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Solar Hops: US-China Cooperation; Provinces Get Going; Suntech Shining Strong
courtesy of The Green Leap Forward (1)
Solar Hops: US-China Cooperation; Provinces Get Going; Suntech Shining Strong
It's been about 6 months since we’ve had an extensive discussion of China’s solar market, so let's catch up on the major developments in the space:
a new US-China dynamic with 2 large projects;
profound official policy actions;
and oodles of activity by Google-backed eSolar & Chinese solar poster child Suntech !
With such an ardent push from China and such a large gov't & corporate commitment: this author / technician does not see any direction for Crude Oil but down, down, down in 2010. Price action within WTIC / Brent / CL is about to be bombarded by profound shifts within not only crude's core demand base but also (for THE very first time) from the actual supply side of the aggregate energy equation.
Before detailing 5 key points that will help crash the Crude Oil market in 2010 ~ let’s kick-off with an excellent video created by ClimateWorks ....
Let’s kick off with this pretty cool video created by ClimateWorks (2):
Now, onto recent developments:
Going Big with the Stars and Stripes
Google-backed eSolar, a three-year old Californian solar start-up, has signed an agreement to provide technology and assistance to Penglai Electric, a privately-owned Chinese electrical power equipment manufacturer, to build a series of solar thermal power plants totaling at least 2 gigawatts over the next 10 years (see pictured right example of an eSolar installation).
The first project, a 92-megawatt solar power plant, will be built this year and located in the 66-square-mile Shaanxi New Energy and Industrial Park in Yulin city, Shaanxi province of Northern China. The region has become a hot spot for renewable energy, with the 2,000-megawatt First Solar project planned 60 miles to the north in Inner Mongolia. China Huadian Engineering Co. will lead the construction process. At completion, China Shaanxi Yulin Huayang New Energy Co. will own and operate the first 92 MW plant.
According to Todd Woody, eSolar already manufactures its heliostat arrays in China, and under the terms of the agreement with Penglai it will also build its power plant receivers there. The solar thermal power plants, using technology distinct from photovoltaics which currently dominate China’s solar power market, will consist of mirrors and lenses to concentrate the sun rays to power a steam turbine. eSolar’s technologies, in particular, boasts ease of transportation and installment, modularity, scalability, redundancy, and resilience against wind tear.
This announcement marks the first large-scale commercial effort to develop CSP in China, something that has been on somewhat of a slow track for two main reasons; (1) Limits of water availability: How eSolar and its Chinese partners deal with the issue of the water-energy nexus (concentrated solar thermal as a technology that would run up to limits of water availability ~ "Charting China’s Water Future: Closing China’s water availability gap results in $21 billion in net savings") since typical CSP designs require significant amounts of water for cooling turbines, and the sunny desert regions of Inner Mongolia, as we all know, is not exactly abundant in water; and (2) a policy emphasis on solar photovoltaics over CSP stemmed from the desire to absorb excess solar photovoltaic panel production capacity caused by several reasons (see below in “Too Much of a Good Thing”).
Just 60 miles north of the eSolar project, in Ordos City, Inner Mongolia, another landmark solar project was announced exactly four months earlier to the day. Arizona-based First Solar, the world’s leading manufacturer of thin-film PV modules, signed an MOU (memorandum of understanding) with the Chinese government to build a 2 gigawatt solar PV plant.
The solar project in Ordos will be built over a multi-year period:
Phase 1 would be a 30 megawatt demonstration project that would begin construction by June 1, 2010;
Phases 2 and 3 would be 100 and 870 megawatts, respectively, completed in 2014;
while Phase 4 would be 1,000 megawatts completed by 2019.
This announcement was significant because it marked the first time a foreign company was invited to participate in such a high profile solar project, and came at a time when the China was coming under fire for being overly protective of its renewable energy (particularly wind) industry.
Best Solar, in conjunction with China Guangdong Nuclear Energy Development and Enfinity NV, won the right to operate the Dunhuang project with a tender of RMB 1.09/kWh. Jiangsu-based thin film and crystal solar module provider Best Solar President Fang Peng said he expects to make 8% internal rate of return from its 10 MW solar energy project in Dunhuang, Gansu province. Some Chinese solar executives, however, think such a tariff might not be high enough to support the development of the PV market in areas other than the most highly irradiated regions such as Tibet. A range of 1.5 to 1.8 yuan per kwh is more reasonable (Chinese only), they suggest.
Provincial-Level Initiatives
Suntech’s CEO expects 500 MW to be installed in China in 2010. And Jiangsu province, where Suntech is headquartered and which is also dubbed "the California of China" when it comes to progressive clean energy policy, is going to be a big part of this equation. A while back, Jiangsu was poised to announce provincial incentives to stimulate the industry without having much details on hand ("Jiangsu Kicks Off Domestic Solar Market Race with Provincial Subsidies"). Since then, the full details of Jiangsu’s three-year solar PV development plan have been released.
Under the plan, Jiangsu aims to install 400 MW of solar PV by 2011, consisting of:
260 MW of roof-top projects;
10 MW of building-integrated PV projects; and
130 MW of ground-mounted PV projects.
To put this capacity figure in context, the official national target for solar power (including solar thermal power such as CSP, which is a distinct technology from PV) capacity by 2010 is 300 MW, so Jiangsu is clearly blazing ahead.
To support this deployment, a generous feed-in tariff for the next three years is provided along the following scale (in yuan/kwh)
Year Ground-mounted Roof-top Building-integrated PV
2009 2.15 3.7 4.3
2010 1.7 3.0 3.5
2011 1.4 2.4 2.9
The eventual goal of encouraging mass deployment is to spur innovation and achieve economies-of-scale that drive costs down to 1 yuan/kwh. According to the plan, Jiangsu also sets its sights to ramp up its already-strong solar manufacturing base to 10 gigawatts of capacity for components, and 3.5 gigawatts of PV cells by 2011.
The development plan doesn’t shy away from picking winners and losers - or at least picking winners - naming specific cities and companies and their share of the provincial target.
Suntech, based in Wuxi city, is mentioned most often; Suntech, in particular, will be a key driver of solar innovation as it establishes important R&D centers in the province. Other key provisions in the Jiangsu solar development plan include those on standards-setting and human resource development.
Beijing has also adopted its own solar development plan as of the beginning of this year ... by 2012, it aims to have established:
700 million square meters of solar thermal water heaters;
70 megawatts of solar power generation;
solar manufacturing output of 20 billion yuan ($2.93 billion); and
the formation of testing centers for PV and solar thermal heating applications.
By 2020, Beijing wants:
solar water heating to cover 11 million square meters;
to install 300 megawatts of solar power; and
to achieve national leadership in the solar value chain.
To this end, it is dedicating a total of 1.44 billion yuan (about $210 million), consisting of:
160 million yuan of central government money;
980 million yuan of municipal money; and
300 million yuan in district and county money, in investments across its various municipal departments.
A focal point of the three-year development plan are the six “Golden Sunshine” projects, which consist of:
1. 20 megawatt solar PV roof-top project – Beijing will supplement projects that qualify for the the national solar roofs program (“Dawn of a New Era: The Gansu Solar Concession and Landmark Solar Roofs Program“) with additional financial incentives of 1 yuan/watt per year for three years.
2. 50 megawatt solar power generation project – By 2012, achieve an installed capacity of 50 megawatts of PV.
Hearteningly, land use will be a major consideration, with an emphasis on the use of otherwise degraded land as well as large-scale agricultural facilities to strategically deploy solar installations.
3. Solar campus project – install by 2012 in 50% of all:
primary and secondary schools solar water heating;
solar-powered lights;
grid-connected PV;
solar energy science classrooms; and
other projects, also to educate students on the value of renewable energy.
4. Solar energy hot water project – among other things, will provide a subsidy of 200 yuan per square meter for the installation of solar hot water systems.
5. Rural solar project – the promotion of solar energy use in rural communities.
6. Solar lights park landscaping project – all city parks and 30 percent of district parks will be equipped with solar lights by 2012.
For even more details on the Golden Sunshine projects ~ here (again, Chinese only, sorry).
In addition to these deployment projects, Beijing wants to be a leader further upstream the solar value chain ~ in R&D.
Ningxia Autonomous Region, which is highly rural, has also been aggressive in the solar space.
In 2009, it installed:
50 MW of PV;
produced 600 and 1,700 tons of mono-crystalline and polycrystalline, respectively; and
established a solar panel manufacturing capacity of 20 MW.
Just days ago, it announced the opening of a new 40 MW grid-connected PV power station (Chinese only) developed by a consortium of 5 companies, including the CECIC, described in more detail below.
And thanks to co-operation with Germany, remote villages of Qinghai province are also benefiting from:
56 independently operating photovoltaic and photovoltaic-diesel hybrid power stations with a gross installed capacity of 1,539.4 KW;
including 454.4 KW of solar power; and
1,085 KW of diesel power.
The project enabled 3,680 families of 10,400 farmers and herdsmen to use electricity in their daily life ... and also guaranteed power supply for:
34 temples;
13 villagers’ committees;
2 police stations;
2 schools; and
clinics in Hainan, Haibei, Huangnan and Yushu Tibetan autonomous prefectures as well as the Mongolian-Tibetan Autonomous Prefecture of Haixi.
The project cost 92.4 million yuan (13.5 million U.S. dollars), including:
64 million yuan from the German government;
28 million yuan from the Qinghai provincial government; and
400,000 yuan provided by a German free training [grant].
Too Much of a Good Thing?
If one wanted to trace back the steps and causes for the Chinese government’s sudden interest in promoting domestic deployment of solar, one of the key factors must certainly be the need to absorb excess capacity of domestically manufactured PV modules, especially in the wake of a collapse of overseas demand as the global economy slowed and key European markets (noticeable Germany and Spain) started reducing their own domestic financial incentives for solar deployment.
In essence, (policy brief in China Security last year) a solar industry bailout would be a good excuse to start creating a domestic solar market in China. Overcapacity is also happening further up the value chain within the production of polysilicon, the raw ingredient to silicon-based PV modules (see also graphic, right). The crimp in demand for solar panels abroad, plus a collapse in polysilicon costs (to the range of $50 to $70 per kilogram today, dramatically down from its peak of almost $500 per kg) as a result of this oversupply, has brought down the prices of solar modules by roughly 40%.
This situation has provoked a response by the NDRC to pour some cold water on the overheated polysilicon sector, among other industries (including wind energy components). Still, that is not stopping China Investment Corporation, the $300 billion Chinese sovereign wealth fund, from making an investment into GCL Poly Energy, which first focused on co- and poly-generation thermal combustion plants across China when it first went public a few years ago, but now is in the business of polysilicon production after a recent acquisition. Surely CIC, now a savvy energy investor, must see something in GCL’s business that makes it interesting.
Over the Slump?
If the bellwether Chinese solar companies are any indication, the solar industry, hemorrhaging in for at least the first half of 2009, seems to be on the road to recovery. At the beginning of the third quarter, HSBC already suggested that the solar sector had turned a corner. Suntech, Yingli, Trina and LDK Solar subsequently reported bullish financial results for that quarter.
The good times appear to be back as Reuters has reported that Suntech is basically in a "sold out" situation through at least the second quarter of this year, and that the "solar majors" are all ramping up capacity again to cater for more diversified demand, particularly from Japan, which recently rejuvenated its domestic market with new incentives after discontinuing them in 2005. Suntech, for instance, is expanding capacity by opening a new facility in Suzhou city (Chinese only) in Jiangsu province, near its Wuxi city headquarters.
Suntech, for its part, is extending its dominance in the crystalline-PV sector. At home in China, it announced in November that it expects to develop one-fifth of the 91 MW of PV projects recently announced as beneficiaries of the national Solar Roofs program, a PV subsidy program announced last March (“Dawn of a New Era: The Gansu Solar Concession and Landmark Solar Roofs Program“).
That’s some serious market share for a country and sector with such serious competition.
Coming to America
Suntech has already secured 10 percent of the market share of California, which accounts for 40% of the U.S. solar market. Suntech’s domestic competitor, Yingli Green Energy, based in Baoding, Hebei, has been even more impressive, capturing an astonishing 27 percent of the California market.
Separately, Suntech announced plans to establish a modest 30 megawatt manufacturing facility in Arizona, the first solar manufacturing site in the United States by a Chinese firm, which would employ up to 75 people.
Politically, this is important as it came at a time when China was accused of “stealing green jobs” from the United States through unfair practices (whether rightly or wrongly).
From a pure life-cycle energy economics analysis point of view, it may also be the right thing to do ....
ENN, a private diversified alternative energy company headquartered in Hebei province, is partnering with Duke Energy of North Carolina, USA to develop solar PV projects in the United States. The projects will be of two varieties: utility-scale solar power plants and commercial distributed generation (e.g. rooftop).
This solar partnership is the latest in a series of arrangements between ENN and Duke to work together on exploring and developing a series new clean energy technologies, including cleaner combustion of coal and CO2-absorbing algae biofuels.
Emerging Giant
State-owned China Energy Conservation Investment Corporation, or CECIC, is an emerging solar project developer. By some accounts, as of the end of Q3 it was China’s largest investor and operator of solar projects ~ totaling 1.1 GW in capacity.
In September, it completed contruction of China’s first 10 MW solar PV power plant (the first phase of a 50 MW project) in Ningxia Autonomous Region together with Suntech. CECIC has since cemented its relationship with Suntech by entering into a 5-year partnership, in which:
CECIC will be responsible for project investment and development;
while Suntech supplies the solar products, system design and technical support.
Suntech and CECIC plan to focus on the development of large scale on-grid projects, urban BIPV projects, rural off-grid projects, and wind-solar hybrid projects.
Separately, CECIC is reportedly building Asia’s largest grid-connected BIPV project (6.5 MW in Shanghai) amongst other deals. Typically focused on domestic projects, CECIC, with a growing confidence, now has ambitions to build solar projects overseas in Germany, Spain and Italy.
More Eagles visit the Dragon’s Lair
Evergreen Solar, a U.S. company that is the pioneer of "string ribbon” wafer technology, is shifting some of its wafer and cell manufacturing operations from Massachusetts, USA to Wuhan in Hubei province. Production in Wuhan at about 100 MW capacity will commence by mid-2010 and be ramped up to 500 MW by the end of 2012. Evergreen hopes its strategic move into China can help to bring down production costs to $1/watt by the end of 2012.
Evergreen’s efforts sees it partnering with a local PV manufacturer, Jiawei Solar (Wuhan) Co., which will be a subcontractor, and the Wuhan Donghu New Technology Development Zone Management Committee, part of the Wuhan city government, which will provide financial incentives (arrangement details can be found here).
Applied Materials, the world’s leading supplier of solar manufacturing equipment, opened last October the world’s largest non-governmental solar R&D center in Xi’an, Shaanxi, a big coal province. This bold move had some scratching their heads, but for Applied Materials, the following logic was compelling enough:
" We’re doing R&D in China because they’re becoming a big market whose needs are different from those in the U.S.," says Mark Pinto, Applied Materials’ CTO. Going forward, he says, "energy will become the biggest business for the company," and China, not the U.S., "will be the biggest solar market in the world. "
Dupont also announced plans to expand its R&D work in Shanghai and build a new thin-film manufacturing facility in Shenzhen city, Guangdong province.
All in all: seems like China learnt its lesson from 20th century-Japan and is actively & aggressively furthering a multivariate diversification of its own domestic energy production.
That said ... there remain a handful of key fundamental points (overarching issues) to note that will help crash the Crude Oil market in 2010:
(1) a massive Chinese solar infrastructural build-out based upon a similarly large 'Beijing Bonus' ~ copious gov't subsidies;
(2) an equally ginormous solar manufacturing capacity build-out, up and down the entire vertical integrity of the 'solar-system' from OEM to end-use;
(3) an abruptly bifurcated ROC (rate-of-change) slow-down in US, European & global aggregate energy demand (irrespective of what the IEA claims (4)) juxtaposed by the SE Asia + China + India sub-continent contingents continuing to voraciously consume / burn fossil fuels like Twinkies within Rosie O'Donnell's spider hole (5, 6) / Slim Jim's within Wendy Williams' Green Room (7);
(4) an extended pregnant pause of epic consumer discretionary & collective economic proportion by the West; and
(5) the very first initial subdivisions of Primary wave 3 (circle) to the down, down, downside across financial markets.
While refraining from addressing the technical posture of 'solar' stocks ... there is one rather large, underlying takeaway as I see it:
Bottom Line:price action within crude oil (WTIC / Brent / CL) is about to be bombarded by profound shifts within not only crude's core demand base but also (for the very first time) from the actual supply side of the aggregate energy equation.
With such an ardent push from China and such a large gov't and corporate commitment: this author / technician does not see any direction for Crude Oil in 2010 but down, down, down.
Only the hard right edge (the next bar on a / any chart) will tell the truth, and in due time.
Just don't forget that there exists a 26-mile long flotilla of idled oil tankers, which is more than enough to blockade the English Channel !
Now that, is food for thought.
»
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I propose not to hold off until you earn big sum of money to buy all you need! You can take the mortgage loans or just credit loan and feel yourself free
A closer look at the history of the rare earth industry in China, the recent controversies surrounding it, and some of the upcoming trends to watch.
Author: Lilian Luca
Posted: Sunday , 17 Jan 2010
http://www.mineweb.com/mineweb/view/mineweb/en/page72102?oid=96049&sn=De...
http://tinyurl.com/ylc2kw6
Good article and info ! I belive that concentrated solar power is the place to invest . Also watching stirling engine technology , small scale solar generation . Thanx again
right now american micro-crystalline panels cost less than chinese. thin film kaneka panels, 98 cents a watt http://sunelec.com/
chopshop excellent research and analysis
but
notwithstanding all of the above, will voluntary production constraints by the producers and
market manipulation by traders
distort the price model
I am building a residential solar installation in sunny Southern AZ; ideal conditions, but would not remotely be economic without the massive subsidies and tax credits.
thank you, mock turtle; glad a few folks enjoyed it.
while i certainly agree with ya, i don't have much experience / expertise within the hardcore / idiosyncratic specifics of the industry to feel qualified enough to answer that; my gut tells me that everyone is going to massively over-produce and get stuck holding a shelf full o' inventory w/o PO's to book on the right side of the ledger.
irrespective of whatever does transpire for solar / alt. energy: there is no way in hell that anything solar or alt. energy is a positive for oil in n of itself; can be nothing but negative if not outright deleterious to the price prospects of / for Crude.
maybe a few folks here can chime in and give us all some good guidance / insight ~ exactly what these excellent comment boards / threads are intended for.
*
* inputs to solar *
* silver --- the most reflective metal & superconductive (FVI.to, SBB.to, ASX.v, NJMC, SHSH, EXK)
* gallium --- LEDs (GCU.v)
* silicon --- photovolaics (TIM.to)
* lithium --- electricity storage (MCI.v, ABN.v)
2nd part has China etc....
January 21, 2010: To listen to John Budden's Business@Night, interview
with Dean LeBaron, Founder of Batterymarch Financial Management -
New
Part 1 Part 2
http://www.beearly.com/
Classic case of malinvestment, projects that would never see the light of day outside of massive government subsidies and intervention.
yeah, uh hum, right,
like the grand coolee dam, or the apollo space program
Or the TVA, or the Hoover dam, or the Interstate system.
Chopshop,
Excellent analysis even if it was a tad too long. Suntech is going to be a dominant player in this sector, but I wouldn't discount others in this space. Here are Suntech's major holders (As at Q3 2009):
http://finance.yahoo.com/q/mh?s=STP
I also note that other top hedgies (like Tudor) are accumulating Suntech. Again, in my opinion, at these levels, you should initiate positions and/or accumulate more solars. But be warned, you need to stomach gut-wrenching volatility or else don't bother with this sector.
BTW, disclaimer, Chopshop, are you long Suntech?
thanks for the thumbs up, Leo ... and perfect comment for the thread; thank you, sir.
No: I / we are not long/ short STP or any other solar (or Gurgle even for that matter).
Rarely trade equities themselves outside of options; almost exclusively futures for us ... andwithout fail we do not hold positions from session to session (we may re-enter but never hold futures inter-session so as not to incur the free cash wrath of T+.
When we advise / consult clients et cet ... if we're on the record, even behind closed doors: then I / we won't be opening our mouths one way or another (hence the lack of FTU's this past week n change or myself not screaming bloody murder before being extremely confident about a multiple confluence of technically rigorous methodologies to make such a public call.
We may speak different languages, Leo, but at the end of the day i think we're each brash, ball-busters with the cojones to talk the talk and the experience to walk the walk in our respective fields.
Thanks again for not only taking the time to sift through the long-winded synopsis above but also for leaving a great comment as well as not taking personal offense at our friendly little back-n-forth; welp, my petulance, really.
Really do appreciate your expert insight and look forward to sharing many civil debates / friendly disagreements with you in the months ahead ... do firmly believe that such back-n-forth only strengthens each of our arguments / thought-processes and I always welcome either constructive criticism or a good verbal grenade thrown my way ~ all in good fun !!
Enjoy the only damn day any of us get to relax for a few hours, Leo / everyone !
January 23, 1368
Either Ming Or Yuan Dynasty Seizes Control Of Mainland China