Grim long term view
The outlook for European solar and renewable energy manufacturing are very grim if Chinese underpriced products continue to flood the European and global markets.
Five year plan
China's long term ambitions to become the global leader in PV solar production are clearly stated in the current five-year plan. A Five-Year Plan is a key element in state central planning first implemented in the Soviet Union and other countries. The ‘Plan’ regulates the allocation of resources among different industries and sets rules for redistribution. The People’s Republic of China uses central plans since 1953. People’s Republic of China 12th Five-year-Plan currently in force is valid for 2011 to 2015 and contains a specific sector plan for the photovoltaic industry. It sets ambitious goals:
- Silicon companies will produce 50,000 tons a year and leading cell manufacturers will exceed the five-gigawatt mark. The government expects that the largest PV company will generate revenues of 100 billion Yuan, over € 12.5 billion, by the end of this five-year plan. In addition, there is the requirement that at least 50 percent of the materials used in manufacture must be from China.
- The Five-Year plan also sets goals for production costs for the next decade. Costs per kilowatt, with which a module is manufactured, converted to Euros, are set to be lowered to € 0.87 per kilowatt by 2015. By 2020, the goal is to manufacture at only € 0.62 per kilowatt. It may sound realistic, however it does not explain why you can already buy Chinese modules for € 0.47 in Europe today.
It is obvious that the Chinese government is not going to easily give up on its ambitions to support national PV solar production in the future. China has already invested huge resources in the PV plan, and has many more to allocate to further the goals set out in the Five-Year Plan.
Chinese monopoly in all renewable energies?
The Solar PV industry is not the only industry in trouble. China is also endangering other European producers of renewable energy materials and systems, such as wind turbines. If Europe doesn’t act now, soon one key industry after another will cease to exist in Europe.
Denmark’s Vestas, the world’s largest manufacturer of wind turbines, made a loss last year for the first time since 2005. Its market share has dropped from 28 percent in 2007 to just 12.9 percent last year. Four of the top 10 turbine producers are now Chinese, including second place Goldwind. Source Global Post April 7, 2012
Two Chinese wind turbine makers are looking into launching takeover bids for world number one Vestas Wind Systems, according to Danish daily Jyllands-Posten. China's second-biggest wind turbine maker Xinjiang Goldwind Science & Technology Co and Sinovel Wind Group have discussed the possibility with a number of corporate bankers after a plunge in Vestas' shares, Jyllands-Posten said, citing unidentified Danish corporate financiers. Source Reuters 16 April 2012