Navigant Research Blog

China Moves Beyond Solar

Anissa Dehamna — August 21, 2013

Solar PV panel manufacturers, who have had a rough few years, have recently had reason to celebrate.  The European Union has reached an agreement with Chinese solar panel exporters to avoid the dumping of cheap, state-subsided panels from China in the European market. For years, European makers have charged that China is subsidizing the manufacture of panels, leading manufacturers to sell below cost and  making it impossible for non-Chinese companies to compete.

China is investing heavily in clean energy, and it doesn’t stop at solar PV.  Total electricity consumption in China was forecast to increase an average of 8% per year between 2010 and 2015.  Energy consumption as a portion of GDP is expected to decrease by 16% per year during the same period.  China has a binding target for renewable energy consumption – in 2010, this target was 8.4% of energy consumed; in 2015, this target is 11.8 % of energy consumed.  Considering the increase in overall energy consumption, this should be a windfall for renewables and technologies, such as wind forecasting and energy storage, that optimize renewables and make the grid more efficient.

China has no intention of importing these technologies; it’s building export industries.  The country is currently executing its 12th Five-Year Plan, and the State Council published the supporting Energy Development Plan in January 2013.  China’s R&D pipeline includes wind, solar thermal, distributed energy generation, and storage.

Only One Winner

China is looking to leverage its lithium ion battery manufacturing base to supply the grid storage market. Chinese energy storage vendor BYD already has 18 projects for its containerized, grid-scale, lithium iron phosphate energy storage product.

According to Navigant Research, the EU market for storage (including applications as varied as bulk storage, ancillary services, community/residential storage, and microgrids) will reach $736 million this year and is expected to grow 10-fold to $7 billion by 2018.  Germany Trade and Invest estimates that the market is much larger, and that the global market for energy storage solely for the purposes of solar PV integration will be worth $17 billion by 2019.  Regardless, the market potential is enormous, and China clearly aims to grab a major share.

Unfortunately for the global economy, everyone loses in this scenario except for China.  Under the recent agreement, Chinese solar PV will have a minimum price, or a price floor.  A price floor is less efficient than letting the market decide the best price for solar panels, but considering that dumping results in a market failure, this is the best Europe can hope for.

European, North American, and Japanese battery firms that are targeting the storage market ‑ including SAFT, Altairnano, and Sony ‑ should beware. China’s coming.

One response to “China Moves Beyond Solar”

  1. shecky vegas says:

    A crappy product at cheap prices.
    What could possibly go wrong?

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