by Hans Chen | June 21st 2011
The Chinese Government has amended the solar portion of its recently released 12th Five-year Plan. The new plan suggests that by 2015, total solar capacity within the country will reach 10,000 megawatts, doubling from the original plan of 5,000 megawatts.
Among the 10,000 megawatts, about 6,500 will come from large utility-scale solar power plants in provinces and regions such as Qinghai, Xinjiang, Gansu, Inner Mongolia, Ningxia and Shanxi, all of which are inland, less-developed provinces. Around 3,500 megawatts will be in the form of smaller-scale projects spreading throughout the mid-eastern provinces and regions, where factories need large amount of electricity to support the country’s gigantic manufacturing industry. The final 500 megawatts will be off-grid solar systems aiming to solve the issue of power shortage in countryside and the least developed regions.
Taken into consideration that the total solar capacity in China is merely 768 megawatts at this moment, this amended plan sounds quite ambitious. But let’s not forget that China owns a total solar cell production capacity of 8,000 megawatts, good for 60% of the global capacity. The problem is just that 95% of those cells were exported. Apparently , solar cells and modules will likely experience the process of “exports turning into domestic sales” in the next few years, similar to many other products that once were primarily exported but now has strong domestic demand (i.e. clothes, electronics, appliances, etc.). I would like to call this transformation the Version 2.0 of solar industry in China.
Although many would probably view this ambitious plan as another grandiose yet unrealistic vision of the Chinese Communist Party, there are indeed some indications that this plan might turn out pretty successfully. The cost of solar power has reduced by 50% in the past three years thanks to improving technology. And of course, China has no problem of offering a series of aggressive subsidies for solar power generation because of its political system. With the current trend, it is only a matter of time that the cost of generation hits the goal of under RMB0.8/kWh (currently it’s around RMB1.0/kWh).
China has seen a huge growth in wind power generation in the past five years via exactly the same route: ambitious government planning, aggressive subsidies, support from domestic equipment suppliers. Now the government would like to shift the focus to solar. Is five years enough? We’ll see.
