11 January 2006


Interview with Emil ter Horst; PV consultant

What are your experiences in the Chinese PV market?

I have been involved in the preparation of the WorldBank/GEF/NDRC China Renewable Energy Development Project in 1998 and 1999. Since 2002 until the end of this year I have assisted the Chinese project management office (PMO-REDP) in the selection and evaluation of Technology Improvement proposals and projects in this project.


What are the major developments and the achievements made in the Chinese PV programme so far?

Though China had a moderate but interesting and unique market of rural PV systems (very small Solar Home Systems of 10 to 40 Wp) around 2000, the quality of the PV products and the professionalism of the PV industry was rather poor. On the other hand, there was strong attention in the academic sector and among engineers for PV, which was the basis for the development we have since seen.

The REDP and other programmes have been really successful, leading to a lower price of Solar Home Systems at a much higher quality. At the same time the professionalism of the Chinese PV industry improved; the market was growing while the general attention to PV and renewable energy was raised.

Some of the relevant policy drivers in China are:

– The diversification policy and the lowering of the dependency on oil and coal;

– To bring electricity to the rural western provinces in China;

– To become a world market player in this future gigantic market.


Given your broad experience and long track record in the international PV market, how would you qualify the recent developments of the Chinese PV industry?

After the jumpstart in the first years of this decade, we have lately seen that financial powerful and strong industries have started to invest in PV. They have been especially interested in the export to Germany and Japan and in larger market segments in China.

Since 2004, the announcements for new PV production capacity were extremely high in China (PRC). In 2005 there was a >100 MWp production capacity, while the real production was about 50 MWp. For 2007 a > 750 MWp production capacity is to be expected, making China already at the end of this decade a world player in PV production.


What do foreign people absolutely have to know when they consider starting business activities in China or with Chinese PV companies?

First of course: general things such as finding a good synergy between your business style and the Chinese business culture. In China it is important to build up long-lasting and reliable business relations but, more importantly, you and your potential cooperation partners should really offer complimentary strengths. The Chinese industry is so competitive internally that I do not know many Chinese companies who have the time to cooperate with foreign companies if it is not really useful.  Of course there are many other interesting ways to do business with Chinese PV companies.

If you want to sell in the Chinese PV market, assess your market carefully, as the Chinese market differs from others markets, and, more importantly, this market is changing rapidly. One of the striking differences between the Western and Chinese markets that I have seen is that the low-end of the Chinese market is often very differentiated and the high-end a lot less, while in Western countries this is often the other way around.


What are your experiences with the quality level of Chinese PV modules and products?

The quality level has risen drastically in 6 years time, but you still see a lot of bad products in the local Chinese markets. If you produce or buy products in China you have to define your quality level very carefully. In general, many PV companies easily reach the international state-of-the-art levels but you have to ensure that you get this quality level.


Do you expect the Chinese domestic PV market to grow rapidly the coming years, or will export and OEM production remain dominant for the Chinese PV industry?

I expect the Chinese domestic PV market to be a bit unstable in the coming years until 2010. The rural market will suffer from the higher PV cell and module prices, while non-rural markets are expected to grow rapidly also due to governmental incentives and programmes. However, the impact of these incentives is always difficult to predict. The Chinese domestic PV market might grow from 1-2% of the global market in 2003 to double this by 2010. Meanwhile the Chinese PV production capacity will be at least tenfold of that in 2003 (when the Chinese industry was more or less only producing for the local markets) in 2007/8.


The Chinese government seems to have serious plans with large desert power plants (100 of 10 MWp; 8 till 2010 and 92 in the period from 2010-2020). What will be the most important market segments in the Chinese PV market in the coming years?

The most important PV market segment in the coming 10 years will still be the rural market consisting of two main market segments: the village power market (>100 MWp) and the market of very dispersed Solar Home Systems. After 2015, the market of grid-connected systems will become quickly the most important consisting of the market for PV in the built environment and the market of large desert power plants. Due to geopolitical constraints (China has the Gobi desert "available"), I expect China to play a leading role in this area.


What do you know of the Shanghai 100,000 roof programme and what do you expect the Renewable Energy Law will mean for the PV market?

The "Renewable Energy Law" was approved in February last year and has been actively enforced since this year. The effect for the development of the PV market is not yet clear. The law is inspired by the German “Renewable Energy Sources Act” (EEG), but the feed-in tariff for PV is substantially lower and, therefore, the feed-in tariff on its own is not cost-effective for PV.

On the other hand, I expect other policy measures to help, such as preferential tax and loans as well as specific incentives for PV on buildings. I also think that provincial incentives/policies such as the Shanghai 100,000 roof programme will be decisive for the prevalent PV market segment in the province.


What will be the major challenge in the Chinese PV market and for the Chinese PV industry?

For the Chinese rural PV market the main challenge will be to educate the consumers such that they choose more and more for the best price/performance PV systems instead of the cheapest. It will be a challenge for the PV industry (not only in China though) to give serious attention to this important but somewhat smaller market segment in the future.

For the market segment of grid-connected building integrated PV systems, the challenge is to play a suitable role in the global PV theatre, developing new concepts specially adapted to the Chinese situation such as shading systems in public spaces such as parks and standardised PV systems for suburbs making it possible for citizens to consume more energy and enjoy more comfort (e.g. for air-conditioning) without putting undue pressure on the energy supply and oil imports.

For the market segment of large PV central power plants, the challenge is to find good cooperation partners during development, thus, preparing a forerunner role for China as soon as these systems are viable.

The Chinese PV industry's main general challenge will be not only to reach and consolidate a level at an international state-of-the-art level concerning production technology, but to go one step further and have a forerunner role in the development of the next generation of solar cell technologies.


Thank you for the interview!

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