Solar industry gaining strength from home market

HAIKOU - Loading trucks busily shuttle in and out of the delivery area of a plant owned by Yingli Green Energy in southern China's Hainan province. To meet a surge in domestic orders, workers are on extra shifts.

Meanwhile, in a reception room of the company's headquarters in northern Hebei province, a dozen college graduates are taking a test in application for a job at Yingli, the country's largest producer of photovoltaic (PV) modules by market value.

This overtime and recruitment to cope with booming business is driven by the fact that, while anti-dumping probes initiated by the United States and Europe may have put a brake on overseas demand for PV products from Chinese companies, firms like Yingli are gaining strength from the burgeoning domestic market.

"The industry is undergoing hard times, but I think it's temporary. Solar power is a new type of energy source and I have confidence in it," said Li Yang, one of the graduates sitting the test.

The company's production lines are in full operation and its output is barely meeting orders, Li Guoliang, deputy governor of Hainan province revealed at the regional cooperation-focused Pan-Pearl River Delta Forum on Wednesday.

Yingli plans to recruit 2,000 new workers. Wang Xiangdong, the company's vice president, told Xinhua that the company will invest 15 billion yuan ($2.39 billion) to build a plant in Hainan, an island rich in solar energy.

The company's latest financial report showed home orders accounted for 28 percent of its total revenues in the third quarter, up from 14 percent in the second quarter.

Yingli is one of the several Chinese companies to have seen an increase in production recently.

It comes despite the United States' announcement in early November of the imposition of punitive duties ranging from 18 percent to 250 percent on billions of yuan worth of Chinese solar products for the next five years. The European Union is still probing the case.

On Nov 23, India also launched an anti-dumping investigation into solar products from China in a bid to foster its domestic solar industry, a move adding to the grave overseas market for Chinese producers.

Based on industrial association data, it is estimated that over 90 percent of Chinese solar panel producers have reduced or halted production since last year.

However, many, like Shanghai-based JA Solar, Jiangxi's Jinko Solar, and LDK Solar, one of the world's largest manufacturers of solar wafers, have recently resumed production.

Fang Peng, JA Solar's chief executive officer, said in the company's quarterly report that domestic shipments "more than doubled" in the third quarter from the previous quarter.

The pick-up comes as the Chinese government has moved to boost demand and confidence in the home market.

According to a report released by the National Energy Association on September 12, China will expand its installed solar power generation capacity to 21 million kilowatts by 2015, a five-fold increase from the 3.6 million kilowatts seen at the end of 2011.

In a circular released on Sept 14, the administration asked each provincial-level region to make plans for building on-site photovoltaic generation demonstration centers to buoy the domestic solar sector.

One factor limiting domestic demand for solar panels is the difficulty in integrating PV technology with the State Grid Corporation of China (SGCC), the country's largest power transmission network. It has reason to be fearful that more on-site generation plants could mean less consumption of power provided by the SGCC.

In light of the sector's tough situation, however, the SGCC made concessions and said in October that it will allow solar generators with less than 6 megawatts of installed capacity to be connected to the grid.

"With the series of new incentive programs in place, we believe the China market will embrace a very promising future," said Miao Liansheng, Yingli's chairman and chief executive officer.

What also may cheer the market is the latest order from a US company. Bucking sharp declines in the European market, Yingli announced on Wednesday that it had inked a $10 million  order with America's Fluor Corporation, marking the Chinese PV industry's biggest supply agreement from the US since the imposition of US anti-dumping tariffs.

Data from the Ministry of Commerce showed that more than 90 percent of Chinese solar products are for export, with 70 percent going to the eurozone and 10 percent to the US market.