FocusChina sees rapid solar growth; eyes 3GW new capacities in '12

01 February 2012 05:48  [Source: ICIS news]

By Felicia Loo

Solar power plant in SpainSINGAPORE (ICIS)--China is likely to install at least three gigawatts (3GW) of new solar power capacity this year, up from 2GW installed in 2011, as its government strives to enhance solar energy usage as part of efforts to combat stubbornly high oil prices, industry players said on Wednesday.

The world’s second-biggest energy user, after the US, has a total solar capacity of 2.9GW as of last year, according to China’s Silicon Industry Association.

“There will be a significant number of solar projects to be implemented in China this year. The government will roll out incentives to help local manufacturers at the provincial level,” said an industry player in east China.

The reduction in solar feed-in tariff had bolstered photovoltaic demand in the Chinese market since late last year, players said.

Developers of solar power projects that were approved before 1 July and were completed by the end of last year could be sold to grid operators at yuan (CNY) 1.15/kilowatt hour (kWh) (18 cents/kWh).

For projects that were approved before 1 July and will be completed after 2011, the on-grid price is CNY1/kWh.

The Chinese authorities are widely expected to further lower its reserve requirement ratio for banks after China posted its slowest growth in two-and-a-half years at 8.9% in the fourth quarter of 2011. The easing of the monetary policy will help free up liquidity, and will boost solar investments.

Meanwhile, with US oil prices hovering at near $100/bbl (€76/bbl), Beijing will target to diversify its energy usage, with solar power as one of the main segments that can be developed, players said.

The Chinese solar panel manufacturers are likely to retain much of their solar panels in the domestic market, on expectations of weak solar demand in Germany amid an economic crisis in Europe, players said. That would help to boost the solar power capacities in China, they added.

Prices of polysilicon – the feedstock to make solar wafers, cells, and modules – will likely rebound in the coming weeks, thanks to increased Chinese demand, players said.

In the week ended 25 January, polysilicon prices were assessed at $28-31/kg FOB (free on board) NE (northeast) Asia, while polysilicon prices in China were assessed at CNY210,000-220,000/tonne ($33,281-34,865/tonne) DEL (delivered) China in the same period, according to ICIS data.

To meet the burgeoning photovoltaic demand, China is also seeing an increase in polysilicon capacities.

China’s Sichuan Yongxiang Poly-silicon plans to start up its 6,000 tonne/year polysilicon plant in September 2012. The project has been under construction since July 2010. The company invested CNY4bn for the project, which is located in Leshan city, Sichuan province, in southwestern China.

The company, which currently has a total polysilicon capacity of 4,000 tonnes/year at Leshan city, expects to boost its capacity to produced 50,000 tonnes/year of polysilicon by year 2015.

Shaanxi Tianhong Silicon Industrial is planning to build a 3,750 tonne/year polysilicon project in Shaanxi province. The company is expected to start building the first phase of the project, which will have a capacity of 1,250 tonnes/year, in early 2012 and complete it by 2014.

Construction of the second phase, which will have a capacity of 2,500 tonnes/year, will begin after the company has started operating the first phase.

Shaanxi Tianhong will invest a total of CNY3.7bn on the project. The producer on 19 December signed an agreement with Centrotherm Photovoltaics for the German polysilicon major to supply the key equipment to the new project, according to a statement from Centrotherm.

($1 = €0.76 / $1 = CNY6.31)

Additional reporting by Dolly Wu

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Felicia Loo

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