Solar power producers waiting for subsidy sunshine
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Solar cell manufacturer China Sunergy announced Monday that it would acquire solar module manufacturers CEEG Solar Science & Technology and CEEG New Energy for about $47 million, bringing polycrystalline module manufacturing in-house.
China Sunergy, based in Nanjing, Jiangsu Province, said the move will help it develop into a comprehensive solar solutions provider.
Shanghai-based CEEG Solar Science has an annual production capacity of 150 megawatts (MW), while Nanjing-based CEEG New Energy has a 70 MW capacity.
China Sunergy said it will pay the two acquired companies in a series of installments, though it is capable of fully funding the deal, and that the deal has been approved by all three companies' boards of directors.
Both the acquired companies are controlled by China Electric Equipment Group, which is run by China Sunergy's chairman, Lu Tingxiu.
"It is an industry trend that upstream solar cell makers penetrate downstream by acquiring module producers," said Cui Rongqiang, director of solar energy research with Shanghai Jiaotong University.
China is by far the largest solar cell producer, but about 98 percent of the solar battery production of four gigawatt units last year were exported to countries such as the US, Germany, Spain and Japan.
Domestic solar power plants consume only two percent of the cell production, as China has yet to settle its policy to promote the solar power generating industry, Cui said.
The installed solar power capacity by the end of 2009 was 200 MW, less than 0.1 percent of the country's total power generating capacity, according to the National Energy Administration.
"Solar power generation is still too expensive," said Li Xinqu, a new energy analyst with Beijing-based Bohai Securities. "It's because the government does not offer the solar power plants enough subsidies."
The average power production cost of a solar power plant is 1.2-1.5 yuan ($0.18-$0.22) per kilowatt-hour, compared with 0.5 yuan ($0.07) for wind plants and 0.3 yuan ($0.04) for fossil fuel-fired power plants, according to Li.
Industry players, most of them State-owned power giants, are still looking on as a subsidizing standard on solar power plants has yet to be settled by the country's top economic planner, the National Development and Reform Commission, said Yun Fu, a Beijing-based energy industry insider.
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