|CHINA'S GROWING ROLE IN THE GLOBAL SOLAR POWER INDUSTRY|
Oranjestad, October 22, 2013 - Solar energy is poised to play a larger role in the global energy mix in the coming years. In the decade to 2010, solar’s share of the global electricity power generation increased from almost zero to 0.15%. By 2020, the International Energy Agency predicts this will increase to 1.18% of the global total – a ten-fold rise.
That will be part of an overall increase in the contribution from renewable energy sources – including solar, wind, hydro, biomass and others — to global power generation to 25% of the total mix in 2020 from 20% in 2010, the IEA says.
It’s our view that solar’s share of that total may be underestimated by the IEA because the learning curve for solar has proved to be faster than expected in the past decade. Technology change will be fueled by policy support from governments and capital from investors. Solar stands out among all energy sources because of its virtually unlimited supply.
The IEA’s current projection for solar’s rise in the global energy mix masks what will be some important changes in solar production that will give China a much more important global role in the industry in the coming years. Until recently, solar installations were concentrated in Germany and Italy due to strong policy support. For this decade, installations in Japan, the U.S., Latin America and especially China are now expected to grow faster.
Specifically, China plans to add 10 gigawatts of solar capacity each year in the 2013-15 period. Its goal of having 35 gigawatts of installed solar power capacity by the end of 2015 is seven times the five gigawatts it had installed at the end of 2012, and is more than the 32 gigawatts that Germany – the world’s largest player– had installed at the end of 2012. The U.S., by contrast, had only seven gigawatts of installed solar power at the end of 2012, not much more than China. China, in part using subsidies as an incentive, will account for a third of new solar capacity between 2013 and 2015.
China’s rapidly growing solar energy market at home will help its manufacturers to stay competitive in the current round of global consolidation, and better position them to capture opportunities from global markets. Chinese solar manufacturers that are focused on silicon technologies such as Trina and Yingli or newer thin-film entrants like Hanergy can significantly improve their existing technology through acquisitions of innovative or even disruptive technology from Western countries. Chinese manufacturers are also well positioned to bring down production and research costs and accelerate a move toward an era expected in 5-7 years when solar will not require any subsidies to be profitable.
The rising role and attention on solar today has a larger importance beyond China. The role of solar in the future may have a disruptive impact on the way electricity is generated and used, making it a catalyst for the transformation of the power industry. Growing amounts of solar power produced in individual buildings and homes appear increasingly likely to give consumers the option of generating their own power. This potential is already increasing investments in new types of storage technology, smart grids, electric vehicles, and other innovations. Solar’s share of the total global power market today is small, but that understates its potential importance in the foreseeable future.