A decade ago one of the CEO’s of a Chinese solar manufacturer told me that “China has no choice but to dominate solar.” I didn’t really believe him at the time as we had just seen the German manufacturer Q-Cells IPO on the German stock market to great fanfare and the technology and the market for solar was all in Germany. Sadly for Q-Cells and the other German manufacturers they never took control of the manufacturing intellectual property and as a result their equipment providers (Centrotherm, Roth & Rau and Meyer Burger) took that know how and built Chinese factories. And it is not a surprise that the only Western manufacturers that are still today successful are Sunpower and FirstSolar both of which controlled their production know-how.
Anyhow, here we are in 2015 and global silicon, wafer, cell and module manufacturing and increasingly inverter manufacturing is all dominated by Chinese manufacturers such as GCL Poly, Trina Solar, Yingli, Samil Power. And they have all done something that no other Chinese companies or industry have done and that is to create international brand names. Yingli and Trina Solar have both sponsored the football world cup and are known across the globe. And it’s all good for solar. Without the Chinese and the massive competition they have created in the solar market we would not have had the 80% reduction in module costs in the last decade.
China is also the biggest market for solar installing a massive 10.5GW last year but it is still does not have the largest installation base for solar. That accolade still rests with Germany which had 36.8GW of installed solar capacity at the end of 2014 as opposed to China with 29.6GW. This however will change following China’s National Energy Administration (NEA) announcement this week of their goal to install 17.8GW of solar this year. This would give China an installed base of 47.4GW making them solar king in every way.
And thanks to the growth in China this year global solar installations are likely to hit 55GW this year which will put it ahead of wind, coal, gas, oil and nuclear in terms of new power generation installations. Meanwhile back in Europe and the US companies like GE, Alstom and Siemens who have dominated power generation for a hundred year have still no clear strategy for solar. As to China they were right to focus on dominating solar. Not only is it good for the Chinese economy, it is good for the environment and thanks to solar millions of people across the world who do not have access to electricity will get it. As to Germany they may not dominate the solar industry anymore but they still have world class businesses such as SMA Solar, Wacker Chemie, Von Ardenne, and research institutes such as the Fraunhofer. And they have lots of zero marginal cost solar in their system which is driving huge changes and innovations in the power markets.