Wednesday, December 5, 2012

To Save Solar Companies, China Considers Creating Its Own Demand

The Chinese solar panel manufacturing business is in the dumps. It’s a — dark time — for companies making a living off high tech photovoltaic panels used for capturing the sun’s energy. Most of it is due to major cuts in European demand, thanks to reductions in government spending on green ambitions there.
Select cities in coastal China to add solar energy to their
power grid in attempt to save the nation's private solar
panel makers from going out of business.

In the U.S., anti-dumping and other protectionist measures have kept China at bay for now.

That’s crushed China solar stocks. Many are trading in the single digits. Some are now penny stocks, like JA Solar Holdings (JASO), a panel maker in Shanghai. JASO is trading under $1 a share and is down 84 percent since it launched in February 2007.

China is not going to sit around for the “free market” to save what it deems as an important sector of the future economy. And on Thursday, the National Energy Administration asked state provinces to submit plans by Oct. 15 on ways they can implement a pilot program for adding solar power to their energy grid.

The National Energy Administration recently asked all provinces to submit by October 15 their plans on implementing a pilot program for the so-called distributed photovoltaic power generation, the China Securities Journal reported Wednesday.

Shanghai, Beijing, Tianjin, and other coastal states are said to be taking part in a pilot program, creating demand from local governments to increase solar power in their energy matrix. Even though China is the world’s largest producer of solar panels, less than 1 percent of the country is powered by solar.

China’s solar industry has become dependent on Europe. As a result of subsidy cuts and lackluster demand in countries like Germany, France and Italy, many names in the industry have been suffering from a supply gut. Companies like Suntech Power Holdings (STP) and Trina Solar (TSL) have been trimming their workforce as a result.

To add insult to injury, the European Union is investigating anti-dumping instances with some China solar makers, following the U.S. decision earlier this year to slap punitive import duties on photovoltaic panels Made in China.


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