Made for China

Guest post by chinadialogue intern Cao Jun

After years’ suffering from energy shortages, pollution, mining accidents and increasing international tension as a result of decades of around two-digit economic growth, China has been committing itself to a transition. Starting from the 11th Five-Year Plan, favourable policies have been given to industries related to renewable energies and, as a result, huge PV production sites such as the “Solar Valley” in Shandong Province or the “PV Three Gorges” in Anhui Province kept springing up. PV Production will hit 7,000 to 8,000 megawatts this year from last year’s 4,011 megawatts, more than half of the world’s total, said Shi Dinghuan, president of the China Renewable Energy Society, during a recent conference.

However, until now, China’s photovoltaic industry has not been so high-tech, but another labor-intensive export, just like most other “made in China” industries. During a press conference of the Second PV Summit Asia held in March this year, Sun Guangbin, Solar PV branch head of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), said that 98% of solar PV sales are from export, mainly through processing trade of solar cells and batteries to developed countries with demand and energy subsidies.

And it hasn’t been that green either. Using solar energy itself is relatively pollution free, but the production of solar panels could be quite energy consuming and polluting in China, given the fact that not many Chinese manufacturers have access to advanced techniques for processing silicon tetrachloride or disposing of waste. In 2008, the Washington Post published a piece investigating polysilicon manufacturing companies that was dumping toxic chemicals into local ground and water, and such practices were nothing uncommon among small plants. At the same time, according to Sun, less than 2% of the overall production was domestically installed.

Now the Chinese government has decided to fix the missing links in China’s solar-power chain. A US$1.5 trillion investment is being considered with focus on strategic industries, including alternative energy, to free the country from low-end and dirty manufacturing. And more incentives would be given to transform China into a consumer rather than producer of solar power. On the December 2, a joint meeting of four ministries was held to encourage PV application in China. Pilot programs such as the “Golden Sun” focusing on PV power generation and “Building Integrated Photovoltaics” (BIPV) programme will expand aggressively in the next two years, all supported by fiscal subsidies.

This is just the beginning and solar technology remains a long way from commercial viability, especially in China. More incentives will be needed, not only for PV installation, but also for the grid, businesses and ordinary people to use it, like Germany’s Feed-in Tariffs or Spain’s Real Decreto. And more regulation is necessary, as China’s macro-controlled economy has a tendency to over-correct mistakes, creating new ones in the process.