US could be ray of hope for troubled solar sector

An industry awash in capacity as the economic downturn continues to brake demand, the photovoltaic (PV) sector is expected to suffer more than other renewable energy segments in the current market chill.

According to a report released by a US-based research company iSuppli Corp, global revenue for solar PV panels is expected to drop by 20 percent in 2009, marking an end to eight consecutive years of growth.

Industry experts also predict a drop in solar module prices in 2009, while solar startups that grew too fast will feel the squeeze from the tighter market.

Yet the grim outlook may have better prospects on the horizon in the United States, where President Barack Obama's pledge to spend $150 billion over the next 10 years developing alternative energy has fueled new hopes for PV demand.

"Europe has been a leader in consuming solar and renewable energy," said Rob Melnick, executive director of the Institute of Sustainability at Arizona State University.

"But the potential size of the market in US solar and renewable energy will make it the largest at some point very soon, largely because the Obama administration has made that a focus."

Incentives offered by the US government include investment tax credits for solar energy and a $6 billion loan guarantee program for renewable energy projects and manufacturing facilities.

The federal government has also appropriated $5.5 billion from the Federal Buildings Fund to construct, repair and renovate federal buildings to increase energy efficiency, including installing solar energy equipment.

Each state in the US is also offering tax incentives and other measures designed to increase use of solar and renewable energy. All have now set standards for utilities requiring a portion of renewable energy in their portfolios.

As a result the US PV market will "continue to grow very well", said Melnick, who added that today's market gloom might be a blessing in disguise - as the price of PV products falls, new consumers will be able to afford them.

For Chinese PV manufacturers keen on developing new terrain in addition to the established European market - which has also been immersed by the economic downturn - the US be a silver lining.

"We see the US market as on the cusp of enormous growth," said Steven Chan, chief strategy officer of Suntech Power Holdings Co, Ltd, the world's leading manufacturer of PV modules.

"An increasing number of states have adopted initiatives to promote the expansion of solar and other renewable energy technologies, and there is broad public support across the political spectrum for a new direction in national energy policy that will drive demand for clean technologies," he said.

Since the last half of 2008, Suntech has been blazing a path of expansion in the US. It has increased its dealer network to more than 100 in a bid to increase penetration into the residential rooftop and small commercial solar markets while building brand recognition with downstream solar integrators, according to Rory Macpherson, Suntech investor relations director.

It has also acquired EI Solutions, a California commercial solar system integration company. Suntech said the acquisition will enable the company to provide complete solar solutions to commercial, utility and government customers in the US.

The company has also established a joint venture with MMA Renewable Ventures - called Gemini Solar Development Co LLC - which was recently selected to build a 30-mW photovoltaic power plant for Austin Energy, a municipal utility in Austin, Texas.

Suntech now plans to triple sales to the US in 2009, according to a recent company press release.

A further sign of confidence in the US market is a plan the company is considering to manufacture in the US, to be closer to customers and reduce shipping costs. It expects to more than double its US business to 15 percent of its total.

Yet Li Junfeng, deputy-director general of the Energy Research Institute of the National Development and Reform Commission, remains wary of too much optimism by Chinese producers, saying he is concerned with the "Buy American" clause in the country's $819 billion stimulus package.

"Personally I think it's still not clear whether it will mean great opportunities for Chinese PV manufacturers if US goes ahead with such trade protectionism," Li said.

But industry insiders do agree on one aspect - that quality will be the key to sustained growth for Chinese PV producers in their global expansion.

Ralf Wilde, executive vice-president of TUV Rheinland Holding AG, a PV testing and certification company from Germany, said Chinese PV manufacturers need to look more at their product quality and performance to increase international competitiveness.

He said his company is now helping Chinese PV products sharpen their competitive edge by ensuring their products have a long life.

TUV Rheinland now operates a PV testing lab in Shanghai and has joined forces with Arizona State University to create a network for PV product testing that includes Asia, Europe and North America.

"However long this financial crisis will be, when American consumers start to consume (solar energy) in large quantities, they will definitely look for the best quality products," said Melnick. "It stands to reason companies that subject themselves to the exacting standards of TUV will get a bigger market share and export more to the US."

"The fundamental reason people use renewable energy is that the planet will not survive without much greater use of wind, solar and biofuel," said Melnick. "We just simply can't. So despite the downturn, there are factors that will continue to propel the industry."

(China Daily 04/06/2009 page3)