Drought, floods, typhoon. Solar boom next?

Drought, floods, typhoon. Solar boom next?

Several regions of China are in the grip of extreme
weather conditions. We’ve also seen disastrous storms in South Korea and the
Philippines. Now China announces it will introduce a national feed-in tariff
for solar energy. This clean energy commitment will help solar costs to
continue to fall. Along with energy efficiency measures taking hold and
economic growth slowing, then solar – along with hydro, offshore and onshore
wind – could be accounting for nearly all of the new-build energy plants by the
end of the decade.

Straits Times (6 August 2011):

China hit by floods and drought, with typhoon

Beijing: Several regions of China are in the
grip of extreme weather conditions, according to reports yesterday.

Floodwaters from a river in the south-western
province of Sichuan forced thousands to evacuate while residents in nearby
Hunan province face severe shortages of water for drinking and crops, state
media said.

The authorities, in the meantime, are bracing
themselves for one of the most powerful typhoons in recent years to hit the
country’s east coast.

Typhoon Muifa, packing winds of up to 162kmh,
is expected to make landfall at the weekend.

The National Meteorological Centre said the
typhoon is forecast to land in Zhejiang or Jiangsu province, both of which
neighbour Shanghai, this evening or tomorrow.

Heavy rain has already battered an area in
Sichuan province where at least 2,381 homes collapsed after Zhouhe river near
Dazhou city in Sichuan overflowed.

More than 13,000 people were evacuated, the
official Xinhua news agency reported.

Xinhua said injuries are limited but that
roads and power have been cut off in the region, which frequently suffers from

In a separate article, the news agency said
400,000 rural residents in the city of Huaihua in central Hunan province, about
500km away from Dazhou, are suffering from a lingering drought.

The drought has destroyed 140,000ha of
cropland, dried up 1,200 wells and will seriously impair the autumn grain
output, it said, citing the regional authorities.

The local authorities have induced artificial
rain and allocated special funds to combat the disaster, in addition to
dispatching water trucks and relief supplies to the drought-plagued areas, said
a spokesman with the Huaihua Municipal Flood Control and Drought Relief

A lingering drought has also left thousands
of people and livestock short of drinking water in Zhaotong, Yunnan province,
according to the local authorities.

China frequently suffers from episodes of
extreme weather conditions.

More than 100 people were killed after months
of drought and weeks of heavy rain in June caused flooding and landslides in
the southern and central parts of the country.

Source: www.straitstimes.com


China’s great big solar boost

Giles Parkinson, Climate Spectator (5 August

Hidden away in a government gazette this week
was an announcement that China would introduce a national feed-in tariff for
solar energy. It took a day or two for the significance to dawn on the market,
but it is now being viewed by analysts in an industry full of landmark
developments as possibly the biggest of them all.

China has, in recent years, come to dominate
the global market for solar panels, but it has so far installed little in its
country – just 0.8 gigawatts in a grid that has grown to nearly 1,000GW. It has
preferred to use the world market – which has grown to more than 40GW of
installed solar capacity – as its test tube, and to refine its products.

And, it has also been conscious of the
problems of its wind industry, which grew so quickly that many turbines were
either of sub-standard quality or could not be connected to the grid, and it
has learned carefully from those failures. Now, it seems, it is prepared to hit
the “Go” button.

China does have more than 100 million homes
that use solar hot water, but unlike other countries, China’s solar market is
expected to be dominated by utility-scale projects rather than rooftop panels,
as most people live in units and apartments. And rather than jumping in with
huge projects as their first investment, as is occurring in Australia, the
Chinese have been keen to understand what works and what doesn’t.

Over the past few years, China has been
testing various solar tariffs on a regional or on a strictly targeted basis –
offering incentives for a series of utility-scale solar projects that have
started at modest size and have gradually been scaled up – 1MW, 5MW, 10MW and
then 20MW – before now being rolled out on a national scale.

The structure of the tariff is also
fascinating. At 1.15 renmimbi/kwh ($A0.16) for projects approved before July 1
and falling to 1 RMB for projects approved since then, the tariff is the lowest
national tariff in the world. Clearly, China does not think it needs much to
kick start the domestic solar industry. There are several reasons for this.

The cost of solar has dropped so rapidly in
the past two years that solar is now thought to be already competitive with
wind in many regions in China, some of which have excellent solar radiation,
particularly in the western desert regions. These regions can produce solar
energy at double the efficiency of other regions. China also needs a smaller
tariff than other countries because of lower labour costs and supply chain
advantages (they make the stuff there).

And it is also close to parity with
coal-fired power for local industrial users who, unlike other countries, pay a
significantly higher tariff than individual consumers. According to one report,
LDK Solar, China’s most integrated solar energy company, expects the levelised
cost of energy of its solar modules to fall below average grid levels in China
to around $US0.07/kwh in 2012. It’s a massive irony, and an amazing opportunity
for the solar industry that the (coal-fired) electricity used by companies such
as LDK and Jinko Solar to make their modules is already more expensive than the
energy produced from those modules.

is expected to translate into a dramatic lift in production that will rival
that of wind – where China went from a standing start in 2005 to the number one
installer in 2010, with 17.5GW. In 2008, only 40MW of solar was installed in
China. In 2011 that is expected to reach 1GW, double in 2012, and by 2015 the
installation rate is expected to ramp up to 10GW a year. Given its
competitiveness with wind, some analysts expect it to match and overtake the
annual wind installation rate of 15GW, which is by far the largest in the

“They have wanted to do a controlled ramp
up,” says Tim Buckley, an investment manager with clean energy fund Arkx, which
invests in China solar companies. “They have got huge aspirations, I think the
growth will mirror wind. With wind they went too early, but with solar they now
have the best technology in the world.”

Analysts say the China decision effectively
underwrites the growth of the market. IMS Research upgraded its forecast for
China in 2012 by 1GW after the tariff announcement. Germany, which has been
growing at 7-8GW a year, is about to reach congestion point and is expected to
fall to around 3-4GW. Other European countries such as Italy, France and the
Czech Republic are also tapering off as tariffs are wound back. The US market,
underpinned by government loan guarantees, has been one of the few bright

Analysts believe the surge in domestic demand
in China also means that costs will continue to fall. Module prices are coming
down rapidly – falling by 20 per cent for each doubling in demand, and GCL, a
Hong Kong listed Chinese company that has suddenly emerged as the world’s
biggest supplier of poly-silicon, and is expected to deliver it at a price of
$40 a kilo in 2012, around half of the price in 2010 and one tenth of the price
in 2008.

“The economics of the varying power
generation alternatives have been changing rapidly, however, and solar power is
close to rivalling industrial as well as wind power grid pricing,” the website
Seeking Alpha wrote in an analysis. “China’s annual wind market alone is double
Germany’s record solar market in 2010. Thus it would not be unreasonable to
assume China’s solar demand could reach similar levels once the cost economies

Buckley believes that the economics of solar
projects in China will become irresistible in the next three to five years.
Analysts estimate that at the current tariff, project developers can bank on an
internal rate of return of up to 10 per cent over 15-25 years. With long-term
power purchase agreements, that’s enough to attract 80 per cent debt funding
for projects. “And once you get to grid parity, solar technology development
does not just stop,” Buckley said. “Solar plants with an operating margin of 80
per cent. Parity dramatically changes the dynamics of energy pricing and it
will drive average energy prices down over time. It potentially pushes coal
from being the lowest cost baseload supplier of energy to being the marginal
supply because of its high raw material costs.”

Having started small, the scale of some of
the projects being contemplated in China is enormous. The US firm First Solar,
which makes thin-film solar panels rather than silicon-based panels, is
planning one project of 2GW in inner Mongolia. It will likely be the size of

Still, even at a rate of 15GW a year, solar
would remain a fraction of the 100GW that China plans to add each year to its
national grid to meet soaring demand. But, if solar’s costs continue to fall,
energy efficiency measures take hold, and economic growth slows, then solar –
along with hydro, offshore wind and onshore wind – could be accounting for
nearly all of the new-build energy plants by the end of the decade. The most
obvious victim is coal. That, in turn, could have significant implications for
major coal exporters such as Australia.

Source: www.climatespectator.com.au

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