come down to $3 per peak watt to be competitive, said Ron Pernick, co-founder of Clean Edge, a research and consulting firm.

But economies of scale are expected to lower the cost of producing photovoltaic cells and gradually reduce the price of solar-generated electricity.

Chinese and Taiwanese manufacturers accounted for nearly half of the global increase in solar cell production, which reached 2,521 megawatts in 2006. China and Taiwan produced 547 megawatts last year, compared to only 26 megawatts just three years earlier, according to data from Worldwatch Institute and Prometheus Institute.

China, which exports most of its solar cells to Germany and Spain, displaced the U.S. as the world's third largest manufacturer behind Japan and Germany. Japan, the traditional leader thanks to the likes of Sanyo and Sharp, still controlled the largest share of the market at 36 percent last year, but its production grew only 11 percent.

"The Chinese are, in effect, nipping at our heels," said Mr. Flavin. "This time, they're getting in on the ground floor."

Chinese manufacturers like Suntech Power, which climbed from the world's eighth largest solar cell producer in 2005 to the fourth largest in 2006, rely on conventional, crystalline silicon-based technology. But that could easily change with Chinese companies, many of them startups that went public on U.S. markets, adopting new technologies, Mr. Flavin said.

U.S. market share of solar cell manufacturing slipped to 8 percent in 2006, according to Mr. Flavin. But the U.S. continues to develop next generation technologies for making cells with less or no silicon, which is currently in short supply. In the U.S., production actually rose more than 30 percent to 202 megawatts, largely due to the manufacture of thin-film cells that make do with less silicon by Phoenix-based First Solar, according to the report.

FOCUS - China solar power industry grows, but exports overshadow home market

8/2/2007 05:38 London Time story 0369

BEIJING (XFN-ASIA) - China''s domestic solar power sector will continue to need government help in the near-term as high costs of installation and low returns deter market entry, experts said.

They said the near-term market will remain export-driven and limited domestically to small industrial and commercial applications.

"Manufacturers are expanding their capacity, but I don''t see a major drive to install solar power domestically," said Wang Xing, senior program officer for electricity and renewable energy at the China Sustainable Energy Program.

"Right now there is not a very strong incentive program for solar power," he said.Wang also said most domestic manufacturers are gearing production toward the export market while looking to tap the public investment in projects such as rural electrification programs."

It''s a rural market... an industrial applications market at the moment," said William Wallace, senior technical advisor at the project management office for the United Nations Development Program and Global Environmental Facility, which has partnered with China''s National Development and Reform Commission.Industry analysts said they believe the commercial solar market in China will be slow to develop without adjustments to the country''s electric pricing mechanism as solar installation in China often depends on government investment targeted at development in rural areas.

Wallace said that large scale domestic production of solar electricity is often limited to government-funded rural electrification programs.

Under the rural electrification program, the Chinese government set a goal to install electricity in some 1,000 townships last year, Wallace said, adding that the goal was achieved mostly through small scale hydro and photovoltaic systems.

"They plan to continue this to the small village level, of which there are 20,000... that could require up to (a total of) one gigawatt of photovoltaics," he said.

Wallace added that this would greatly expand the solar market though the plan is expected to take 10 years to complete.

Industry analysts said that one of the largest obstacles for solar energy is the inability to link small scale power production units to a larger power grid. "

Currently, solar energy is only combined with power generation grid networks on a trial basis in first-tier cities like Beijing and Shenzhen, but solar on-grid electricity generation has not been achieved due to its limited scale," said Gao Hu, a researcher with the Energy Research Institute under the National Development and Reform Commission.

Grid connection provides a substantial incentive for alternative energies such as solar, wind, and small scale hydro by allowing excess capacity to be sold back to the power grid.

Industry specialists, who asked to remain anonymous, told XFN-Asia that domestic consumption of solar power should improve in the next few years.

One source said that rumors are circulating in the industry that the central government will introduce policies this year to promote domestic installation of alternative energies such as solar.

But another industry official said that it may be two to three years before these policies are enacted and then another one to two years after the implementation of those policies before they generate meaningful domestic sales of photovoltaic systems.

He added that the central government wants local governments to speed up the creation of incentives.
"The mandate for the central government is... for the regional governments to really start to put in place incentives and subsidies and start to make that happen," the official said.

The central government has set a goal for renewable energy sources accounting for 10 pct of all energy consumed by the year 2010. Authorities are aiming to increase this to 16 pct by 2020.

An industry source said the mix would likely make hydro-electric capacity its top priority, followed by wind and solar.

"I think maybe it (the three- to five-year outlook for domestic Chinese solar sales) will be promising but no one knows for sure," another industry official added.

Wallace told XFN-Asia that wind will continue to dominate over solar electricity as solar energy costs roughly five to six thousand dollars per kilowatt (KW) to install while wind power costs significantly less at 1,000 to 1,500 usd per KW.

"I think the main driver for photovoltaics right now is just the economy of scale. The manufacturing base is increasing, people are gearing up production, the market is expanding and there''s an actual cost and price reduction associated with that," Wallace said.

Chinese companies such as Nasdaq-listed Solarfun Power Holdings and JA Solar Holdings as well as BP SunOasis, a joint venture linking energy giant BP PLC and solar system integrator China Xinjiang SunOasis Co, are planning rapid capacity increases in 2007.

Solarfun had annual production capacity of 120 megawatts (MW) of PV cells and 60 MW of PV modules in 2006, said a research report from Morgan Stanley. The company plans to increase its capacity for cells and modules to 240 and 180 MW by the end of this year with further increases to 360 and 300 MW in 2008, the report said.

Similarly, Jinglong Group subsidiary JA Solar, a manufacturer of monocrystalline silicon-based PV cells that began commercial operations in April of last year, had a capacity of 75 MW in 2006. The Morgan Stanley report said the company will increase capacity by 100 MW this year.

And BP SunOasis told XFN-Asia in a telephone interview that it is also planning to boost production capacity.

However, market sources said that although the domestic market is growing, the capacity boosts are geared mostly toward international markets such as the US and Europe, where policy incentives continue to spur consumption.

"You''ll continue to see growth in the base-line market, which is the commercial market, and this is telecommunications, cathodic protection for pipelines, other industrial type applications - for railroads and so forth," Wallace said.

He added that he expects the government to focus more on grid connection in the future.

For the near term, the solar water heating market will continue to grow as lower costs make it a more viable option. But while the industry ramps up capacity, government incentives will be critical to shifting the attention of Chinese manufacturers away from the export market.

Solar power heads mainstream as costs drop - report

22 May 2007 21:53:08 GMT
Source: Reuters

By Timothy Gardner

NEW YORK, May 22 (Reuters) - Solar power should become a mainstream energy choice in three or four years as companies raise output of a key ingredient used in solar panels and as China emerges as a producer of them, according to a report by an environmental research group.

"We are now seeing two major trends that will accelerate the growth of photovoltaics: the development of advanced technologies, and the emergence of China as a low-cost producer," Janet Sawin, a senior researcher at the Worldwatch Institute and an author of report, said in a statement.

Investors have flocked to solar and other renewable energy sources amid worries about the high costs of oil and natural gas and greenhouse gas emissions. Solar is the fastest growing energy source, but still provides less than 1 percent of the world's electricity, in part because its power can cost homeowners twice as much as power from the grid.

But costs could fall 40 percent in the next few years as polysilicon becomes more available, Sawin said.

More than a dozen companies in Europe, China, Japan, and the United States will boost production over the next few years of purified polysilicon, which helps panels convert sunlight into electricity, and is the main ingredient in semiconductor computer chips, according to the report.

Polysilicon's feedstock is abundantly available sand. But a downturn in silicon refining after the high-tech bubble collapse in the late 1990s has constrained the panel market.

In some of the world's sunniest places, like California, electricity from solar panels costs the same as power from the grid. A drop in solar panel prices could expand that to places that only get average sunlight, making solar more of a mainstream choice, Sawin said in an e-mail.
Last year, China passed the United States to become the world's third largest producer of solar panels, trailing only Germany and Japan.

"To say that Chinese PV producers plan to expand production rapidly in the year ahead would be an understatement," Travis Bradford, president of the Prometheus Institute, a Massachusetts-based group that promotes renewables, said in a release.

"They have raised billions from international IPOs to build capacity and increase scale with the goal of driving down costs," said Bradford, who helped write the report.

Many companies are producing thin-film solar technologies that cut the amount of silicon used in panels. Thin-film could grab a 20 percent share of the market by 2010, up from 7 percent of the market in 2006, the report said.