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China to install record 12GW of solar PV in 2014

Sensemaking / China to install record 12GW of solar PV in 2014

Low manufacturing costs, government initiatives to boost the domestic market and technological advancements are boosting China’s PV industry.

By Futures Centre / 10 Dec 2013

Over the course of 2014, China expects to install a record 12GW of solar power, according to a report by the Chinese Bureau of Energy. That’s more than twice the amount (5GW) solar market research and analysis firm NPD Solarbuzz expects to see installed by the US over the same period. Nevertheless, if the projections are correct both countries will still end up more than doubling their installed capacity to date: by the end of 2013, China’s installed capacity was approaching 9GW, compared to 4.2GW in the US.

According to data from the World Resources Institute, approximately 95% of China's current solar revenue comes from exports. However, increasing domestic demand is beginning to shift the focus of China’s solar industry away from international distribution. As Nathaniel Bullard, Director of Content at Bloomberg New Energy Finance, puts it, “we are seeing a rotation towards domestic Chinese and Japanese demand as drivers of the industry.”

Low manufacturing costs, government initiatives and technological advancements are enabling industry growth in China. Beijing-based Sherry Zhang, a research analyst at The China Greentech Initiative, observes that China is acquiring technological expertise in solar: “Most of China's manufacturers strategically go out and purchase leading technologies in the world, or through partnerships in joint ventures.” She also expects to see more industry consolidation. “Right now, there are more than 500 companies in the solar space. In the future, you will see fewer solar players, but with stronger capabilities.”

However, there are challenges ahead. If supply continues to exceed demand, as has been the case recently, companies will face solvency issues; this will temper the long term development of the industry domestically. An oversupply will also create problems for the industry globally, particularly in countries with higher labor and production costs that lack the flexibility to lower their pricing strategies accordingly.

Even taking into account these challenges, Zhang is bullish about the sector’s prospects. “The cost of solar modules is decreasing and will continue to decrease”, she says. “In a few years, solar will reach grid-parity, thereby realising large-scale deployment.”

Changhua Wu, Greater China Director for the Climate Group in Beijing, agrees that “with the technology and the government initiatives, now is the time for solar.” – Josh Bateman

Photo credit: Getty Images/iStockphoto

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