How China became world’s biggest solar panel manufacturer

According to China Photovoltaic Industry Association data, the country exported 37.9 gigawatt (GW) of solar panels last year – equivalent to 37 per cent of global solar installation – up 78 per cent from 2016.

Its solar manufacturing industry accounted for 55 to 83 percent of global supply of products, ranging from raw material polysilicon to solar panels last year.

The grandstanding from the United States, nonetheless, the country is poised to surpass this achievement as it continues to find alternative markets after tariffs were imposed on exports to the United States.

However China did not achieve this feat by a stroke of luck or on a whim. It is the product of patient planning, strategic thinking, hard work and grit, qualities sorely lacking in those who pretend to govern Nigeria.

In the early 1990s, solar installations were mostly for rural folks, a government programme to subsidise energy access for the poor. About this time, Germany began a programme to promote rooftop solar panels. The country provided capital, technology and experts but it could not meet rising demand. It decided to lure China into making solar panels to meet its need.

“The Chinese took it and basically ran with it,” said Donald Chung, one of the authors of a report on the subject matter, published by the Scientific American.

Chinese companies became intrigued by the income from manufacturing solar panels for exports to Germany that when Spain and Italy began a similar programme, the demand grew and “China began scouring the world, hiring more solar experts and shopping for machinery and polysilicon supplies to meet the expected surge of orders for solar panels,” said ClimateWire.

Experts say China bought solar companies and invited others to move to China, where they found cheap, skilled labour. Instead of paying taxes, they received tax credits and found favourable business climate.

Making solar panels was hard enough and to profit the economies of scale is required. To make the process efficient semiautomated, factories were encouraged.

The government poured in $47billion to help build its solar manufacturing into a strategic industry over a five year period. Expanding renewable energy became one of seven categories of businesses that received special attention, including loans and tax incentives for five years.

“The result was that in building up the world’s largest solar manufacturing industry, one that became the price leader in most aspects of the world’s market—beginning with cheaper solar panels—China had helped create a worldwide glut. There were roughly two panels being made for every one being ordered by an overseas customer,” said ClimateWire.

When its dominance has been established, China decided to follow Germany’s lead,  by developing its own ‘feed-in tariff’ that paid handsome prices for electricity generated by rooftop solar. The result was a surge in domestic demand for solar. The demand was so great that in two years, by 2015, China’s domestic market bypassed Germany’s to be the largest in the world.

China tried to reduce the subsidy this year by setting a deadline for ending it, but that spurred another surge in domestic buying. China added 20 gigawatts in the first half of 2017 while the entire U.S. capacity is around 31 GW. Meanwhile US holds the patent to solar panel.

At different forums, Nigerian officials talk about diversifying the economy but the government has no credible blueprint to put the plans in motion. It is unclear any Nigerian government will have the patience to see through a five-year plan.

Since this tariff began to be enforced, many operators have opened talks to move to East Africa. The clearest evidence of a dearth of vision is to sign a Paris Agreement, which commits you to deepen renewable energy access, and barely two years later begin enforcement of tariffs on solar panels.  Analysts say it is improper for a government to sell green bonds, while demanding taxes for solar panels at the same time.

The ministry of Power, Works and Housing said it is working on a plan of incremental power, which essentially means taking power from wherever and however it can be sourced and nary a word has been said by the ministry about this policy.

ISAAC ANYAOGU