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SOLAR PV IN CHINA by hjg19296


									                                       APPLICATION OF SOLAR PV IN CHINA

                                        J. Tian', J. Byrne', Y-D. Wang', J. Liz and D. Wu3
                   1. Center for Energy and Environmental Policy, University of Delaware, Newark DE, 19716, USA
                       2. Energy Research Institute, National Development & Reform Commission of China
                                  3. NDRClGEFflhe World Bank REDP Project Management Office

                            ABSTRACT                                     System (SHS) project and the US DOE Gansu and Inner-
                                                                         Mongolia projects. These efforts have led to greatly
          Solar energy is abundant in the vast westem areas of           expanded PV applications in China. This paper presents
     westem China, whereas people in this region are often               details of the implementation initiatives together with the
     without electricity access because grid electricity is not          experiences and lessons leamed.
     available. Usually, it is not economically feasible to
     connect residents of the region to conventional power
     systems. Using a grant from the Globat Environmental
     Facility (GEF). the China Renewable Energy Development
     Project (REDP) aims to promote and commercialize the
     PV market by diverse activities and facilities. After several                    UnelectriRed Unelectrified     Total         Total
                                                                                      Township     Villages         Unelectrified Uneleclrified
     years' implementation, the REDP has achieved successful                                        Admin INatural Vitlages       Households
     results although it has encountered various barriers and                        I            1         I      I             I
     risks. As one of the largest PV projects in China, the              Tibet       1486         1 5 . m 1-         15.740       (289.300
     REDP offers a good case of rural Pv's market potential,
     barriers, risks and challenges. This paper analyzes the
                                                                     I GuiZhou 1-                 13,000 1377        13,377       11,294.000      I
                                                                         GanSu          g          871      12.384 3,264          360,173
     implementation and prospects of the REDP, and
     discusses the experiences and lessons leamed from the               Inner
                                                                         Mnnnnlia                  960      2,100    3,060        249,590
     project.                                                            FuJian         -          960      1,400    2,360        249,590
                                                                         PingHai        94         773      f,2M     2,121        101.000
      INTRODUCTlONS                                                      SiChuan            126    1,459    40       t.625        648.300
                                                                         XinJiang       28         216,      1,095   1,339        316,200
          China is a large country with a large population. Of its       NingXia            -                1,306    1,306       64,000
                                                    Despite rapid
     1 3 billion people, 61% live in rural areas [I].
                                                                         HuBei                     75       975       1.050        121.500
     economic progress in China, and impressive electrification
     statistics, there are still about 30 million people in rural        HeNan          *         1700      I-       1700         1577,000
     areas without access to electricity [2]. Table 1 shows the
     latest statistics that over 7 million households and over
     29.000 villages still have no access to a reliable supply of
     electricity. Most live in western China with excellent solar    1                                                                            1
     radiation, low population densities, large proportions of           Hebei                    1357      143      1400         113,800
     nomadic populations, rugged terrain with vast distances
     between towns and villages and limited transport systems.       ~


                                                                                                   259      -        259           112,000
     Building electricity girds is neither economic nor feasible.
     Solar PV can provide a least-cost and dependable                    HaiNan                    253      -        253           260,300
     approach to meet basic need in these regions [3-51.                 Chongqing          3      163      -         166          131,900
                                                                         AnHui              -      $7       33       50           80,500
           To make PV systems affordable to people, the                  JiangXi                   17        33       50           287,000
      Government of China, in partnership with international             Heilongjiang
      development organizations such as UNDP and GEF, have                                         13        -        13           9,300
                                                                         LiaoNing                  4
      launched several projects and programs. These include:                                                         4            4,800
      the 10" five-year development plan, the Brightness                 GuangDong          -                                      50,800
      Program, the Township Program, Tibet's "Sunshine                   Total              761    16,889 11,592 29,242            7,141,853
      Project", the Mi Solar PV Project, GEFNorid Bank PV
      commercialization project, UNDP Renewable Energy
      Village Power Project, NED0 (of Japan) Solar School
      Project, Netherlands Xinjiang Silk Road Solar Home

     0-7803-8707-41051$20.00 02005 IEEE.                         1742
                                                                      As the first large-scale rural PV project in China,
     There are two different but complementary                   REDP has boosted Chinese PV market and diffused more
approaches to promotion of solar PV applications. One            widely the use of SHS systems. In the beginning of project
type is aimed at improving the performance and reducing          planning, annual production and sales were very low and
the cost of renewable energy technologies. Another type is       most of the products then were made purely by hand.
designed to enhance market opportunities and remove              REDP has dramatically stimulated the development of PV
market bamers for renewable energy devdopment. The               companies and SHS sales. Some companies developed
 GEFlWorld Bank China Renewable Energy Development               into farge businesses with assets more than US$ 3.5
 Project (REDP) employs both approaches in an effort to          million (30 million RMB). Currently, total production
capture synergistic benefits.                                    capacity in China is 20MW annually. Target end users -
                                                                 herdsmen, farmers, and rural households generally - have
      With the support of a GEF grant, REDP.aims to              become familiar with PV products and household power
 improve the quality of PV products and after sales setvice      supply in rural China has markedly improved. Recent
 used for household electrification. expand the market, and      installed PV capacity is shown in Figure 1.
 ultimately reduce the cost of off-grid renewable energy
 systems. The project consists of three parts: the                    Figure 1 Cumulative PV installed capacity in China
 development of small wind systems: the improvement of
 solar home systems; and the organization of infrastructure
 to suppoit technology improvement (TI). The PV
 component of REDP intends to provide electricity in an
 environmentally sound and affordable way by means of
 SHS to unelectrified people in six westem provinces. A
 direct grant is provided to PV system distribution
 companies to assist them to market, sell, and maintain 10
 MWp of small FV systems (an estimated 300,000 -
 400,000 systems in target areas). The systems are
 expected to be purchased mainly by households and
 institutions living in isolated rural areas without access to
 grid electricity. The companies receive a grant of $1.50
 per Wp of PV capacity, per system (minimum capacity of a
 system is 10 Wp). This financial support assists
 companies to improve PV product quality, upgrade
 warranties and after sales services, strengthen business            Source: Zhao, Y., 2003. "Development trends of solar
 capabilities and increase marketing efforts. Other grants             Pv", a presentation at REDP annual meeting
 are also designed to support companies to assist PV
 market development and to strengthen institutional                   The supply of electricity from such systems brings
 capabilities for PV quality assurance and project               tangible social and economic benefits to rural populations
 management. Technology improvement grants are also              in developing countries that include the ability to
 available to companies with proposed activities to reduce       refrigerate food and medicine, fighting for households.
 costs and improve the quality of solar home systems.            power for small electric motors (such as water pumps),
                                                                 and provision of education and communication
      The five-year project began on December 12. 2007.          opportunities for isolated rural populations [3, 6-71. The
 The Project's disbursement targets are shown in Table 2.        project has demonstrated that PV technologies could be
 As of June 2003, about 3 MW of solar home systems had           used in westem areas of China to address the need for
 been installed under REDP. The direct sales grants was 4        mral electrification.
 million US$ and around 1 million US$ have been invested
 for technology improvement.                                          Technical assistance via REDP has also contributed
                                                                 to China's PV strategy. Grants are directly offered to
 Table 2: IndicativeGEF Grant Disbursement Schedule              component manufacturers for improving quality andlor
1 Year 1        PV Component         I TI Component              reducing cost. Free tests on components (including
                  (Million-US$)        (Million-US$)             modutes, batteries and lights) are available at designated
          PV Sales Grants      Other                             testing centers. REUP also funds testing centers for their
                                                                 institutional strengthening activities. With no previous
 2003     2.80                 1.20    0.98
                                                                 national standards for PV products in China, the greatest
 2004     2.90                 1.75    1.30
                                                                 contribution of the TI component of REDP has been the
 2005     3.80                 1.50    0.45                      adoption of product standards. These standards provided
 2006     4.60                 7.10    0.10                      assessable technical requirements for PV products. Work
 2007      2.20                                                  on a standard system is now in process. Testing centers
                                                                 are being supported to obtain IS0 Guide 25 certification

and IECQ accreditation. Training courses on IS0 9000 are        system maintenance is of critical importance for people
also being developed.                                           who use PV products. Alternatively, a problem arises
                                                                when systems need repairs, because there are few
    Despite these impressive achievements, several              convenient facilities available. Most households in areas
problems can be identified.                                     without access to electricity have no access to retailers
                                                                that sell photovoltaic systems. Even where systems are
     Firstly, the prices of SHS products are still              sold, there is very little after-sales support for systems.
comparatively high, especially for low-income rural             Customers often wait about one month for system repairs.
households. SHS consumers cannot typically buy a solar          The average distance to a repair shop varies from 50
system without financial help. According to statistics of       kilometers to more than 400 kilometers. When transport
National Development and Reform Committee, the annuat           occurs by animal and walking, these can be long
average cash incume of western rural people is US$200           distances.
(RMB 1755). This leaves little r m m for the purchase of
power supply equipment. This situation limits mrat PV                There is a need for a recognized standardized market.
market development. Although compared to several years           Some component manufacturersand PV companies adopt
ago, the system price has dropped to less than US$4 per          diverse means to expand their market share.
Wp, it is not known whether this drop is due to production       Unfortunately, some offer poor quality materials and
cost reductions or the disbursements of incentives from          products to attract consumers at low prices. This can not
the PV projects. Some companies complain that the                only damage consumers, but also harm the reputation of
marginal benefit is small that product sales are sufficient      the PV industry.
only to maintain a modest market share.
                                                                      REDP has been essential to China's successful and
    Secondly, the lack of rural credit is influencing both       China's expanding use of SHS systems. Indeed, it is fair to
consumers and companies. The availability of credit in           say that implementation of REDP has been the single
remote areas in China is often very limited. Today most          most important driving force in China's recent
purchases of renewable energy systems are on a cash              development of the SHS market. At the same time, this
basis. The purchase of photovoltaic systems without credit       fact signals the need totplan for a new phase in vhich
requires households to have US$ 125-250 (RMB                     China's rural energies institutions take over the role now
1000-2000) on hand, and most agree that this can be a            played by REDP.
major stumbling block to the promotion of systems. The
availability of credit for the purchase of PV systems can
expand the market by lowering initial cash outlays.              OUTLOOK & RECOMMENDATIONS

      On the company side, most PV businesses are small.             The potential market for SHS options is large. Despite
The largest production capacity by one PV company is 10          numerous government and foreign donor-funded PV
Iww. PV businesses are often short of funds and there is         programs, a significant number of households could still
little opportunity for them to loan or borrow money from         be served by PV companies. Nevertheless, the remaining
local banks or other financial organizations. This restricts     households are likely to live in remote areas have lower
campany development and prevents efforts to promote              incomes and be harder to reach than those already senred.
product quality and reduce manufacturing costs.
                                                                      Although the objective of all PV projects is to expand
    Thirdly, the TI component of REDP has performed              the market, there is no coordination among the many
admirably in the short number of years in which funding          projects underway in China. Thus, in some places efforts
has been available. But its accomplishments require the          may be overlapping while in other places there are no
adoption of national standards to be sustained. The              incentive projects at all. A coordinating mechanism among
involvement of a wider array of RBD, educational and             these projects is needed 50 that rural communities and the
regulatory institutions is likewise essential if technical       PV industry are able to pursue their interests effecting. A
performance of China's SHS products are to continually           major disadvantage of government PV projects to date is
improve.                                                         that not all PV companies have the opportunity to
                                                                 participate in projects, The topdown style of
     Although most of the PV systems seem to be                  administration is a major cause of this restriction entry
performing well, several problems have been observed             problem. The GEFNVorld Bank PV project has the
especially with lamp and battery performance. The                potential to help domestic PV companies expand and
average lifetime of lights is only 6 months and Chinese          legitimize their operations, but companies cannot rely on
batteries have a high failure ratio. Besides component           foreign assistance alone to solve this problem.
quality, some problems are associated with incorrect
system operation by end users that has led to over-                   Training of end users and special training for village
charging or low charge states of batteries. Considering          technicians would be very useful for development of SHS
that end users live in remote places with poor                   market. More public information campaigns should also be
transportation, it is very hard to secure replacements. Also,    conducted to expand rural knowledge about SHS options,
parts for common problems with systems, such as lamp             to teach people of the relevance of equipment test results,
failures, are sometimes not available locally. Therefore         and to increase end user understanding of how to properly

operate and maintain PV systems. As most of the end                  [8] J. Byme, G. Alleng and A. Zhou, 2001. Economics of
users live in autonomous regions, training in different local       Building Integrated PV in China, a presentationon Green
languages shoutd be developed.                                      Buildhg Workshop. July 9-10, 2001. Shanghai, China

    A report presented at the Green Buildings Workshop
[SI indicated that building integrated PV (BIPV) could
provide positive economic value for a green buildings
strategy in China's leading cities. Besides rural
electrification, PV for high-density cities in China is also a
promising application area. If the BIPV market were to
grow, this would have benefits from rural users in the form
of lower product prices and improved technical
performance. Thus, an integrated approach to urban and
rural development of PV markets should be considered.


     PV in China has played a significant role in improving
people's living conditions, especially through rural
electrification. But to a large degree, this market is driven
mainly by policy and regulations. Grants have proved
essential to stimulating PV markets. But eventually, the PV
industry and users will have to be the principal responsible
parties if a sustainable future for PV is to be realized.


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million people. Renewable Energy World. September-
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[4] J. Byrne, et al., The economics of sustainable energy
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revolution: analyzing the dissemination of photovoltaic
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Best Practices for Photovoltaic Household Electrification
Programs: Lessons from Experiences in Selected
Countries, The World Bank, Washington DC. 1996.


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