Chinese Solar Firms Eye Fast-Growing Japanese Market

U.S. Market Remains Fragmented but Future Bright

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Major Chinese solar panel manufacturers are targeting the fast-growing Japanese market for their panels in 2010 and beyond. The U.S. sector remains fragmented, due to a lack of a national climate change policy, but it looks promising in the longer term, they say.

Japan is aiming for 28 gigawatts of solar power in 10 years. In comparison, current solar capacity worldwide is under 17 gigawatts.

“Some countries, when they put out a national goal, you don’t know whether they will achieve it, but Japan seems to have a good track record,” said Shawn Qu, CEO of Canadian Solar, a Chinese manufacturer of solar power modules.

“If the [Japanese] government puts out the target, then they have the mechanism to make sure it happens.”

Japan reintroduced solar subsidies for home panels last April, after pulling the plug on the incentives in 2005. It watched sales more than double in 2009, compared with the previous year.

“We believe [the market] is going to double again in 2010,” Qu told investors and reporters at the Piper Jaffray clean energy technology conference.

JA Solar, another Chinese solar panel maker, echoed Canadian Solar’s optimism over Japan.

“Today, the Japanese market is very strong,” said Ming Yang, vice president of business development for the firm, citing the nation’s high electricity rates plus a “very good subsidy support from the Japanese government.”

A Fragmented U.S. Market

While Japan was singled out for fast expansion, both companies pointed out that the U.S. solar industry is brightening.

For Canadian Solar, which moved its headquarters to Ontario from China last September, the U.S. was not on the business map in 2008. But in 2009, the American market covered nearly 10 percent of the company’s sales.

The U.S. is going to be a “high-growth market,” predicted Qu, but it is “very fragmented at this moment.”

The major difficulty for solar makers is the lack of a blanket federal policy to combat climate change. Current carbon regulation in America is marked by a patchwork of state laws, which include renewable energy portfolio standards (RPS) in roughly 30 states, creating multiple markets with various clean power targets.

Still, the “U.S. has the potential to become, if not No. 1, then the No. 2 solar market in the world,” Qu said. “Give it three or four years.” Currently, Germany is the world’s top market for solar by installed capacity, thanks to aggresive government subsidies in recent years.

The main market drivers in the U.S. are expected to be the federal stimulus money related to clean energy and state renewable electricity standards, said Roger Little, CEO of Spire Corp., a Massachusetts-based maker of solar equipment.

“The U.S. is going to be the fastest growing market in the world,” he said. “States have incentives that the feds haven’t gotten to yet.

“There’s something like 250 gigawatts over 10 years [in clean electricity] that the states have identified are needed for their RPS and other applications.”

In a sea of Asian solar makers, Little pushed another message: Buy American. “You can make modules in the U.S. for almost as much as you can make them in China,” he said.

China’s LDK Solar, meanwhile, the largest and lowest-cost solar wafer company in the world, said the U.S. is on its radar, while the Chinese market really is set to boom.

“Module sales in North America will be a big opportunity for LDK to explore down the road,” said Xiaofeng Peng, the company’s chairman and CEO. “China,” he added, “in the next five years could be one of the biggest solar markets.”

Global Growth

Qu described the nascent solar energy market as a “roller coaster ride.”

“Every year it is going to have its new challenges,” he said. But even with the tumult in the solar energy sector, most observers agree that solar will be mostly up for many years to come.

The lesson of 2009, said Qu, is that “solar can maintain a very healthy growth even during the worst financial crisis in modern history.”

Yang of JA Solar predicted a constant 30 to 40 percent boost in the industry over the next 10 years, as nations, including Europe, China, and U.S. states, chase national renewable energy targets by 2020. Solar power is “one of the few solutions that can help achieve that,” Yang said.


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