On Tuesday, the announcement that U.S.-based First Solar and the Chinese government will partner to build a 2GW photovoltaic (PV) power plant Ordos New Energy Demonstration Zone in China, sent shockwaves of excitement through the solar and clean energy communities.
The memorandum of understanding, which both companies signed on Tuesday, sets the stage for the construction of the world’s largest PV power plant to be completed by 2019.
According to the New York Times the plant is part of a planned 11,950-megawatt renewable-energy park slated for this region of Mongolia, that “would generate enough electricity to power about three million Chinese homes.”
Scheduled to be built in phases, construction on the first 30 MW piece of the project is slated to begin June 1, 2010. Yet, despite the plans issued in the MOU, the financial aspects of the agreement are foggy at best. More detailed financial plans are pending Chinese action on a renewable energy feed-in tariff that would offer a premium on renewable-energy generated electricity thus allowing the costs of the PV power plant project to be significantly lower than an identical project in the U.S.
First Solar is based in Tempe, Arizona however this agreement would allow it to build a thin-film solar panel factory in China and open the company to what promises to be a hugely profitable Chinese market. While First Solar stands to gain market share and turn a considerable profit from this partnership, in terms of job creation, moving the supply chain expansion to Asia means not many more manufacturing jobs will be created in the U.S.
As many debate the implications of a China’s cleantech competitiveness, some see this partnership as a truce between two of the biggest competitors, but in terms of solar RD&D, significant government support combined with this strategic collaboration will only give China more of an edge.
The NY Times quotes Nathaniel Bullard, a solar analyst at New Energy Finance, as commenting:
“Given that China has built up homegrown companies like Suntech, it’s quite significant that they’re importing a U.S. world leader to the marketplace…This is going to help ensure technological leadership and not just manufacturing leadership.”
Furthermore, First Solar CEO Michael Ahearn believes it is likely that a Chinese utility will own and manage the plant.
The success of this colossal solar project and its implications for the future of solar energy are still uncertain. In addition to establishing a supply chain in China, First Solar must successfully train inexperienced Chinese contractors in solar construction as well as establish a transmission system to connect the 16,000-acre solar power plant to the grid.
Still, China’s government policies to incentivize clean energy investment as well as its massive direct investment in the solar industry dwarf America’s parallel efforts. If this project is completed and First Solar does not find comparable demand in the U.S. solar market, it may be trading in its digs in the desiccated landscape of Arizona for an equally dry piece of real estate in the Mongolian Desert.
Sources: New York Times, The Phoenix Sun
Image Credit: Langalex on Flickr under a Creative Commons license
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