Solar energy industry enters a period of structural adjustment, tapping into a rural market worth hundreds of billions
The solar photovoltaic industry is regarded as an important component of new energy. During the financial crisis, China's photovoltaic industry, which had once grown rapidly but relied excessively on “processing with supplied materials” and “both ends abroad,” ran into difficulties. In 2009, with the introduction of a series of national industrial support policies and the gradual recovery of private investment, China's photovoltaic industry began to enter a period of structural and market adjustment. Several experts interviewed by reporters believe that in 2010, China's photovoltaic industry will undergo a further “great shift,” moving from excessive reliance on the international market to the vast domestic market, especially the rural market. But they also believe that while China's photovoltaic industry develops at high speed, many problems still need to be handled with caution.
“Both ends abroad” is unsustainable
Before the financial crisis, the photovoltaic industry had always been a hot spot for investment by China's private enterprises. In 2005—2006, as many as 11 Chinese photovoltaic enterprises were listed in the United States. In 2008, China's solar cell output reached 2600M, making it the world's largest solar cell producer.
Behind the bubble-like development of the photovoltaic industry lurked structural problems such as excessive reliance on “processing with supplied materials” and “overseas markets.”
Li Anding, a senior researcher at the Institute of Electrical Engineering of the Chinese Academy of Sciences, explained that 2003—2008 was the first stage of China's photovoltaic industry development. Among the 5 major links in the photovoltaic industry chain - high-purity polysilicon material production, silicon ingot and wafer production, cell production, module encapsulation line production, and photovoltaic application - Chinese enterprises could only seize links such as silicon ingot and wafer production, cell production, and module encapsulation lines, while the most upstream polysilicon material production and the most downstream photovoltaic application both appeared inadequately supported.
Before 2008, international polysilicon prices soared all the way, rising from 25—40 USD/kg in 2001—2003 to a peak of 480 USD/kg in 2008. At the time, there was even a saying in the industry that “whoever has silicon has the world.” Driven by huge profits, China's photovoltaic industry rushed into polysilicon production. In 2007, among the 15.67 billion yuan of investment in the new energy field by 25 domestic listed companies, polysilicon projects alone accounted for 1/3 of it, with planned output reaching more than 4000 tons. However, China's polysilicon production was mostly sustained by high energy consumption, high cost, and high pollution, and its processes and technologies were far behind advanced international levels.
Li Anding explained that domestic polysilicon costs were generally 50 to 70 USD/kg, with some companies even reaching as high as 100 USD, while the production cost of advanced enterprises in countries such as the United States and Germany was only 25 USD/kg.
Compared with the “quantity without quality” of polysilicon material production, the prominent contradiction in photovoltaic application lay in insufficient domestic demand. In 2008, 98% of China's photovoltaic cells were exported abroad, and local application was scarce.
This structural problem of China's photovoltaic industry was especially evident during the financial crisis. Affected by the financial crisis, silicon material prices fell, dropping from a peak of nearly 500 USD to 70 to 80 USD, and China's polysilicon production, sustained by high cost and high energy consumption, became difficult to continue; at the same time, major photovoltaic demand countries such as Germany and Spain adjusted their own photovoltaic development strategies, and foreign orders plummeted, making matters worse. Chinese photovoltaic enterprises that had once been highly sought after on international stock markets were cold-shouldered by Wall Street. In September 2008, in the first week after the bankruptcy of Lehman Brothers, Chinese solar stocks as a whole fell 10%. After that, not a single Chinese photovoltaic enterprise raised a single cent on Wall Street.
“Surviving in a desperate situation” and opening up the domestic market
Nothing describes China's photovoltaic industry in 2009 more aptly. In 2009, under the guidance and support of government policies, China's photovoltaic industry began a industrial structural adjustment like “a strong man cutting off his own wrist.”
On October 24, 2009, the State Council approved and forwarded the “Several Opinions on Suppressing Overcapacity and Redundant Construction in Some Industries and Guiding the Healthy Development of Industries” from the National Development and Reform Commission and other departments, strengthening control over new polysilicon projects and clearly proposing that the scale of new polysilicon projects must be greater than 3000 tons/year. At the same time, it encouraged polysilicon production enterprises to strengthen alliances and cooperation with downstream solar cell production enterprises and extend the industrial chain.
Experts believe that in recent years the development of China's photovoltaic industry, especially polysilicon production, was to a large extent an act of seeking quick success and instant benefits. Guiding through industrial policy and eliminating outdated production capacity is an inevitable choice for realizing the technological upgrading and sustained healthy development of China's photovoltaic industry. Although the industry reshuffle during the crisis brought pains, the waves wash away the sand, and those enterprises that withstood the test in this crisis were often those with high technical levels and strong market competitiveness, which brings more benefits than harms to the development of China's photovoltaic industry.
While regulating industrial development, the Chinese government also successively issued a series of support policies such as the “Roof Project” and the “Golden Sun Project” to strengthen photovoltaic application capacity.
In July 2009, the Ministry of Science and Technology promoted the “Golden Sun Certification Project,” clearly providing subsidies for a 500 MW solar demonstration project. In September, this quota was increased to 642 MW. Experts estimate that the “Golden Sun Project” alone is equivalent to adding 500 to 680 MW of photovoltaic installed capacity in more than two years, with an annual increase of more than 250 MW of installed capacity, and will provide more than 14% of the market each year for China's photovoltaic cell enterprises.
“The state's industrial support policies effectively stimulated domestic market demand for photovoltaic applications and played a key role in enabling the photovoltaic industry to take the lead in recovering during the financial crisis,” Li Anding said.
The rural market has great potential
While the state promoted the structural adjustment of the photovoltaic industry through policies, the market-oriented adjustment of the photovoltaic industry itself also continued.
At the beginning of the new year in 2010, the “Photovoltaic New Energy and Three-Dimensional Agricultural Industrialization” project in Hezhou, Guangxi, passed expert review, and a solar power station project with an installed capacity of 4 MW was about to settle in Hezhou, long known as the “vegetable basket of the Pearl River Delta.” This is a microcosm of China's photovoltaic industry beginning to shake off excessive dependence on foreign and urban markets and march into the vast domestic rural market.
Experts believe that the vast rural market and the Chinese government's subsidy policy for home appliances going to the countryside have prompted photovoltaic industry application enterprises centered on high technology to turn their eyes to the rural market with endless potential.
Photovoltaic enterprises that saw the huge potential of the rural market earlier have already benefited from it. Dongguan Donghailong Environmental Protection Technology Co., Ltd. has long been engaged in technical services for LD solar lighting sources and currently already owns more than 10 patents with independent intellectual property rights.
Company chairman Luo Guohao told reporters that from 2004—2009, the company invested continuously almost every year, with cumulative investment exceeding 200 million yuan, belonging to a typical stage of technology accumulation. But starting in 2010, the company's service orders centered on solar photovoltaics exceeded 500 million yuan. It is expected that in the coming years, orders will show “snowballing” development.
Luo Guohao believes that the combination of the photovoltaic industry and agriculture has broad prospects. With the development of photovoltaic technology, photovoltaics and agriculture will be able to integrate in multiple fields, promoting the development of green agriculture and ecological agriculture while also promoting their own growth and expansion. Another project currently being undertaken by Donghailong is solar insect-killing lamps. Luo Guohao explained that this kind of insect-killing lamp, combining high-tech photovoltaics, can lure and kill more than 1000 kinds of insect pests across 50 to 100 mu of fields, is environmentally friendly and efficient, and the cost of each lamp is only 10,000 yuan.
Lin Bingying, a professor at Guilin University of Technology, is devoted to researching the integration of photovoltaic power generation and biogas. Lin Bingying believes that biogas has sufficient raw materials in rural areas, and biogas can complement photovoltaic power generation to build a stable and sustainable green power supply system.
Experts believe that the photovoltaic industry's march into the rural market will further promote the development of domestic photovoltaic applications and change the awkward situation of China's photovoltaic industry being “both ends abroad,” especially “application abroad,” and is of great significance for China's energy conservation and emission reduction and for expanding domestic demand.
Li Jingwen, an academician of the Chinese Academy of Engineering, said that China is a major country in energy production and consumption, and energy development is in short supply. Promoting the combination of agriculture and the photovoltaic industry plays an important role in promoting the development of new energy, promoting energy's supporting role for the national economy, and realizing energy conservation and emission reduction.
Sun Yaowei, deputy director of the Policy and Law Department of the State Electricity Regulatory Commission, used “historical progress” to judge the combination of the photovoltaic industry and agriculture: “First, it is a revolution in agricultural industrialization; second, it raises the use of new energy to a new level, and it is of revolutionary significance.”
Industry insiders judge that the total value of the photovoltaic industry entering the rural market exceeds hundreds of millions of yuan. Huge market demand will attract more photovoltaic enterprises to enter, which will rewrite the previous urban-centered market pattern of the photovoltaic industry. (He Fenglun, Wang Qiufeng)