Clean, renewable, and infinite are just a few words that describe the topic bringing great minds to campus this week: solar energy. The GW Solar Institute, which is part of the Columbian College, is hosting the fourth annual Solar Symposium to discuss ways solar energy can be harnessed to meet global environmental challenges and energy needs. Among the items the Symposium presenters will discuss is an analysis by Master of Public Administration candidates Alim Bayaliyev, Julia Kalloz, and Matt Robinson, who worked with Solar Institute Director Ken Zweibel to explore China’s expanded use of solar photovoltaic (PV) systems—technology that uses solar panels to convert sunlight into energy. The student analysis was part of a capstone project within the Trachtenberg School of Public Policy and Public Administration (TSPPPA).
After analyzing the eight largest Chinese PV manufacturers and four non-Chinese manufacturers, the students concluded that China has been able to expand manufacturing from near zero output to more than double the global solar PV market in under a decade through easy access to large amounts of capital. Among the subsidies identified for the solar companies analyzed, were real interest rates on loans for Chinese companies that were significantly lower than those for non-Chinese manufacturers, which averaged 2 percent.
The report highlights the fact that, in just three years, China’s production of PV cells and modules has grown to account for more than 50 percent of the global market. At the same time, prices for solar modules have decreased. The students detail the drivers behind China’s rapid advance in solar PV manufacturing and conclude that the sustainability of China’s industry in the short term will depend on how well it addresses overcapacity and captures domestic demand.
“The analysis by these TSPPPA graduate students puts a spotlight on the substantial revolving credit line—many tens of billions of dollars—that the Chinese PV companies can draw on during the present calamitous collapse of PV module prices,” explained Zweibel. “The Chinese are in much less danger of going out of business from the resulting losses, whereas non-Chinese companies have no such safety net and are rapidly collapsing into bankruptcy.”
According to the report, risks to the future sustainability of China’s PV manufacturing sector include increasing transportation costs, dependence on a single type of PV technology, dependence on exports, changes to exchange rates, import restrictions on Chinese products and inflation of labor rates. The Chinese companies included in this analysis are planning to address some of these risks by increasing automation, reducing costs to guard against exchange rate changes, and seeking opportunities in the domestic market. Further actions could include increased presence in new markets, such as Brazil, South Africa, and Australia, and entry into other PV technology markets, including thin film.