by Kevin McKern
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 modules.

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 company.

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 is impractical.

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 set.

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 feedstock supplier.

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.