While still in its infancy, the solar energy industry is growing in China as the country seeks clean, cheap and renewable sources of power
　　
　　
　　Shi Zhengrong, President and CEO of Suntech Power Holdings Co. Ltd., was not a very familiar face to people outside the solar power industry until December 14 last year. On that day, Suntech, based in Wuxi, Jiangsu Province, became the first Chinese mainland hitech company to be listed on the New York Stock Exchange.
　　As the first “solar energy concept” stock to be traded on Wall Street, Suntech’s successful initial public offerings were considered a major development in China’s solar energy industry. The company sold 26.4 million American depository shares at $15 each, bringing in $500 million.
　　Suntech shares shot up 41 percent to $21.2 on the first day of trading and rocketed above $34 one month later.
　　Shi, who owns about 47 percent of the company, is by some estimates worth $2.3 billion, surpassing Rong Zhijian, who topped Forbes magazine’s list of China’s richest people in 2005. At that time, he ranked 98th with $200 million. However, he is likely to lead the list this year.
　　Before establishing his own company, Shi was a scientist who earned a doctorate in solar energy from Australia’s University of New South Wales and holds more than 10 international photovoltaic (PV) patents. In 2001, he returned to China and, together with seven other shareholders, established Suntech, which is mainly involved in the research, manufacturing, sales and servicing of photovoltaic cells, modules and power systems.
　　In the beginning, the factory was small, little different from a privately run water heater enterprise. But in September 2002, the company built the first photovoltaic cell production line with a capacity of 10 megawatt, which is four times China’s total production over the previous four years. The company is China’s largest solar energy enterprise and is ranked among the top 10 such companies in the world by Photon International magazine, based on production capacity.
　　
　　Suntech expanded three times from 2003 to 2004 to meet the growing demand in the market for new energy sources, both domestically and internationally. As of last September, Suntech’s production capacity reached 120 megawatt. A new production line has gone into operation, which will increase the capacity to 150 megawatt.
　　New concept
　　As the only clean and renewable energy source not limited by geographic factors, solar energy has increasingly become the first choice for sustainable development. Last year, the “solar energy concept” hit world securities markets, leading to a surge in stocks of photovoltaic cell producers. Meanwhile, China’s solar energy companies began a rapid expansion based on these optimistic expectations.
　　Headquartered in Baoding, Hebei Province, Baoding Tianwei Yingli New Energy Resources Co. Ltd. created another solar energy mania in the second half of last year as its shares soared 192 percent, the largest increase among firms listed on the Chinese stock market.
　　In July last year alone, the company realized sales revenue of 40 million yuan and brought in foreign exchange of $4.37 million from its exports, paying 10 million yuan in taxes, which was equal to the entire amount paid in 2004. “Our orders extend until 2007. Now, our supply cannot meet the demand,” said an employee at the company’s marketing department.
　　According to other statistics, from January to October last year, the Shanghai Stock Exchange composite index dropped 14.5 percent. However, new energy shares increased an average of 14.03 percent and solar energy shares showed an average gain of 37.68 percent. If calculated from the lowest level of the year, solar energy stocks showed an almost 100 percent rise on average.
　　Suntech, Tianwei Yingli and Chinese Electrical Equipment Group had a combined annual photovoltaic cell manufacturing capacity of 300 megawatt in 2005, while China’s total production capacity exceeded 400 megawatt.
　　“After the Internet boom, the photovoltaic cell industry is likely to flourish,” said United Securities analyst Yang Jun.
　　John Manzoni, Managing Director of BP Plc, noted that because of the shortage of electric power in the country and the pressure to protect the environment, China is becoming, after Japan and Europe, the biggest and fastest growing solar energy market.
　　Last December 1, Manzoni and Zhang Xin, President of China Xinjiang Sunoasis Co. Ltd., announced that they would establish a joint venture to engage in photovoltaic product and system sales in China. Since the 1990s, BP and its Chinese partners have been involved in many large solar energy projects. BP has also provided photovoltaic equipment to remote areas in Tibet, Xinjiang and Sichuan. In addition, the company participated in the alternate power supply project for Qinghai-Tibet Railway’s signal system and provided separate solar energy power systems to telecommunications networks in western and northeastern regions and some southern islands.
　　A solar energy system jointly constructed by BP and its Chinese partners was successfully put into operation in 2005 at the Shenzhen International Garden and Flower Exposition, covering an area of 5,325 square meters. The network has a total installed capacity of 1 megawatt, the largest such network in China, and in Asia. It is also one of the few PV power systems with an installed capacity of at least 1 megawatt in the world.
　　
　　Solar whirlwind
　　
　　Last November, Zhang Guobao, Vice Minister of the National Development and Reform Commission, said at the Beijing International Renewable Energy Conference that, based on the Medium- and Long-Term Development Plan of Recyclable Resources, China’s total installed solar energy capacity is expected to reach 500 megawatt in 2010 and 2,200 megawatt in 2020. Compared with capacity of only 650 kilowatt in 2004, this goal will create a huge potential in the domestic market.
　　On January 1 this year, China’s Renewable Energy Law took effect. Relative prices, taxation, market quotas and other supporting policies were announced as well. China’s renewable energy industry has since entered a new era of development, and the solar energy market will be more open.
　　China started research on photovoltaic cells in 1958, and the technology was first successfully used in the Dongfanghong 2 satellite in 1971 and in ground projects in 1973. But China began to develop its solar energy industry in earnest in the late 1970s, to which the Central Government has consistently given its support. The technologies were then expanded to applications in microwave relay stations, military telecommunications systems and some other areas.
　　The Program on the Development of New and Renewable Resources promulgated in 1995 presented goals, tasks and related policies for the period from 1996 to 2010. In September 1996, the World Solar Summit proposed pushing forward the “PV Project” in regions that do not have access to electricity. The Chinese Government gave a quick and active response, creating and implementing the Chinese Brightness Project, which aimed to provide electricity generated from solar energy and renewable resources to 23 million people in areas suffering from a shortage of power. The launch of this program immediately attracted attention from Europe, America and Japan. Many countries, international organizations and companies expressed their wish to cooperate on such programs to the Chinese Government, and some work is already underway.
　　“Although the cost of solar energy in China is six to eight times that of thermal power, in the past 10 years the PV industry still grew by 25 to 40 percent every year,” said Zhao Yuwen of the China Solar Energy Society.
　　An increasing number of local governments are showing an interest in the PV industry. Tibet is one location where intensive solar energy construction has gone on. There are almost 400 solar power stations with a total capacity of 8 megawatt. Nearly half of Tibet’s farmers and herdsmen are using PV-powered energy. Yu Heping, Deputy Director of Tibet’s Development and Reform Commission, said that the industry is still in its infancy in Tibet compared with the huge potential of the region’s renewable resources.
　　Experts from the National Development and Reform Commission who have been sent to Tibet for research have advised that the region should be established as a national model of “green” energy, which can help set a good example for other provinces and regions.
　　Officials of the Shanghai Municipal Government have also stressed the development of solar energy. Recently, Cui Rongqiang, Director of Shanghai Jiaotong University’s Solar Energy Institute, wrote a project design report on constructing 100,000 solar energy roofs in Shanghai, which includes renovating 1.5 percent of Shanghai’s flat roofs to solar-powered ones by 2015. However, only 15 percent of the solar energy collected can be converted to electricity, making the cost of solar power much higher than that of thermal energy.
　　The big difference in cost makes it fairly difficult to develop solar energy on a wide scale, but Cui is confident about the industry. “If 90 percent of PV cells can be produced by domestic manufacturers, the cost will be much lower. By 2015, the cost of PV power may be one third or one tenth of the present price.”
　　
　　Shadows loom
　　
　　Thus far, there has been a rather unusual phenomenon in China’s solar power industry: Over 90 percent of raw materials are imported and over 90 percent of products are exported.
　　Currently, photovoltaic cell companies widely use polycrystalline silicon as the raw material, which is refined from metallurgical-quality silicon that has a low grade of purity. The refining technology is still monopolized by a few large companies in developed countries. According to the Chinese Academy of Engineering, in 2005 China needed 3,800 tons of polycrystalline silicon, including 2,691 tons for the PV industry, but the country only produced 60 tons in 2004. Even if all the polycrystalline silicon produced by China are used in the PV industry, that would only account for 2.6 percent of the market’s demand, which means all the rest has to be imported.
　　The material is also in great demand in the international market. A report on the solar energy industry by CLSA Asia-Pacific Markets pointed out that in the next two years, the biggest danger in the industry is a shortage of silicon. It added that if some companies cannot get enough silicon, profits would be reduced, which has happened already.
　　Yang, the United Securities analyst, said in 2003 every kilogram of silicon cost $24, but the price had risen to $60 at the beginning of 2005, and currently is $80. “I think this year the price will exceed $100,” he said.
　　He noted that Tianwei Yingli left 60 percent of its photovoltaic cell production capacity unused for a period of time because of a shortage of silicon, and that Suntech will use $100 million of the funds from its IPO to buy the material.
　　Therefore, acquiring an adequate supply of high-purity silicon is an urgent matter for solar energy companies. Tianwei Yingli has invested in Sichuan Xinguang Co., which owns China’s first and largest polycrystalline silicon production facility that can produce over 1,000 tons annually. It is expected to manufacture 1,260 tons this year.
　　Advanced Technology & Materials Co. Ltd., which is listed on the Shenzhen Stock Exchange, signed an agreement with German company Odersun in August 2004 to cooperate in jointly developing a new-type film solar cell, which will be put into mass production soon. The German Solar Energy Research Institute spent 10 years developing this low-cost solar cell technology, which uses copper foil as the raw material.
　　If this technology can reduce the cost to one quarter of the present price, the government would be capable of paying some subsidies to encourage wider use of photovoltaic cells. According to Advanced Technology executives, the company and Odersun have discussed building a joint venture with an initial design and manufacturing capacity of 3 megawatt per year, increasing to 10 megawatt in five years. As this is only an initial plan, the actual manufacturing capacity will be adjusted accordingly. However, some experts said this might indicate that China will soon be able to make its own solar cells.

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