china solar photo voltaic market report

8/3/2019 China Solar Photo Voltaic Market Report

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TABLE OF CONTENTS

List of Figures ............................................................................................................................ 4

List of Tables ............................................................................................................................. 5

1. China Solar Photovoltaic (PV) Market Introduction .......................................................... 6

2. China Solar Feed-in Tariffs Present Status and Impact ...................................................... 7

3. China Solar PV Market Size, 2006-2010 ........................................................................... 8

3.1. China Solar PV On-Grid and Off-Grid Cumulative Installed Capacity, 2006-2010 .. 8

3.2. China Solar PV On-Grid and Off-Grid Annual Installed Capacity, 2006-2010 ....... 10

4. China Solar PV Power per Capita, 2006-2010 ................................................................. 11

5. China PV Shipments, 2007-2010 ..................................................................................... 12

6. China Solar PV Market Segmentation .............................................................................. 13

6.1. By Technology Capacity and Output, 2010 .............................................................. 13

6.2. On the Basis of Applications of Solar PV, 2010 ....................................................... 14

7. China Solar PV Market Competitive Landscape .............................................................. 15

8. China Solar PV SWOT Analysis ...................................................................................... 18

Strengths .................................................................................................................... 18

Weakenesses.............................................................................................................. 18

Opportunities ............................................................................................................. 18

Threats ....................................................................................................................... 19

9. China Solar PV Market Future Outlook ........................................................................... 19

9.1. China Solar PV Cumulative Installed Capacity, 2011-2015 ..................................... 20

9.2. China Solar PV Annual Installed Capacity, 2011-2015 ............................................ 22

9.3. China Solar PV Power Per Capita, 2011-2015 ......................................................... 24

9.4. China Total Electricity Demand and Solar PV Electricity Contribution, 2009-2015

25

10. China Macro Economic Indicators: Current and Projections ....................................... 26

10.1. Population, 2006-2015........................................................................................... 26

10.2. GDP, 2006-2015 .................................................................................................... 27


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11. Appendix ....................................................................................................................... 28

11.1. Market Definition .................................................................................................. 28

11.2. Abbreviations......................................................................................................... 29

11.3. Research Methodology .......................................................................................... 31

Data Collection Methods ........................................................................................... 31

Approach ................................................................................................................... 32

11.4. Disclaimer .............................................................................................................. 33


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LIST OF FIGURES

Figure 1: China Solar PV Market Size in terms of Grid Connected and Off-Grid Cumulative

Installed Capacity in Percentage, 2006-2010 ............................................................................. 9

Figure 2: China Solar PV Market Size in terms of On-Grid and Off-Grid Annual Installed

Capacity in Percentage, 2006-2010 ......................................................................................... 10

Figure 3: China Solar PV Power Installed Capacity per Capita in Watt/Inhabitant, 2006-2010

.................................................................................................................................................. 11

Figure 4: China Solar PV Shipments in Megawatt (MW), 2007-2010 .................................... 12

Figure 5: China Solar PV Market Segmentation on the Basis of Applications of Solar PV, in

Percentage, 2010 ...................................................................................................................... 14

Figure 6: China Solar PV Cell/Module Producers Market Share on the basis of Production orShipment Volume in Percentage, 2010 .................................................................................... 17

Figure 7: China Solar PV Market Size in terms of Cumulative Installed Capacity in

Megawatt, 2011-2015 .............................................................................................................. 21

Figure 8: China Solar PV Market Size in terms of Annual Installed Capacity in Megawatt,

2011-2015 ................................................................................................................................ 23

Figure 9: China Solar PV Power Installed Capacity per Capita in Watt/Inhabitant, 2011-2015

.................................................................................................................................................. 24

Figure 10: China Total Electricity Demand in Terawatt hour (TWh) and Contribution of Solar

PV Electricity in Percentage, 2009-2015 ................................................................................. 25


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LIST OF TABLES

Table 1: Present Scenario and Impact of Feed-in Tariff Plans in China Solar Photovoltaic

Market ........................................................................................................................................ 7

Table 2: China Solar Photovoltaic Industry Feed-in Tariff Rates, in CNY/kWh in 2011 ......... 8

Table 3: China Solar PV Market Size in terms of On-Grid and Off-Grid and Total

Cumulative Installed Capacity in Megawatt (MW), 2006-2010 ............................................... 9

Table 4: China Solar PV Market Size in terms of On-Grid and Off-Grid and Total Annual

Installed Capacity in Megawatt (MW), 2006-2010 ................................................................. 11

Table 5: China Solar PV Market Segmentation by Technology Capacity and Output, 2010 . 13

Table 6: Competitive Landscape of Major Solar Photovoltaic Cell/Module Producers in

China (JA Solar, Suntech, Yingli Solar and Trina Solar) ........................................................ 15

Table 7: China Major Solar PV Cell/Module Producers Production or Shipment Volume in

Megawatt (MW), 2009-2010 ................................................................................................... 17

Table 8: China Solar PV Market Size in terms of Cumulative Installed Capacity in Megawatt,

2011-2015 ................................................................................................................................ 22

Table 9: China Solar PV Market Size in terms of Annual Installed Capacity in Megawatt,

2011-2015 ................................................................................................................................ 23

Table 10: China Population Trend in Million, 2006-2015 ...................................................... 26Table 11: China Gross Domestic Product in USD Billion, 2006-2015 ................................... 27


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1.CHINA SOLAR PHOTOVOLTAIC (PV) MARKETINTRODUCTION

China Solar PV industry is the second largest market behind Japan in Asia Pacific with the

cumulative installed capacity of 893 MW in 2010. The installed capacity has increased over 8

times from the level of 100 MW in 2007 to 893 MW in 2010.

Though the Chinese PV market has showcased phenomenal growth in the installed capacity,

the local market still contributes around 4% to total PV production. The country ships over

96% of the total PV production to overseas countries. The domestic PV market has taken off

in 2010 under the umbrella of national program Golden Sun. In 2009, the country

announced a gamut of plans and incentives to back the growth of the solar PV market

including open bidding for solar power plant licenses,the Solar Rooftop Plan and the Golden Sun

Demonstration Projects. Such activities were directed at

growing large-scale solar power plants and urban

rooftop solar power systems.

With this growth prospects in line, the government expects that 20 GW of cumulative

installation capacity will be installed by 2020. Well, it would be difficult to achieve this

target with the current shortcomings in the market. China is however definitely expected to

become a Gigawatt market by 2011 driven by various national and provincial programs.

There are several trends and developments which have been witnessed in the Chinese solar

PV industry such as the increasing share of thin film wafer in the solar cells production due to

improved conversion ratio and efficiency, gaining popularity of the administrative work

business associated with the license for solar PV installations, increasing flow of capital

investment in the PV equipment manufacturing and production of raw material line of

business and changing competitive landscape with the evolving technology. Few challenges

and opportunities await the PV manufacturers in the country. The supply chain in the country

has witnessed an increase in the manufacturing capacity along with the rise of business with

companies expanding via vertical integration. The insufficient capacity in the Chinese market

with respect to supply chain will not be dealt in the short run and will continue to linger on inthe near future. The disparity in capacity is largely because of restrictions in technology,

availability of funds and others. For instance, polysilicon which is used as a raw material in

manufacturing of solar cells is supplied 50% internally and the rest is imported. This has

resulted in a high price of polysilicon in the country.

The competition is expected to increase in the near future internally as well as externally with

introduction of more technologically advanced products. Many big investors and corporate

electronic giants are constantly tracking the PV industry and are looking out for ways and

China has over 400 solar PV

companies which produce over

23% of the PV products globally


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building 235 million kW of power

generation capacity from clean

energy forms by 2015, and

increasing its installed photovoltaic

power capacity over the next five

years to 10 GW by 2015.

purchasing Chinese solar

modules and inverters or using

Chinese firms to build profitable

projects

Source: AM Mindpower Solutions

Table 2: China Solar Photovoltaic Industry Feed-in Tariff Rates, in CNY/kWh in 2011

Category/ Capacity (KWp) Tariff Rates, 2011, (CNY/kWh)

Grid Connected Power Systems

1-1.15; varies on the timing and location of the

project


3.CHINA SOLAR PV MARKET SIZE, 2006-2010

3.1. CHINA SOLAR PV ON-GRID AND OFF-GRIDCUMULATIVE INSTALLED CAPACITY, 2006-2010

With the rapid demand arising from European countries, the PV industry in China has surged

phenomenally. During 2006-2010, the cumulative PV installed capacity has increased at an

exceptional CAGR of 82.8%. China is one of

the largest solar cell manufacturers in the world

which contributes more than half of the global

output in 2010. There are nearly 300,000

individuals associated with this sector and theentire PV industry in China has generated

revenue of more than USD 44 billion.

The PV industry in the country is becoming

competitive with several local companies adapting the cell manufacturing process with the

latest technologies and silicon purification. Most of the raw material used in manufacturing

and the equipment used in installations are locally available. China has emerged in its

position in the solar PV market as the industry has realized economies of scale with the

China Solar PV industry is the second

largest market behind Japan in Asia

Pacific with the cumulative installed

capacity of 893 MW in 2010. The

installed capacity has increased over 8

times from the level of 100 MW in 2007

to 893 MW in 2010


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manufacturing capacity in full swing, resulting in price reductions and control on supply

chain management

Figure 1: China Solar PV Market Size in terms of Grid Connected and Off-GridCumulative Installed Capacity in Percentage, 2006-2010

Source: EPIA, AM Mindpower Solutions

Table 3: China Solar PV Market Size in terms of On-Grid and Off-Grid and TotalCumulative Installed Capacity in Megawatt (MW), 2006-2010

Years

On-Grid Cumulative

Installed Capacity (MW)

Off-Grid Cumulative


Total Cumulative


2006 71 9 80

2007 89 11 100

2008 130 15 145

2009 338 35 373

2010 815 78 893


89.0% 89.2% 89.8%90.6% 91.3%

11.0% 10.8% 10.2%9.4% 8.7%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

2006 2007 2008 2009 2010

Off-Grid On-Grid


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3.2. CHINA SOLAR PV ON-GRID AND OFF-GRID ANNUALINSTALLED CAPACITY, 2006-2010

The solar PV industry has evolved in the past, in terms of its installed capacity and price of

the solar PV systems. In the last 3 decades, the price of the PV solar modules has decreased

from USD 78 to USD 2. This drastic decrease has been largely due to decrease witnessed in

the prices of the raw material used, worldwide acceptance and the efficiency achieved in the

operations. On the other hand, the annual installed capacity has increased manifold from 12

MW in 2006 to 520 MW in 2010. With plenty of resources available in the country, China

has emerged as one of the major supplier of PV systems offering quality and innovative

products.

The country has over 400 solar PV companies which produce over 23% of the PV products

globally. The number of grid connected large scale PV installations has increased in thecountry. It has been witnessed that the proportion of on-grid installations in the total annual

installed capacity has risen over the years. The grid connected installations were 477 MW in

2010.

Figure 2: China Solar PV Market Size in terms of On-Grid and Off-Grid Annual

Installed Capacity in Percentage, 2006-2010


89.0%90.0% 91.0%

91.2% 91.8%

11.0% 10.0%9.0% 8.8% 8.2%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

2006 2007 2008 2009 2010

Off-Grid On-Grid


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Table 4: China Solar PV Market Size in terms of On-Grid and Off-Grid and Total

Annual Installed Capacity in Megawatt (MW), 2006-2010

Years

On-Grid Annual Installed

Capacity (MW)

Off-Grid Annual


Total Annual Installed

Capacity (MW)

2006 11 1 12

2007 18 2 20

2008 41 4 45

2009 208 20 228

2010 477 43 520


4.CHINA SOLAR PV POWER PER CAPITA, 2006-2010Chinas per capita solar PV power capacity is among the lowest in the world. The country has

registered a ratio of 0.7 watt per person in 2010 which was just 0.1 watt per inhabitant in

2008. This was largely due to the massive population in the country whose electricity demand

is huge comparative to supply in terms of installed capacity. Though the ratio is expected to

increase in the future, the solar PV market has a long distance to cover in order to penetrate

the electricity consumption market.

Figure 3: China Solar PV Power Installed Capacity per Capita in Watt/Inhabitant,

2006-2010

Source: EPIA, IMF, AM Mindpower Solutions

0.1 0.10.1

0.3

0.7

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2006 2007 2008 2009 2010

Watt/Inhabitant


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5.CHINA PV SHIPMENTS, 2007-2010The various government programmes and the feed-in-tariffs have created a surge in the

demand for PV in the country. In 2010, 520 MW of installed capacity was installed compared

to only 12 MW installed in 2006.

China is one of the leaders in the production of PV cells and modules but lag in the number

of PV installations. Although the country has witnessed growth in the PV sector, still in terms

of PV installations the country has a small share of 4% of the global PV installations as the

country ships over 96% of its production to overseas market. The shipment level has

increased almost 8 times from the level of 1,088 MW in 2007 to 8,000 MW in 2010.

Figure 4: China Solar PV Shipments in Megawatt (MW), 2007-2010

Source: IEA

1,088

2,600

4,011

8,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2007 2008 2009 2010

MW


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6.CHINA SOLAR PV MARKET SEGMENTATION

6.1.

BY TECHNOLOGY CAPACITY AND OUTPUT, 2010

Since most of the PV products are exported to different countries, there exists a wide

disparity between the production and consumption of PV products. Since most of production

is exported, there is heavy dependence on foreign markets leading to susceptibility in the

Chinese market. The local companies in China are also susceptible to amendment in the

exchange rate and the feed-in-tariffs introduced by other countries.

The country has a moderate capacity utilization ratio of 53% in terms of output of polysilicon

material. China generated 45,000 tons of polysilicon wafers in 2010 comparative to thecapacity of 85,000 tons. The market is currently dominated by the multi-crystalline and single

crystalline technology. About 11 GW of solar cells were produced in 2010.

Thin-film wafer is the new and upcoming technology which has improved the conversion

efficiency ratio. Presently, 0.5 GW of solar cells were produced in 2010 with the installed

capacity of 2.5 GW. The thin film wafer system is considered as the next big technology in

the solar PV market which will be a game changer as it is effective and efficient in

performance and cost.

Table 5: China Solar PV Market Segmentation by Technology Capacity and Output,

2010

Technology Capacity, 2010 Output, 2010

Polysilicon 85,000 Tons 45,000 Tons

Silicon Ingot/Chip 23GW 11GW

Si Solar Cell 21GW 8.5GW

Thin film Cell 2.5GW 0.5GW

Source: SEMI PV Group, China Photovoltaic Industry Association


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6.2. ON THE BASIS OF APPLICATIONS OF SOLAR PV, 2010

Rural electrification was the largest application of PV systems in China. Almost 50% of solar

PV installations are utilized for electrifying the rural areas. With more emphasis bygovernment on the BIPV segment, its share of 17.5% in 2010 is likely to increase in the

coming years. Communication and Industrial Applications, Small solar PV appliances and

ground based large scale PV power plants are other segments where PV installed capacity are

utilized.

Figure 5: China Solar PV Market Segmentation on the Basis of Applications of Solar

PV, in Percentage, 2010


50.0%

17.5%

15.0%

10.5%

7.0%

2010

Rural Electrification

Building-integrated

photovoltaics (BIPV)

Communication and

Industrial Applications

Small Solar PV Appliances

Ground-based Large-Scale

PV power plant (LS-PV)


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7.CHINA SOLAR PV MARKET COMPETITIVELANDSCAPE

Table 6: Competitive Landscape of Major Solar Photovoltaic Cell/Module Producers in

China (JA Solar, Suntech, Yingli Solar and Trina Solar)

Major

Players Business Overview

Key Business Segments

(Revenue Contribution) Financials Geographical Reach

Founded in 2005, JA Solaris a leading solar power

products manufacturer

Offers solar cells, modulesand panels for residential,commercial and utility-

scale power generation

Has total manufacturingcapacity of 2.1 GW in

2010 relative to 25 MW in

2006

Major customers includeBP Solar, Solar-Fabrik and

MEMC/SunEdison

Headquartered inShanghai, China

Solar Cells (69.6%):Manufactures

Monocrystalline Silicon

and Multicrystalline

Silicon solar cells with

average conversion

efficiency rate of 17.8%

and 16.5% respectively

Solar PV Modules(21.3%): Produces both

monocrystalline and

multicrystalline solar

modules ranging from

155W to 240W in power

output

Solar ProductProcessing (9.1%):

Provides solar product

processing services to

customers who supply

polysilicon or silicon

wafers

FY2010Group

Revenue:USD1.78

billion (up

211% y-o-y)

FY2010DomesticRevenue:

USD 909

million

FY2010Shipments:

1.46 GW (up

187% y-o-y)

Operates 2 solar cellmanufacturing

facilities in Ningjin,

Hebei Province and

in Yangzhou,

Jiangsu Province

Recently establisheda PV module

production facility in

Fengxian, Shanghai,

with an annual

capacity of 500 MW

Founded in 2001, Suntechdesign, develop,

manufacture and market a

variety of PV cells andmodules, including a

broad range of value-

added BIPV products

Has shipped over 15million panels since

inception and has installed

solar modules in over 80

countries

Has PV Cell and module

PV Cells (0.8%):Produces a variety of

monocrystalline and

multicrystalline siliconPV cells

PV Modules (95.3%):Produces a variety of PV

modules ranging from 2

watts to 290 watts in

power

PV System Integration(3.9%): Involves the

design, installation and

FY2010Group

Revenue:

USD 2.9billion (up

71% y-o-y)

FY2010Domestic

Revenue:USD 154

million

(5.3% of the

total

Has offices in 13countries including

regional

headquarters in SanFrancisco,

California,

Schaffhausen,

Switzerland, and

Wuxi, China

Operates in majorsolar energy markets

including Germany,

Italy, Spain, France,


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manufacturing capacity of

1,800 MW in 2010

Headquartered in Wuxi,Jiangsu province, China

and employs over 20,200

people

testing of PV systems;

provide this services

through subsidiary,

Suntech Energy

Engineering

revenue)

FY2010Shipments:1.572 GW

(up 123% y-

o-y)

Benelux, Greece, the

US, Canada, China,

the Middle East,

Australia and Japan.

Yingli Green is leadingphotovoltaic product

manufacturers which

design, manufacture and

sell PV modules and

install PV systems

Has manufacturingcapacity of over 1,000

MW for each of crystallinepolysilicon ingots and

wafers, PV cells and PV

modules in 2010

Company sells PVmodules under brand

names, Yingli and Yingli

Solar, to PV system

integrators and distributors

PV Cells: Produces PVCells to use in the

production of PV

modules; Company

purchases a small amount

of PV Cells from third

party to meet the

requirement

PV Modules (98.2%):Produces Monocrystalline

and multicrystalline PV

modules with an average

output ranging from 150

to 270 watts

Integrated PV Systems(1.8%): Produces PV

systems and also design,

assemble, sell and install

stand-alone PV systems

for lighting systems,mobile communication

base stations and

residential applications

FY2010Group

Revenue:USD 1.89

billion (up

72.3% y-o-y)

FY2010Domestic

Revenue:USD 113

million (up

127.1% y-o-

y)

FY2010 PVModules

Sold:1,061.6 MW

(up 102% y-

o-y)

Markets products toGermany, the US,

Italy, China, Spain,

the Netherlands,

Greece, Czech

Republic, France, the

United Kingdom,

South Korea and

Japan

Founded in 1997, TrinaSolar is leading

manufacturer of mono and

multicrystalline solar

modules

Has annual manufacturingcapacity of ingots and

wafers of approximately750 MW and cells and

modules of approximately

1,200 MW in 2010

Serves customers for anoff-grid and on-grid

residential, commercial,

industrial and utility scale

applications

Solar PV Modules:Produces standard

monocrystalline PV

modules ranging from 165

W to 185 W in power

output and

multicrystalline PV

modules ranging from 215W to 240 W in power

output for use in a wide

range of residential,

commercial, industrial

and other solar power

generation systems

FY2010Group

Revenue:USD1,857.7

million

FY2010 PVModules

Shipments:1,057MW

(up 164.9%

y-o-y)

AverageSellingPrice: USD

1.75 per watt

Operates inSwitzerland, US,

Japan, China,

Madrid, Munich,

Milan, San Jose,

Seoul, Tokyo and

Shanghai

Markets solarproducts in the US,

Belgium, Germany,

Spain, Italy,

Australia, India,

China, the Czech

Republic, France,

Israel, Japan and

South Korea


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Headquartered inChangzhou, China and

employs 12,863 people

Source: Company Reports, AM Mindpower Solutions

Figure 6: China Solar PV Cell/Module Producers Market Share on the basis of

Production or Shipment Volume in Percentage, 2010

Source: IEA, Company Reports, AM Mindpower Solutions

Note: * 2010 estimates

Table 7: China Major Solar PV Cell/Module Producers Production or Shipment

Volume in Megawatt (MW), 2009-2010

Solar PV Cell/Module

Producers

Total PV Cells/Modules

Production or Shipment Volume

(MW), 2009

Total PV Cells/Modules

Production or Shipment Volume

(MW), 2010

Suntech Power 739 1,572

JA Solar 509 1,462

Yingli Green Energy 525 1,062

Trina Solar China 399 1,057

20.0%

18.6%

13.5%

13.5%

6.8%

6.1%

4.4%

3.5%

2.9%

10.6%Suntech Power

JA Solar

Yingli Green Energy

Trina Solar China

Solarfun*

Jinko Solar China*

China Sunergy

Ningbo Solar*

Changzhou Yijing*

Others


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Solarfun* 220 535

Jinko Solar China* 120 480

China Sunergy 190 344

Ningbo Solar* 140 275

Changzhou Yijing* 135 225

Others 504 831

Source: IEA, Company Reports, AM Mindpower Solutions

Note: * 2010 estimates

8.CHINA SOLAR PV SWOT ANALYSISSTRENGTHS

Positive and robust national and regional subsidy program including tax rebates,incentives and soft loans

Easy administrative and regulatory policies for obtaining solar power plant licenses Worlds leading supplier of solar PV products and cost effective solar technology to

western European markets

WEAKENESSES

Immature and small domestic solar PV market High dependency on exports to drive the growth

OPPORTUNITIES

Rich solar power resources with average annual solar radiation level of over 5,000mega joules (MJ) per square meter and 66% of the country's area receiving over 2,200

hours of sunshine per year

Increasing investment from government and foreign players in on-grid, buildingmounted and ground mounted systems


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THREATS

Rising rivalry from other Asia Pacific countries in the price sensitive solar PV market Declining demand from Europe expected to take a toll on export dependent solar PV

market

9.CHINA SOLAR PV MARKET FUTURE OUTLOOKChina is expected to emerge as a prominent country with respect to manufacturing solar PV

products. The dominance of European countries and the US are expected to fade away with

rise of China as the epicenter of solar manufacturing. The low cost of production backed by

technological advancement are some of the factors which are creating a share for the Chinese

competitive products.

The soaring requirement of various PV products such as inverters and batteries in 2010, made

Chinese PV industry ramp up its production. The effect of increased production is being felt

in 2011 and beyond as the excess production will lead to a reduction in the price of the

components. Cheap products on offer are likely to stir the demand globally. The cheap

Chinese products will exert more pressure in the market in terms of pricing of products and

are also expected to improve its technology in the coming years. It is also expected that

consolidation may take place in the industry as the market is getting saturated, with number

of players increasing the competition.

Financial and credit markets worldwide experienced unprecedented deterioration in 2008 and

early 2009. Due to the global economic downturn and a concurrent decrease in consumer

demand, China experienced a slowdown in its economic growth during the second half of

2008 and early 2009. Consumption in general was adversely affected during that downturn in

the global economy.

Although the Chinese economy has recovered recently, it is doubtful whether such recovery

will continue for the remainder of 2011 and beyond. Any recurrence of a global financial

crisis may cause a further slowdown in its economy. These changes in macroeconomic

conditions have, had, and are expected to continue to have, an adverse impact on the business

and operations. These factors may also intensify competition for market share.

Improvements in the economy and general business conditions will depend on the extent to

which government policies succeed in addressing fundamental weaknesses in the markets,

restoring consumer confidence and increasing market liquidity in an adequate and timely

manner. Any recurring weakness in the global economy or in the economy of China may

materially and adversely affect the revenues.


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There is huge potential for the growth of the PV market in the country. Although the market

for PV cells and modules is the largest in the world but there is huge scope in the PV

installation market. Most of the PV products produced in China are exported to European

countries which have led to an increasing demand for PV products. The local PV

manufacturers needs to start targeting the local market for their product as it will be a majormarket in the coming years.

The government should introduce new ways and means in terms of policies and

recommendations to sustain the growth of PV market. The processes should be streamlined

with clear understanding of the implementation and evaluation of different events. More

incentives need to be introduced either by subsidy or feed-in-tariff which will have a positive

bearing on the market. With abundance of space available, rooftop and BIPV installations

should be encouraged.

Most of the projects are run by state run companies. Most of the PV business is operated by

government firms and there are hardly any projects run by private enterprises. In order to

promote healthy growth of the PV industry it is highly recommended that the market should

be more diverse with local players (both public and private companies) and foreign players.

9.1. CHINA SOLAR PV CUMULATIVE INSTALLEDCAPACITY, 2011-2015

China Solar PV market has witnessed major growth in production of solar PV cells, modules

and panels in 2010. The country is the largest exporter of solar PV systems to Europe and

other countries with a commanding market share. The domestic market on the other hand is

still underdeveloped and hence requires a major impel in the growth. The country has larger

proportion of small scale residential power projects till date. With the government initiative

on the commercial power projects, investors focus has shifted towards large scale grid

connected commercial power projects. It is expected that with this trend line along with the

government national and provincial program, the solar PV installations will increase

phenomenally in the country.

Under the normal business conditions, it is

expected that new players will enter in the

industry and existing players will consolidate

resulting in the influx of investment for the

solar PV projects. The economies of scale in terms of low cost of solar PV power systems

along with the increased preference for improved thin film wafer technology will aid the

investors to achieve the grid parity in the long run. It is expected that cumulative solar PV

installed capacity will incline to 1,650 MW by 2011 and to 10,610 MW by 2015.

With governments initiative oncommercial projects along with

investors targeting big grid connected

projects, the Chinas PV installations are

expected to increase tremendously


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The worst case scenario signifies that China will face stiff competition from other Asian solar

PV systems manufacturing countries such as Taiwan and South Korea resulting in the decline

in market share of exports in the country. Additionally, increasing pressure on European solar

PV markets due to the reduction in the tariff rate will result in low demand for solar PV

systems in the future. Since the domestic market contributes a marginal proportion to the totalsolar PV capacity, the decline in the exports will affect the industry. Hence, the cumulative

installed capacity in this situation will increase to 1,276 MW in 2011 and will reach 6,930

MW by 2015.

With Chinas commitment to cut down carbon emission per unit of the GDP by 40 to 45% by

2020 in comparison to 2005 levels ahead of the Copenhagen climate summit, the country is

expected to face increased pressure to reduce its dependency on conventional sources. Hence

under the best case scenario, it is expected that government will provide a major impel in the

future in terms of new incentive plans for investors for investing in large scale commercial

projects along with residential installations. Under this situation, the cumulative installedcapacity is expected to increase to 1,980 MW in 2011 and to 17,934 MW by 2015.

Figure 7: China Solar PV Market Size in terms of Cumulative Installed Capacity in

Megawatt, 2011-2015


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2011 2012 2013 2014 2015

MW

Worst Case Base Case Best Case


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Table 8: China Solar PV Market Size in terms of Cumulative Installed Capacity in

Megawatt, 2011-2015

Years Cumulative Installed Capacity (MW)


2011 1,276 1,650 1,980

2012 2,290 3,120 3,967

2013 3,780 5,180 6,975

2014 5,350 7,670 11,155

2015 6,930 10,610 17,934


9.2. CHINA SOLAR PV ANNUAL INSTALLED CAPACITY,2011-2015

Under the base case scenario, the cumulative capacity is expected to breach a Gigawatt

benchmark with annual installations of 757 MW in 2011. The capacity is expected to incline

with the prevailing situation in the country resulting in an increase to 10,610 MW by 2015.

Under the worst case scenario, increasing pressure on the European solar PV markets and

propelling other Asian countries will eat up the market share of China in exports and will

affect the annual installations in the country. In such situation, the annual installed capacity is

expected to decline marginally to 383 MW in 2011. However, it is expected that market will

soon stabilize as the domestic market will drive the growth of the solar PV industry. Hence,

the annual installed capacity will increase to 1,014 MW in 2012 and to 3,200 MW in 2015.

The best case scenario assumes compelling infusion of capital investment in the market alongwith decrease in solar PV systems prices resulting in fast adoption to clean renewable

electricity over other conventional sources of electricity. This will drive the grid parity in the

country resulting in an increased demand for solar PV installations. Hence, in this case, the

installed capacity will increase by 1,087 MW in 2011 to cumulative installations of 1,980

MW.


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Figure 8: China Solar PV Market Size in terms of Annual Installed Capacity in

Megawatt, 2011-2015


Table 9: China Solar PV Market Size in terms of Annual Installed Capacity in

Megawatt, 2011-2015

Years Annual Installed Capacity (MW)


2011 383 757 1,087

2012 1,014 1,470 1,987

2013 1,490 2,060 3,008

2014 1,570 2,490 4,180

2015 1,580 2,940 6,779


0

1,000

2,000

3,000

4,000

5,000

6,000

2011 2012 2013 2014 2015

MW



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9.3. CHINA SOLAR PV POWER PER CAPITA, 2011-2015

China solar PV power per capita ratio is expected to witness a major incline along with an

increase in the installed capacity. The ratio will however remain low as compared to the

average ratio in Asia Pacific and to that of Japan and Australia. Under the base case scenario,

ratio will reach 7.7 watt per person by 2015. The expected growth is based upon the China

current trend growth along with the development of the domestic market.

Under the best case, the per capita installed capacity will increase to 1.5 watt in 2011 and will

reach to 13.0 MW by 2015, at an expected 5 year CAGR of 81.3%.

Figure 9: China Solar PV Power Installed Capacity per Capita in Watt/Inhabitant,

2011-2015

Source: AM Mindpower Solutions, IMF

0.91.7

2.8

3.95.0

1.2

2.3

3.8

5.6

7.7

1.5

2.9

5.1

8.2

13.0

0

2

4

6

8

10

12

14

2011 2012 2013 2014 2015

Watt/Inhabitant



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9.4. CHINA TOTAL ELECTRICITY DEMAND AND SOLAR PVELECTRICITY CONTRIBUTION, 2009-2015

Electricity demand in China has grown at a rapid pace in the past. It was registered at 2,783

TWh in 2010 with solar PV contributing approximately around 0.20%. It is expected that in

2011, total electricity demand will increase to 2,914 TWh while solar PV market share in the

electricity consumption will increase to 0.24%.

Government consistent effort and support to promote new solar PV projects in order to

reduce carbon gas emission will result in increased adoption of clean electricity, though at a

higher price comparative to conventional sources. This effort is likely to increase the

contribution of solar PV in the total electricity generation and consumption. The electricity

demand is expected to grow at an estimated CAGR of 5% and will reach to 3,504 TWh by

2015 with solar PV contribution of 0.51%.

Figure 10: China Total Electricity Demand in Terawatt hour (TWh) and Contribution

of Solar PV Electricity in Percentage, 2009-2015


2,652 2,7832,914

3,0523,196

3,3463,504

0.16%

0.20%

0.24%

0.29%

0.35%

0.42%

0.51%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2009 2010 2011E 2012E 2013E 2014E 2015E

Electricity Demand (Thousand GWh) % of PV Electricity (Global Average)


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10. CHINA MACRO ECONOMIC INDICATORS:CURRENT AND PROJECTIONS

10.1.POPULATION, 2006-2015

China is the leading country in carbon emission which generates about 7,031,916 thousand

metric tonnes of annual CO2 emissions with the market share of 23.33% in the global

emissions. This indicates that the growing demand for energy from the world most populous

country contributed the largest to carbon emissions. China became the worlds largest

consumer of energy (18% of the total) when its consumption increased by 8% in 2009 and

from 4% in 2008. Oil and coal are still the leading sources used to generate electricity thoughtheir market share has reduced over time.

The government is taking stringent actions to reduce the population growth and energy

reliance on these sources by aiding renewable energy sources power projects. The country

has witnessed several solar power projects in the last 3 years and is expected that trend will

continue in the coming years. The per capita emission is also expected to reduce in China

with the fast pacing growth of non-conventional sources and with reduced population growth.

The Chinese population is expected to increase to 1,375.3 million by 2015.

Table 10: China Population Trend in Million, 2006-2015

Years Population (Million)

2006 1,314.5

2007 1,321.3

2008 1,328.0

2009 1,334.7

2010 1,341.4

2011 1,348.1

2012 1,354.9

2013 1,361.6

2014 1,368.4


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2015 1,375.3

Source: IMF

10.2.GDP, 2006-2015

Chinas is the worlds largest manufacturer of PV panels, exporting over 96% of the

production to overseas country. The country is one of the biggest harvesters of the sun's

energy. The market has seen strong incentive for solar farms and rooftop panels which will

come from the governments USD 640 billion economic stimulus fund. The growing GDP

and government expenditure is one of the major drivers for the strong economic stimulus. As

the economic condition of China will improve, the government will endeavor further toincrease the market share of renewable sources in the total electricity demand. The worlds

2nd

largest economy and worlds most populous country has great potential for its renewable

industries. By 2020, the government is expected to raise the share of renewable energy

(excluding hydroelectric power) in the total energy contribution to 6% from the present 1.5%.

Table 11: China Gross Domestic Product in USD Billion, 2006-2015

Years GDP (USD Billion)

2006 2,712.9

2007 3,494.2

2008 4,520.0

2009 4,984.7

2010 5,745.1

2011 6,422.3

2012 7,169.7

2013 8,000.5

2014 8,935.7

2015 9,982.1

Source: IMF


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11. APPENDIX

11.1.MARKET DEFINITION

Asia Pacific: The region includes Australia, China, Japan, South Korea and Taiwan

Grid Parity Point: It is the point where the electricity generation from other sources is

equivalent (in terms of cost) as the electricity generated from grid power.

Conversion Efficiency: Defined as the ratio of electrical energy generated by the cell to the

sunlight energy that reaches the cell. The conversion efficiency of PV cells is largely

determined by the quality of wafers used to manufacture the solar PV cells, which is, in turn,

is ascertained by the combination of different types of polysilicon raw materials used in the

ingot casting process.

Peaking Capacity: It is defined as the maximum electricity-generating potential of a

photovoltaic cell or panel

Feed in tariff: The price per unit of electricity paid by a utility or supplier for renewable

electricity purchased from private generators. The regional or national electricity utilities are

mandated to purchase renewable electricity at above market rates set by the government

Grid-Connected PV system1: A PV system in which the PV array acts as a central

generating plant, supplying power to the grid

Off-grid PV System1: System installed in households and villages that are not connected to

the utility grid. Usually, a means to store electricity is used. It is also known as "stand-alone

photovoltaic power system.

Worst Case Scenario: The worst case scenario assumes a market behavior with a major

feed-in tariff (FiT) cut or no enforcement of expected FiT proposal while assuming

increasing competition or increasing cost of the solar equipment in the market.

Base Case Scenario: The base case scenario indicates current business in continuity market

behavior with the equitable persistence of current feed-in tariff aligned with the Photovoltaicsystem prices but with no major impel from government in terms of reinforcement of existing

support schemes.

Best Case Scenario: This scenario assumes the initiation or continuation of feed-in tariff

complemented with a favorable political impel to regard photovoltaic as a major power

source in the foreseeing future. This will be accompanied with a removal of futile

administrative barriers and the streamlining of grid connection procedures.

Source:1. PV Employment.org


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11.2.ABBREVIATIONS

AC: Alternate Current

ADB: Asian Development Bank

ASEI: Asia Solar Energy Initiative

BIPV: Building Integrated Photovoltaic

CAD: Canadian dollar

CDTE: Cadmium Tellurid

CIGS: Copper Indium Gallium Selenide

DC: Direct Current

DIA: Denuncia di Inizio Attivita

EEG: German Renewable Energy Sources Act

ERO: Energy Regulatory Office

EU: European Union

FIT: Feed-in-Tariff

GHG: Green House Gases

GSE: Gestore Servizi Energetici SpA

GW: Gigawatt

INMETRO: Institute for Metrology, Standardization and Industrial Quality

IRR: Internal rate of return

KW-dc: Kilowatt direct current

KWp: Kilo Watt Peak

LED: Light-Emitting Diode

METI: Ministry of Economy, Trade and Industry

MJ: Mega joules

MW: Megawatt

PIDA: Photonics Industry & Technology Development Association


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PV: Photovoltaic

REC: Renewable Energy Certificate

RES: Renewable Energy Sources

RESOP: Renewable Energy Standard Offer Program

RIPV: Roof-integrated Photovoltaics

ROW: Rest of World

RPS: Renewable Portfolio Standards

TWD: Taiwan dollar

V: Volt

W: Watt

y-o-y: Year on Year


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11.3.RESEARCH METHODOLOGY

Several statistical methods such Covariance, Correlation, Regression and Coefficient of

Determination (R square) analysis have been used to assess the industry performance and

analyze the future outlook of the industry.

Correlation analysis is a measure of degree of association between two set of quantitative

data. Correlation coefficient describes the direction and strength (both positive and negative)

of association between the dependent variable and independent variables and overcome the

shortcomings of covariance analysis.

Regression analysis helps to calculate the value of one variable from known or assumed

values of other variables related to it. The report has independently studied the cause and

effect relationship between dependent and independent variables and has formulated theregression coefficient explaining the estimated change in the response variable due to a unit

change in the corresponding explanatory variable, conditional on the other explanatory

variables remaining constant.

R Square is the coefficient of determination that represents the proportion of total variation in

the dependent variable that is accounted for by the variation in the factors. In simple terms, it

explains the validity of the independent variables and reflects the degree of influence

independent variables have on the dependent variables.

The report has analyzed several socio-economic, demographic, political, and regulatory

market factors which directly or indirectly affect the industry performance by indicating their

degree of impact in the cause and effect relationship between them. The reason for selected

these macro-economic and industry factors has also been explained.

DATA COLLECTION METHODS

In terms of data collection, we have used both primary and secondary data sources.

Secondary Data Sources: Secondary data sources includes the analysis of existing macro

economic and demographic factors, obtained from national statistics of several regions and

countries and from magazines, journals and online articles The secondary data sources are

used to form the initial perception and contention on several forces playing their role in

determining the future growth in the industry.

Primary Data Sources: Structured interviews are conducted through telecon with several

industry veterans including major decision makers of companies operating in the sector,

representatives of several solar PV associations and research institute such as EPIA, Chinese

Renewable Energy Association. These interviews help the research team to authenticate the


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data collected from secondary data sources and to reject or accept the hypothesis regarding

the future projections.

APPROACH

Our research team follows a Top-down approach for the future projections in which they

first study the effect of economic factors and then industry factors on the sector.

This approach indicates the several independent macro-economic and industry variables and

their degree of relationship with the sector. The industry factors and their sensitivity have

been discussed in the regional solar photovoltaic market future outlook.


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11.4.DISCLAIMER

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redistributed without prior permission. You are permitted to print or download extracts from

this material for your personal use only. None of this material may be used for any

commercial or public use.

The information provided in the research documents is from publicly available data and other

sources, which are reliable. Efforts are made to try and ensure accuracy of data. With respect

to documents available, neither the company nor any of its employees makes any warranty,

express or implied, including the warranties of merchantability and fitness for a particular

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usefulness of any information, apparatus, product, or process disclosed, or represents that its

use will not infringe privately owned rights.

The report also includes analysis and views expressed by our research team. The research

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as of the date appearing in the material and may be subject to change from time to time

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