China Hunger for Clean Energy to Leave No Rooftop Behind

Nov. 13 (Bloomberg) — China, the world’s biggest solar
market for two years running, is pushing to install more panels
at factories, schools and even greenhouses as it seeks to meet
its goals under a historic climate agreement with the U.S.

China expects to install as much as 8 gigawatts of small
solar systems this year, more than 10 times what was built last
year. The country had almost 20 gigawatts of solar capacity at
the end of 2013, a figure comparable to about 20 nuclear
reactors. Most of that came from massive solar farms in remote
locations and policy makers are now promoting smaller systems
closer to where they’re needed.

The push to promote wider use of rooftop solar comes amid
growing health concerns tied to smog within its own population
and from foreign companies. It also adds to the nation’s push to
be a leader within the global climate community.

The figures show the changes. Coal made up 64 percent of
China’s electricity mix in 2013, down from 68 percent in 2010,
according to Bloomberg data. Solar’s proportion of electricity
generation capacity rose to 2 percent, from 0.08 percent four
years ago, doubling nuclear power’s share last year.

“Solar is actually the most attractive when you do rooftop
because it eliminates transmission and distribution
investment,” said Ahmad Chatila, chief executive officer of St.
Peters, Missouri-based SunEdison Inc.

Dirtiest Air

Producing so much power in isolated areas creates
bottlenecks in the grid. So-called distributed power, smaller
systems installed locally, eliminates the need for costly
transmission cables and will speed the country’s transition away
from the coal-fired power plants that help create some of the
world’s dirtiest air.

SunEdison is in talks with a Chinese partner to build a
factory in the country and agreed last month to jointly create a
$220 million fund to develop as much as 1 gigawatt of solar
projects there. China’s distributed solar market is going to be
“enormous,” Chatila said.

China’s National Energy Administration introduced policies
in September aimed at boosting the use of distributed solar
power. Companies both in China and in other regions are
responding. For instance, Solar Power Inc., a U.S. developer
backed by the Chinese manufacturer LDK Solar Co., said it would
build 19 megawatts of rooftop systems in Shandong.

The country installed about 13 gigawatts of panels last
year, almost matching the total amount of solar power in
operation in the U.S., and 94 percent of that capacity came from
utility-scale projects.

Identifying Sites

The agency asked local authorities to identify potential
sites for rooftop plants and smaller, ground-mounted projects.
These would include industrial and commercial companies with
large rooftops, and public buildings such as railway stations
and airport terminals. China has set a goal of installing 8
gigawatts of small systems this year and 6 gigawatts for larger

Distributed solar will look different in China, where land
is state-owned and single-family houses are still relatively
rare. While homeowners are driving the rooftop solar market in
the U.S. and Europe, panels in China will be mostly found atop
industrial and commercial buildings, as well as vacant lots,
greenhouses, intertidal zones and the empty spaces around
fishponds and lakes.

Solar Bankruptcies

China is expected to add as much as 8 gigawatts of
distributed solar systems in 2015, out of 15 gigawatts of total
photovoltaic power, according to Bloomberg New Energy Finance.

That forecast has China installing in one year about twice
as many panels atop factories, office buildings and other
distributed sites as there are currently in operation in
Australia, one of the world’s sunniest countries.

Chinese manufacturers sold about $5 billion of shares from
2005 to 2010, and wrested control of the market from companies
in the U.S., Germany and Japan. The added capacity drove down
prices and pushed dozens of manufacturers into bankruptcy. Solar
panels sell for 72 cents a watt now, compared with $2.01 at the
end of 2010. The price has slipped 12 percent this year.

“Beijing’s solar policy of concentrating on distributed
generation with ongoing tweaks to make it more effective is
actually very solid in the mid- to long-term,” said Charles Yonts, head of sustainable research at brokerage CLSA Asia-Pacific Markets in Hong Kong.

More Projects

JinkoSolar Holding Co., China’s third-largest panel maker,
arranged in July as much as 1 billion yuan ($161 million) in
financing from China Minsheng Banking Corp. for distributed
solar. An 88.8 million-yuan loan for a 20-megawatt rooftop solar
project in Zhejiang province will be the first under the
agreement. JinkoSolar is planning three more projects of
comparable size in Jiaxing, also in Zhejiang province.

“Policies are relatively good, and companies are competing
for rooftop space,” said Sebastian Liu, Jinko’s director of
investor relations. Rooftop projects will account for a third of
Jinko’s developments in 2015, up from 10 percent this year.

“Investors have hesitated to start projects in the past
because returns weren’t clear,” said Meng Xiangan, vice
chairman of the China Renewable Energy Society, which acts as a
liaison between the government and industry. Developers “should
grasp the opportunities favorable for distributed projects to
install more panels.”

To contact Bloomberg News staff for this story:
Feifei Shen in Beijing at

To contact the editors responsible for this story:
Reed Landberg at
Iain Wilson, Keith Gosman

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