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China Poised To Lose Solar Top Spot To Japan… Maybe

China has been losing steam on ways to achieve its annual solar targets. With Japan coming up strongly, there is a real chance that the former may not be the leading solar installer this year.

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China had set itself a target to install 14 GW solar PV this year. However, due to delays and postponements in projects, the country does not seem to have enough time at hand to pursue it.

Li Junfeng, Director General of the National Center for Climate Change Strategy and International Cooperation, shared in an interview that China may “only” be able to add slightly more than 10 GW of solar PV this year. As per forecasts from Bloomberg, Japan on the other hand is all set to achieve 10.3 GW to 11.9 GW in 2014.

Early this year, the Chinese National Energy Administration (NEA) had set ambitious annual targets of 6 GW from ground-mounted projects and 8 GW from distributed projects. However, in June, these targets were revised to a more realistic 10 GW (total). In August, buoyed by the confidence that supporting policies to be launched in September would tackle problem areas and help boost installations, targets were raised back to 13 GW.

Wang Xiaoting, an analyst with Bloomberg New Energy Finance (BNEF), said that the delays pose a higher risk to China’s small panel producers, who are heavily dependent on the domestic demand for their growth. Bigger producers such as Yingli and Trina, among others, have diversified into higher-price markets and are thus likely to remain relatively unaffected.

A higher share was allotted to distributed systems so as to relieve power transmission bottlenecks in the sparsely populated but solar-rich northern regions. BNEF suggests that policymakers in China have purposely delayed the larger utility-scale projects so as to favour more solar rooftop installations, following a push to boost distributed solar power.

Between January and September this year, only 3.79 GW of solar power capacity were added in China, which includes 2.45 GW ground-mounted capacity and 1.34 GW distributed capacity. During this period, Jiangsu, Xinjiang, and Zhejiang were reported to be the leading provinces in terms of installed capacity. Together, these provinces added 1.56 GW capacity, accounting for over 40% of the total capacity installed across China. However, in the third quarter, only 0.34 GW of distributed projects and 0.15 GW of ground-mounted ones came online.

Wang Sicheng, a senior researcher at the Energy Research Institute of the National Development and Reform Commission (NDRC, China) explains that one of the main reasons for the lower-than-planned installations is due to the lower power prices for residential consumers, which result in low returns from distributed solar projects. There are also financing issues.

However, he adds that a target of 14 GW could still be reached, but the split (large-scale vs distributed) would be very different from what was intended by the government. Sicheng expects that 10 GW ground-mounted and 4 GW distributed capacity could be added cumulatively by the end of this year.

Japan, on the other hand, has poured over $30 billion to tap solar power in a single year. Even though availability of land is a problem area, more than half of the solar installations are expected to come up via utility-scale plants. But Japan has had its own fair share of solar woes.

A 2012 law requires power companies to buy electricity from approved solar projects at rates well above what they pay for electricity from other sources. Naturally, this led investors to rush into solar power and take advantage of the high feed-in tariffs.

At least five of the Japanese utilities were said to be restricting the access of new solar farms to their grids, stating that the two years of rapid expansion has strained their capacity to absorb all of the solar power. The Japanese government has said it would investigate this matter.

Representative of the utilities, however, said they were continuing to accept solar power from smaller installations of capacity less than 10 kW. A Kyushu Electric spokesperson said that the company would be ready to work with new solar facilities if they use storage batteries to prevent a sudden surge of electricity into the grid.

But considering that China has been be “difficult to forecast,” it is still too early to put your money on Japan. Despite predictions all through 2013 suggesting that Japan would walk away the dominant solar PV market, China “outstripped even the most optimistic forecasts” to install a record 12 GW of photovoltaic projects in 2013. So much so that it installed more solar power in 2013 than USA had in its lifetime!

The fourth quarter is traditionally the peak installation season for solar and wind farms in China. As per Bloomberg, the last three months in 2013 accounted for almost 70% of annual installations for the whole of 2013 as developers were in a frenzy to push installations ahead of a tariff cut.

China is aiming to increase its solar capacity five-fold to 100 GW as part of its 2016-2020 five-year plan on energy. China can reach a 26% renewables share in its energy mix in 2030 with annual spending of $145 billion (€117 billion) over the next 15 years, the International Renewable Energy Agency (IRENA) calculates.

Image Credit: Sun dragon via Shutterstock

 
 
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is a Fellow with The Energy and Resources Institute (TERI, New Delhi). He tweets at @indiasolarpost. Views and opinion if any, are his own.

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