China Aims to Clean Up in Solar Power

Its environment is a world-class mess, but the mainland has ambitious plans to use and produce solar power cells and panels

by Chi-Chu Tschang

China is home to some of the most polluted cities on the planet and likely will overtake the U.S. as the biggest emitter of greenhouse gases by the end of the decade. Yet while China's "dirty dragon" image is well-deserved, Beijing officials are also deadly serious about investing in solar power capacity at home and eventually becoming a dominant player in this rapidly-emerging, clean energy technology.

Consider that some 1,100 solar panels are being installed over the curved roof of Beijing's National Indoor Stadium, ahead of the 2008 Summer Olympics. In October, SunTech Power (STP), based in the old industrial city of Wuxi in Jiangsu Province will begin installing a 130 kilowatt solar energy system in the main venue of the games—Bird's Nest Stadium. Beijing has also been installing solar powered streetlights throughout the Olympic Village as well as in less urbanized areas of the Chinese capital's suburbs.

This isn't just environmental posturing, but a serious and sustained push to diversify China's energy mix, local officials contend. Beijing has pledged to install three megawatts of solar power for the 2008 Olympics. However, "If you add up all the solar energy investment in the Olympic Village, National Indoor Stadium, Bird's Nest, and rural villages, it is entirely possible that Beijing could have six megawatts by 2008," says Zhu Wei Gang, a vice-president with Beijing Corona Science & Technology, the company which is installing the solar panels in the National Indoor Stadium.

Ambitious Goals

China's worsening environmental mess (acid rain and water pollution are rampant, too) and an alarming dependence on imported oil have prompted Chinese President Hu Jintao's government to set some ambitious goals for solar power. Last year, China's solar power consumption was less than 10 megawatts, a tiny fraction of the country's total electricity consumption of 2.83 billion megawatts. By 2010, though, China hopes to be generating and consuming about 300 megawatts of solar energy, roughly equivalent to what Japan, the world's second largest consumer of solar energy, used last year.

Getting there, however, will be a stretch. China's domestic solar power industry is a work in progress. There are more than 150 Chinese companies that make photovoltaic cells that convert light into electricity, accounting for a third of the world's solar cell production. Yet the industry is heavily reliant on overseas supplies of polycrystalline silicon, or polysilicon, a key material used in solar cell production. And since demand for alternative energy has been low at home until recently, Chinese solar cell makers export 90% of their products to Germany, Japan, the U.S. and other countries.

There are compelling reasons for China to build up its own industrial solar energy capacity. The global market for solar panels and cells has been growing at a 38% compound annual growth rate since 2001. Demand is so brisk that there is now a serious shortage of polysilicon. In fact, prices for the material have jumped tenfold, to $200 to $300 per kilogram, since 2003.

"Foreigners Have Power"

If China developed a robust domestic market for solar power, it could shift the solar industry's balance of power, from the West and Japan to the Middle Kingdom. Just as the focal point of global TV and personal computer manufacturing has shifted to China, solar panel and cell production could be next, some argue. "If the domestic Chinese PV (photovoltaic cell) market starts to develop that would pretty much be the nail in the coffin for other countries because then not only will the cluster be here, but the [lower] manufacturing cost will be here," figures Timothy Chang, managing director of Citigroup Venture Capital China.

Still, given the anxiety other countries already have about Chinese export prowess, some governments may want to keep mainland-made solar cells out of their markets.