PHOTOVOLTAIC CELLS BLOOM IN CHINA
March 22, 2006
When the Forbes billionaires list was released recently the name Zhengrong
Shi seemed familiar. A Zhengrong Shi had been a graduate student at
Sydney’s University of New South Wales and worked on a "solar cell"
technology called Crystalline Silicon on Glass (CSG) with a Professor
Martin Green and colleagues, a decade ago.
Australia was unable to find the capital to
commercially develop this promising technology and apart from a small
royalty for the Uni, the local interest in CSG technology was sold to a
German company in 2004.
Amazingly, Zhengrong Shi went back home, created a
company called Suntech Power and is now a billionaire helping to drive the
Green power revolution currently underway in China.
Permit me to report on these developments.
Suntech Power makes photovoltaic solar cells (PV cells)
and solar electric systems. Its products are used in residential,
commercial, industrial, and utilities, for both on-grid electricity
generation and off-grid use, such as lighting for street lamps,
telecommunications and mobile phone networks.
Suntech Power is now the world's 10th-largest solar
cell manufacturer and the leader in China. Major international customers
include Aleo Solar, Bihler, Conergy, IBC Solar and SolarWorld AG. Photon
International, the trade magazine, ranked Suntech fifth place in capacity
and sixth place in production in its annual solar league table.
Production capacity for cell and module production in
China already exceeds 20% of the world’s total, spread across 30
companies. Five years ago, it was less than 1%. China is the world’s third
country in terms of solar cell production capacity and the industry is
growing at over 50% per annum.
Production capacity is expected to grow to 820 MW per
annum in 2006.
Growth is currently limited by the availability of
solar grade silicon (SGS) and wafers on the world market however Zhengrong
had the foresight to place contracts before the shortage materialised.
LDK Solar (Xinyu City, Jiangxi Province) has set itself
the goal of a 13,000-ton wafer production capacity for 2010 - a figure not
far off current world production (16,000 tons). The company will spend 58
million on equipment manufactured by GT Equipment Technologies to reach
this goal. The solar cell production capacity in China has so outstripped
the available silicon feedstock it is anticipated that even by 2010 China
will still need to import wafers to maximise production of cells and
Most Chinese PV companies use processes, equipment and
technology purchased from the West so joint ventures and partnerships are
common. Spanish Isofoton has an arrangement with the Himin Group and BP
Solar with SunOasis. Sharp and SolarWorld have modules components produced
in China by OEM manufacturers.
Chinese manufacturers are starting to brand and sell
their own products in western markets and find it easy to raise capital.
Suntech Power raised $396 million in its IPO in December last year on the
New York Stock Exchange and closed up 41% on its first days trading - a
record for the global solar industry. Market capitalisation is now 2.5
billion, not bad for a company established less than 5 years ago.
Its stock exchange listing quickly made its founder and
CEO, Zhengrong Shi, the first solar PV billionaire with about 55% of the
In 5 years, Chinese PV manufacturers will dominate the
world market as they already plan to expand capacity by 400% in that
period. While 80% of current capacity is exported, mostly to Germany to
take advantage of carbon trading credits and other government subsidies, a
major domestic market exists in the Village Electrification Programme,
which aims to electrify 20,000 villages with PV power wherever grid power
The goal of the Chinese government is to have 450 MW of
PV power installed in China by 2010, an increase of 375 MW. Average Sales
growth of 40% per annum until 2010 is needed to achieve this goal but,
amazingly, a new target of 8,000 MW PV capacity by 2020 has already been
More than 500,000 grid-connected solar power systems
have already been installed in rural areas and with the new Renewable
Energy Law (REL) that came into force in January 2006 the market is now
expected to grow by more than 75% per annum.
Shanghai has a 100,000 PV roof programme expected to
create 70 MW of grid-connected capacity by 2010.
China and Chinese companies have been shown to be
highly effective in meeting the goals and targets they set. If, in the
next decade, PV applications become directly competitive with other energy
sources, both China’s gigantic market and the markets of the third world,
desperate for energy in a post peak world, will be supplied with PV cells
made by these emerging giants, with Silicon Valley in a secondary role of
As investment opportunities are clearly legion, the
Chinese photovoltaic sector should reward diligent investors.
It seems that solar power, like nuclear, is much less
expensive than we imagine when we consider road, infrastructure,
environmental and the little considered opportunity costs that result from
the wasteful use of conventional power.