Solar industry in China

China has 80% of the world market for solar water heating, but very little installed PV capacity, despite a strong module exports industry. It is already a global powerhouse for cells and modules, but is currently dependent on imported feedstock. This will change by 2015, due to intense investment in silicon refining capacity in 2006-2012, and the country will become a net exporter of every element of the PV value chain by 2020.

Investment in Chinese solar companies totalled $4.1 billion in 2012, consisting of $2638 million of Venture Capital & Private Equity, plus $1466 million of public market fund raising. While silicon shortages persist, inexpensive labour gives China an edge in that it is economically viable for it to manually recover and recycle silicon. However, this situation will change as new silicon production within the country comes on stream and the bottleneck eases.

Foreign demand for Chinese PV products drives production, with domestic demand expected to remain a small proportion of revenue (currently around 10%). Exports will continue to dominate the mix.

Even though China is expected to become a net PV exporter, this will not be at the expense of its domestic

industry: China is likely to more than meet its target of 500MW installed by 2015, and to easily outstrip its 2020 target of 2GW – which will require total investment of more than $40 billion in domestic solar thermal and PV installations over the next 15 years. While PV remains relatively expensive as a form of generation, China will continue to focus on capitalising on other countries’ generous feed-in tariffs (it has done particularly well on Germany’s), rather than building out its own solar capacity.

Source: New Energy Finance