China’s progress from being bit player to the very centre of global PV sector has been breathtaking in its speed. First as component manufacturer, then project developer and now with the world-leading end market, China’s influence on the global PV marketplace has never been greater.
Frank Haugwitz from Asia Clean Energy Advisory Co. (AECEA) observes that Chinese solar companies are hungrily eyeing opportunities being presented by Australian state government tenders, and are well placed to develop hybrid arrays and agricultural-PV applications.
pv magazine: It’s a huge, huge number. In 2017 China looks set to install close to 50 GW of PV. This is equal to the global annual market back only a few years ago in 2013. With this level of surging demand at home, does this dampen the interest of Chinese companies in foreign markets, either as a supplier or as project developer?
Frank Haugwitz: It is not that the Chinese market is not without any constraints or challenges. You have annual FIT reductions, the FIT payments are being delayed up to two years, and there are various problems as projects can be subject to massive grid curtailment.
For some companies, it is not that the Chinese market is too small, it is just that outside of China there is more transparency, more predictability, better risk assessment, stronger regulative framework, and changes within that framework are easier to anticipate. That basically translates to a steady stream of revenues for the developers. Not the kind of ‘solarcoaster’ development that you do have in China.
What markets in particular are the Chinese companies looking at?
Markets along the One Belt and One Road initiative, and that is potentially 60-plus markets across Southeast Asia, Central and South Asia and down to Africa. [Under the initiative] solar projects have been developed countries like Pakistan in particular, there are also projects in Sri Lanka and the eastern part of Africa.
Simply looking at the government tenders across the Middle East, there are a huge number of Chinese companies bidding for these projects. In Argentina – with the second round of tenders – quite a lot Chinese companies have put in bids.
It makes sense for the Chinese to bid, they bring along technology, funding, if needed even the manpower. Chinese companies have also teamed up with some Japanese banks that bring along even cheaper money. So, there are a number of good reasons why the Chinese companies should tap foreign markets.
You have to mention sometimes that while some people may look at FITs and think they are all similar. But depending on the market, some of the FITs in early stage markets are even higher than what the Chinese companies can get back home. The early mover advantage is always combined with higher risks, but with that comes the potential of higher returns – and the Chinese are certainly up for that, to accept this risk.
In Australia, there are two state government renewable tenders, one for 650 MW another for 400 MW. They are looking at coupling solar and storage or solar and wind, or other hybrid concepts. Is this something that Chinese companies would be looking at?
Chinese companies are already doing this. This kind of renewable energy hybrid systems is something that China’s National Energy Administration (NEA) has been favouring for some time.
In the province of Qinghai there is the combination of hydropower and PV in particular. In the north-eastern part of China, along the three provinces [Heilongjiang, Jilin, Liaoning], since June last year they have been promoting wind+solar in combination with storage. This means that peak shaving, frequency regulation and the provision of grid services.
The idea from the NEA’s point of view was to combine renewable assets wherever possible. In the north-eastern part of China, particularly during the winter period, massive amounts of heating are required. So, they burn a lot of coal causing the air pollution. Today, it is all about wood pellets, a renewable resource. And then they are looking at how this can be combined with wind and PV in particular.
Agricultural PV is also a big trend in China, on fish ponds, vegetable producing sites, even arable cropping. Could China export the engineering and components for these types of arrays?
China really were the early movers in these agricultural PV applications. In China, it is called the ‘double harvest’, harvest the sun and the crops below. It provides a double revenue for the farmers, and an incentive to stay on the land. China is home to domestic migration of 20 million people per year, from poor areas to urban areas.
Tomatoes, mushrooms, potatoes are good for PV applications. However, some crops still require more light. The ownership of the land is also very clear in these applications: it is the farmer Mr Wong – for instance. Usually if you have to deal with multiple owners [as is more common in China], then it is very difficult to develop PV. So agri-PV, yes, we see quite a number of arrays deploying these sorts of technologies. Today, on average, one GW of agri-PV is being installed in China – it’s not a bad number.