Commentary: China's demand for alternative energy will grow
By Sage Brennan
Last Update: 7:00 PM ET May 27, 2007
SHANGHAI (MarketWatch) -- Investors in China's tumultuous solar power equipment sector will watch Suntech Power Holdings Co. Ltd.'s earnings report on Tuesday morning, after Suntech competitor Trina Solar reported solid results last week.
After a sluggish stretch following its IPO in late 2006, Trina Solar Ltd.'s stock saw a massive rise through mid April to almost $70, and has since settled in the mid-$50 range. Suntech's stock has seen similar volatility since its late 2005 IPO, and JA Solar Holdings Co. Ltd. has been on a bit of a roller-coaster ride too.
Stocks in this photovoltaic generation technology sector are driven by limited supply of resources, namely their silicon base material, as well as by the recent attention that alternative energy technologies have received as the global warming phenomenon has finally gained acceptance.
Although the largest markets for solar-based energy products are currently found in Europe, countries in other regions are beginning to consider government policies and other incentives that could increase worldwide demand for alternative energy technologies, including solar.
Interestingly, the many solar-cell manufacturers that have cropped up along China's east coast are overwhelmingly producing for export, but this will eventually begin to change as Beijing makes good on recent promises to improve energy efficiency. Currently, of course, China's energy efficiency is degrading with every new power plant and car that is produced, as is the case in other industrial economies.
Like the U.S. and Europe, China's demand for the whole spectrum of alternative energy products will inevitably grow, bringing prices of solar products within reach of Chinese consumers. In my opinion, the question for investors is when, not if, the solar energy market will go mainstream.
Suntech reported a tripling of profits during the fourth quarter of 2006, and I would expect the long-term prospects for companies in the solar sector to be bright.
Monday, May 28, 2007
Sunday, May 27, 2007
Global Solar Industry May Soon Experience Decline In Costs
According to a new assessment by Worldwatch Institute of Washington, D.C., and Prometheus Institute of Cambridge, Mass., the solar industry is poised for a rapid decline in costs that will make it a mainstream power option in the next few years.
Worldwatch and Prometheus Institute's statistics reveal that the global production of solar photovoltaic (PV) cells has grown sixfold since 2001 - the market grew 41% in 2006 alone, the organizations say. This growth has been constrained by a shortage of manufacturing capacity for purified polysilicon - the same material that goes into semiconductor chips. But the situation will likely be reversed in the next two years, the organizations say, as more than a dozen companies in Europe, China, Japan and the U.S. plan to increase production capacity.
"Solar energy is the world's most plentiful energy resource - the challenge has been tapping it cost-effectively and efficiently," says Janet Sawin, a senior researcher at Worldwatch. "We are now seeing two major trends that will accelerate the growth of PV: the development of advanced technologies and the emergence of China as a low-cost producer."
In the meantime, supply shortages have led manufacturers to find ways to use polysilicon more efficiently and have accelerated the introduction of new technologies that do not rely on purified silicon and are less expensive to manufacture, Worldwatch and Prometheus Institute add.
Worldwatch and Prometheus Institute's statistics reveal that the global production of solar photovoltaic (PV) cells has grown sixfold since 2001 - the market grew 41% in 2006 alone, the organizations say. This growth has been constrained by a shortage of manufacturing capacity for purified polysilicon - the same material that goes into semiconductor chips. But the situation will likely be reversed in the next two years, the organizations say, as more than a dozen companies in Europe, China, Japan and the U.S. plan to increase production capacity.
"Solar energy is the world's most plentiful energy resource - the challenge has been tapping it cost-effectively and efficiently," says Janet Sawin, a senior researcher at Worldwatch. "We are now seeing two major trends that will accelerate the growth of PV: the development of advanced technologies and the emergence of China as a low-cost producer."
In the meantime, supply shortages have led manufacturers to find ways to use polysilicon more efficiently and have accelerated the introduction of new technologies that do not rely on purified silicon and are less expensive to manufacture, Worldwatch and Prometheus Institute add.
Awakening: China Promoting Solar Water Heaters for a Cleaner Country
China, one of the largest producers of greenhouse gases, is working hard to cut its emission rates. So it's now promoting solar energy powered solar heaters but cost is still a challenge.
NEW DELHI, INDIA, May 25, 2007 - In the past few years, China has posted an impressive growth in the production of solar cells. In a span of just 2-3 years (nearly form 2003 to 2005), China fortified its position in the worldwide solar cell production market by moving from nearly 1.05% to about 7.8%, according to a recent report "China Energy Sector Analysis" by RNCOS.
The country houses some of the most polluted cities of the world and is likely to leave US behind as the largest producer of greenhouse gases by the end of this decade. While the image of 'dirty-dragon' is well deserved for China, Beijing officials are extremely serious about developing solar power capacity domestically and becoming a major player in this fast-emerging and pollution-free technology.
Following a recent strategy to foster nationwide use of solar energy, the government of China is encouraging new constructions (like buildings) and key users of heated water (like schools, restaurants, hospitals, and swimming pools) to install solar water heaters.
"It is time for China to scale up use of solar water heaters as the technology has become mature and cost-effective", said a top official with the NDRC (National Development Reform Commission), the premier economic planning wing of China, at the International Solar Thermal Utilization Conference in Jinan in April 2007, reported Worldwatch Institute on May 8, 2007.
Solar water heaters, with around one in every ten household owning one, have firmed their place as one of the most commercialized pollution-free energy technologies in China. In 2006, the solar water heater industry showed a turnover of over US$ 2.5 Billion (around 19.9 Billion Yuan) in China. Consumption of solar power in China during 2006 accounted for less than 10 MW in the total electricity consumption of around 2.78 Billion MW. However, by 2010, China believes to produce and consume around 300 MW of solar energy, nearly equal to Japan's figures last year, the world's second largest solar energy consumer.
According to the RNCOS report "China Energy Sector Analysis", for energy supply diversity, China has aimed to cut its reliance on oil and gas that will open-up opportunities for renewable sources. But price factor will play a crucial role, as renewables are dearer than coal. Apart from economic benefits, China has rich deposits of coal. But with the advancement in technology, it's projected that renewables can become competitive with coal at value front.
NEW DELHI, INDIA, May 25, 2007 - In the past few years, China has posted an impressive growth in the production of solar cells. In a span of just 2-3 years (nearly form 2003 to 2005), China fortified its position in the worldwide solar cell production market by moving from nearly 1.05% to about 7.8%, according to a recent report "China Energy Sector Analysis" by RNCOS.
The country houses some of the most polluted cities of the world and is likely to leave US behind as the largest producer of greenhouse gases by the end of this decade. While the image of 'dirty-dragon' is well deserved for China, Beijing officials are extremely serious about developing solar power capacity domestically and becoming a major player in this fast-emerging and pollution-free technology.
Following a recent strategy to foster nationwide use of solar energy, the government of China is encouraging new constructions (like buildings) and key users of heated water (like schools, restaurants, hospitals, and swimming pools) to install solar water heaters.
"It is time for China to scale up use of solar water heaters as the technology has become mature and cost-effective", said a top official with the NDRC (National Development Reform Commission), the premier economic planning wing of China, at the International Solar Thermal Utilization Conference in Jinan in April 2007, reported Worldwatch Institute on May 8, 2007.
Solar water heaters, with around one in every ten household owning one, have firmed their place as one of the most commercialized pollution-free energy technologies in China. In 2006, the solar water heater industry showed a turnover of over US$ 2.5 Billion (around 19.9 Billion Yuan) in China. Consumption of solar power in China during 2006 accounted for less than 10 MW in the total electricity consumption of around 2.78 Billion MW. However, by 2010, China believes to produce and consume around 300 MW of solar energy, nearly equal to Japan's figures last year, the world's second largest solar energy consumer.
According to the RNCOS report "China Energy Sector Analysis", for energy supply diversity, China has aimed to cut its reliance on oil and gas that will open-up opportunities for renewable sources. But price factor will play a crucial role, as renewables are dearer than coal. Apart from economic benefits, China has rich deposits of coal. But with the advancement in technology, it's projected that renewables can become competitive with coal at value front.
Saturday, May 26, 2007
Overview of Solar Energy in China 2006
From Overview of Renewable Energy Development in China 2006
China has extremely rich solar energy resources.According to estimates, the total solar radiation hittingChina's land area annually is 5 x 1022 J, equivalentto about 1700 billion tons of standard coalequivalent (tce). Based on the distribution of thetotal radiation hitting China's land surface, it can beseen that Tibet, Qinghai, Xinjiang, the southern partof Inner Mongolia, Shanxi, northern Shaanxi, Hebei,Shandong, Liaoning, western Jilin, the middle andsouthwest parts of Yunnan, the southeastern partof Guangdong, the southeastern parts of Fujian,the eastern and western parts of Hainan, and thesouthwest part of Taiwan all receive a relatively largeamount of solar radiation. In particular, areas onthe Qinghai-Tibetan Plateau receive the largestamounts of solar radiation in all of China.
Currently, the main use of solar energy in China is the supply of hot water to urban and rural households. The cumulative installed capacity of solar water heaters now surpasses 80 million square meters of collector area. In 2020 and 2050total installed capacity could reach 300 million and 500 million square meters, respectively, with the potential to conserve 130 billion kWh in 2020 and 230 billion kWh in 2050. Potential reductions in peak power loads resulting from these installed capacities would be 120 GW (2020) and 200 GW(2050). Photovoltaic technology (PV) is the main technology used in China for the generation of electricity from solar energy. PV modules are used in both industrial and commercial applications and provide electricity to remote rural areas and urban lighting applications. At present, China's installed capacity of PV systems in over 70 MW, of which about 50% is used to supply electricity to the residents of remote rural areas, a market that is growing at 30% annually. The industrial and commercial PV markets are also relatively stable. China's annual production capacity for urban PV lighting systems is over 10 MW, accounting for 70% of the world total. Among China's manufacturing capabilities for solar energy applications, production of solar thermal equipment , namely solar water heaters, is first in the world. China now has a solar water heater production capacity of over 16 million square meters per year. PV cell production capacity in China has reached nearly 200 MW. Thus, a firm basis for the large-scale development and utilization of solar energy resources in China has been established.
China has extremely rich solar energy resources.According to estimates, the total solar radiation hittingChina's land area annually is 5 x 1022 J, equivalentto about 1700 billion tons of standard coalequivalent (tce). Based on the distribution of thetotal radiation hitting China's land surface, it can beseen that Tibet, Qinghai, Xinjiang, the southern partof Inner Mongolia, Shanxi, northern Shaanxi, Hebei,Shandong, Liaoning, western Jilin, the middle andsouthwest parts of Yunnan, the southeastern partof Guangdong, the southeastern parts of Fujian,the eastern and western parts of Hainan, and thesouthwest part of Taiwan all receive a relatively largeamount of solar radiation. In particular, areas onthe Qinghai-Tibetan Plateau receive the largestamounts of solar radiation in all of China.
Currently, the main use of solar energy in China is the supply of hot water to urban and rural households. The cumulative installed capacity of solar water heaters now surpasses 80 million square meters of collector area. In 2020 and 2050total installed capacity could reach 300 million and 500 million square meters, respectively, with the potential to conserve 130 billion kWh in 2020 and 230 billion kWh in 2050. Potential reductions in peak power loads resulting from these installed capacities would be 120 GW (2020) and 200 GW(2050). Photovoltaic technology (PV) is the main technology used in China for the generation of electricity from solar energy. PV modules are used in both industrial and commercial applications and provide electricity to remote rural areas and urban lighting applications. At present, China's installed capacity of PV systems in over 70 MW, of which about 50% is used to supply electricity to the residents of remote rural areas, a market that is growing at 30% annually. The industrial and commercial PV markets are also relatively stable. China's annual production capacity for urban PV lighting systems is over 10 MW, accounting for 70% of the world total. Among China's manufacturing capabilities for solar energy applications, production of solar thermal equipment , namely solar water heaters, is first in the world. China now has a solar water heater production capacity of over 16 million square meters per year. PV cell production capacity in China has reached nearly 200 MW. Thus, a firm basis for the large-scale development and utilization of solar energy resources in China has been established.
Solar Energy Poised to Go Mainstream, Say Researchers
SAN FRANCISCO, May 24 (OneWorld) - Solar power is the fastest growing source of energy in the world and likely will become much more affordable in the next few years, according to a new report out this week.
"As production costs fall, technologies continue to advance, and supply and demand come into balance," the report reads, "[solar power] prices will fall more than 40 percent in the next three years relative to prices in late 2006. Such a decline would make solar electricity far more affordable in markets across the globe."
Additionally, China's strong entry in the field could drive prices down even further, the report's authors predict.
Already, global production of solar photovoltaic (PV) cells, which turn sunlight directly into electricity, has risen six-fold since 2000 and grew 41 percent in 2006 alone, says the report from the Washington, DC-based Worldwatch Institute and the Prometheus Institute in Cambridge, Massachusetts. That makes solar power the world's fastest growing energy source, though grid-connected solar capacity still makes up less than 1 percent of the world market.
"Today, high cost is the largest barrier, but this is a temporary challenge," said Worldwatch's Janet Sawin, who authored the report.
The growth of solar power has been fastest in Japan and Germany, the report notes. Sawin said that's no accident. Those countries, she told OneWorld, have enacted laws friendly to solar power, which is generated without emitting carbon dioxide or other significant pollutants.
In Germany a law guarantees that owners of solar panels get a fixed price when they produce more solar energy than they consume and sell the excess back to the national electricity grid. In Spain, ordinances require "that new and renovated buildings include solar [power]."
Researchers said the biggest surprise in the report was the dramatic growth in PV production in China. Last year, China passed the United States, which first developed modern solar cell technology at Bell Labs in New Jersey in the 1950s, to become the world's third-largest producer of the cells -- 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, said in a statement. "They have raised billions [of dollars] from international [initial public offerings (IPOs) of stock] to build capacity and increase scale with the goal of driving down costs. Four Chinese IPOs are expected to come to market this month alone."
Most of the solar panels manufactured in China are made for export, according to Sawin. "China is applying its world-leading skills at low-cost light manufacturing of devices such as televisions and computers to the solar industry."
Sawin said that China, with its growing need for energy, large work force, and strong industrial base, could drive dramatic reductions in PV prices in the next few years, helping to make solar energy prices competitive with conventional power even without subsidies.
Solar energy has already dramatically improved living conditions for some 100,000 people in rural India.
In the country where millions supplement a sparse and unreliable electricity grid with kerosene lighting, which is responsible for untold pollution-related deaths and disabilities each year, roof-installed solar panels have offered a clean energy alternative to run a small fan, radio, or television, and a few lights for working or reading.
A UN-sponsored program has encouraged banks in the southern Indian state of Karnataka to finance small loans for the solar systems -- typically $300 to $500 for a system to power two to four small lights or appliances.
The UN credits the solar panels with "better grades for schoolchildren, better productivity for needlework artisan groups and other cottage industries, and even better sales at fruit stands, where produce is no longer spoiled by fumes from kerosene lamps."
The India project has been so successful that similar solar energy programs are being initiated in Algeria, China, Egypt, Ghana, Indonesia, and Mexico, the UN said.
But in the United States, growth has not taken off. The Worldwatch report said only 202 megawatts of solar electricity were produced in the United States last year -- less power than a single coal or natural gas plant.
The legal atmosphere in the United States remains largely hostile to solar power, Worldwatch's Sawin said.
"Many homeowner associations forbid them," she said, and while a handful of states have adopted "net metering" laws, encouraging the use of solar power by allowing customers to run their electricity meters backwards when they feed the power their solar panels generate back into the grid, most states have not.
"There is no state in which customers are paid the full value of the power they generate with PV and feed into the grid," Sawin added, noting that solar panels produce the most electricity on hot days when demand is highest and conventional electricity is the most expensive.
Still, she remains optimistic about solar energy's future.
"The conventional energy industry will be surprised by how quickly solar PV becomes mainstream -- cheap enough to provide carbon-free electricity on rooftops, while also meeting the energy needs of hundreds of millions of poor people who currently lack electricity," she said.
"As production costs fall, technologies continue to advance, and supply and demand come into balance," the report reads, "[solar power] prices will fall more than 40 percent in the next three years relative to prices in late 2006. Such a decline would make solar electricity far more affordable in markets across the globe."
Additionally, China's strong entry in the field could drive prices down even further, the report's authors predict.
Already, global production of solar photovoltaic (PV) cells, which turn sunlight directly into electricity, has risen six-fold since 2000 and grew 41 percent in 2006 alone, says the report from the Washington, DC-based Worldwatch Institute and the Prometheus Institute in Cambridge, Massachusetts. That makes solar power the world's fastest growing energy source, though grid-connected solar capacity still makes up less than 1 percent of the world market.
"Today, high cost is the largest barrier, but this is a temporary challenge," said Worldwatch's Janet Sawin, who authored the report.
The growth of solar power has been fastest in Japan and Germany, the report notes. Sawin said that's no accident. Those countries, she told OneWorld, have enacted laws friendly to solar power, which is generated without emitting carbon dioxide or other significant pollutants.
In Germany a law guarantees that owners of solar panels get a fixed price when they produce more solar energy than they consume and sell the excess back to the national electricity grid. In Spain, ordinances require "that new and renovated buildings include solar [power]."
Researchers said the biggest surprise in the report was the dramatic growth in PV production in China. Last year, China passed the United States, which first developed modern solar cell technology at Bell Labs in New Jersey in the 1950s, to become the world's third-largest producer of the cells -- 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, said in a statement. "They have raised billions [of dollars] from international [initial public offerings (IPOs) of stock] to build capacity and increase scale with the goal of driving down costs. Four Chinese IPOs are expected to come to market this month alone."
Most of the solar panels manufactured in China are made for export, according to Sawin. "China is applying its world-leading skills at low-cost light manufacturing of devices such as televisions and computers to the solar industry."
Sawin said that China, with its growing need for energy, large work force, and strong industrial base, could drive dramatic reductions in PV prices in the next few years, helping to make solar energy prices competitive with conventional power even without subsidies.
Solar energy has already dramatically improved living conditions for some 100,000 people in rural India.
In the country where millions supplement a sparse and unreliable electricity grid with kerosene lighting, which is responsible for untold pollution-related deaths and disabilities each year, roof-installed solar panels have offered a clean energy alternative to run a small fan, radio, or television, and a few lights for working or reading.
A UN-sponsored program has encouraged banks in the southern Indian state of Karnataka to finance small loans for the solar systems -- typically $300 to $500 for a system to power two to four small lights or appliances.
The UN credits the solar panels with "better grades for schoolchildren, better productivity for needlework artisan groups and other cottage industries, and even better sales at fruit stands, where produce is no longer spoiled by fumes from kerosene lamps."
The India project has been so successful that similar solar energy programs are being initiated in Algeria, China, Egypt, Ghana, Indonesia, and Mexico, the UN said.
But in the United States, growth has not taken off. The Worldwatch report said only 202 megawatts of solar electricity were produced in the United States last year -- less power than a single coal or natural gas plant.
The legal atmosphere in the United States remains largely hostile to solar power, Worldwatch's Sawin said.
"Many homeowner associations forbid them," she said, and while a handful of states have adopted "net metering" laws, encouraging the use of solar power by allowing customers to run their electricity meters backwards when they feed the power their solar panels generate back into the grid, most states have not.
"There is no state in which customers are paid the full value of the power they generate with PV and feed into the grid," Sawin added, noting that solar panels produce the most electricity on hot days when demand is highest and conventional electricity is the most expensive.
Still, she remains optimistic about solar energy's future.
"The conventional energy industry will be surprised by how quickly solar PV becomes mainstream -- cheap enough to provide carbon-free electricity on rooftops, while also meeting the energy needs of hundreds of millions of poor people who currently lack electricity," she said.
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