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Suntech says solar PV costs to match coal in China by 2016

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Suntech Power predicts that the cost of building large scale solar PV plants could match the cost of coal-fired generation in China by 2016, a development that will “completely transform” the energy market in the world’s second biggest economy.

WUXI SUNTECH POWER CO., LTD. ERIC LUO

Wuxi Suntech Power CEO, Eric Luo

Eric Luo, the CEO of Suntech Power, which last month completed a buyout by Shunfeng Photovoltaic International, says that solar PV is rapidly catching up to the cost of coal-fired generation. (China is the world’s largest consumer of coal).

“The levellised cost of generation is still coming down,” Luo told RenewEconomy in a telephone interview from his headquarters in Wuxi in China this week.

“We are not far away from the cost of production for conventional energy. We are sure that by 2016 – or at the latest 2017 – the levellised cost of solar PV will be the same as coal-fired generation in China.”

“It is going to completely transform the energy market in China,” Luo added, noting that environmental concerns would also accelerate that transformation. “China is investing a lot of money into the environment to clean up the energy production process. This is a major opportunity.”

Luo predicted that the annual installation rate of solar PV in China would top 25GW by 2020. It could even be more, should the regulations and the modeling around distributed generation be resolved. This would involve leasing and other financing. Battery storage would also have a significant impact on the solar market. “If model is right, then it (distributed generation) will be flying in China,” Luo said.

(The 2014 target for China is 14GW, although there is debate about whether this target could be reached because of concerns about the structure of the market for distributed solar, which is supposed to account for more than half that capacity).

Luo was speaking in one of his first interviews following the recapitalization of Suntech, once the world’s biggest and best-known solar brands, following its collapse under the weight of debts a year earlier.

Luo says he is head of a much leaner organisation. The number of managers has been reduced from 300 to less than 100, and the company’s focus is now on repositioning itself as an “integrated clean energy service provider.”

That is why it has recently invested in an inverter company and a battery storage developer. The company is also focusing on downstream projects, following a similar transition by other major solar manufacturers.

“We want to focus on the entire value chain,” Luo says. This means capabilities in design, engineering, manufacturing, construction, finance, insurance, operation and maintenance.

One of the keys for the company is a large global marketing campaign (Suntech has launched an advertising campaign – a “New Dawn” – on RenewEconomy and other web-sites), and the company will spend time talking to customers, financier and investors.

Suntech expects to quickly ramp up to its stated annualized manufacturing capacity of 2.5GW of solar modules by the end of this year – more than its peak in 2011. This won’t bring it back to the top of the solar tree, but it will regain its position in the top 10 manufacturrers.

Luo said Japan remained a very strong market with rapid growth for Suntech, the US was also promising, although Europe had declined.

Luo describes Australia – where the company has invested heavily in solar PV research projects – as one of its “traditional market.” He said the company would focus on household and commercial scale solar installations, but it would also be a base for an increasing presence in the Pacific islands, particularly in French Polynesia.

However, Luo said he was concerned about the anti-dumping investigation brought by Australia, at the behest of Adelaide-based Tindo Solar.

“We are very upset about it. because we don’t understand how it can happen. In Australia, there is no manufacturing of solar cells, or modules. It is not like Solar World in the US where there is very visible manufacturing.

“In Australia, it is difficult for us to understand why this action will be brought. We hope it will be amicably resolved. We still believe this is just a little bit of distraction.”

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  • Hugh Sharman

    “…there is debate about whether this target could be reached because of
    concerns about the structure of the market for distributed solar.”

    You bet there is!

    Giles, in making these predictions, why do you constantly airbrush away inconvenient facts such as the output profile of PV and the need and cost of balancing significant PV to maintain grid balance.

    Furthermore, as far as I am aware, non-synchronous generation can, as yet, deliver no grid inertia, so requiring even systems with deep renewable penetration like Denmark and Ireland, to plan for maintaining no less than 50% fossil generation on the system at any moment.

    Do not spoil your intersting case with too much evangelical fervour!

    • David Osmond

      Here’s some info about how renewables can provide balancing control to the grid (it mentions that it is not usually done yet):
      http://www.nrel.gov/docs/fy13osti/57820.pdf

    • Matthew Wright

      Actually this is already being adressed electronically and is part of the new standards for any inverters being sold this year into the EU.

    • Michel Syna Rahme

      Correct me if I’m wrong, but won’t large scale storage ie current and emerging battery technology/molten salts/pumped storage hydroelectricity from solar etc assist in grid balancing?

  • Michel Syna Rahme

    “Suntech Power predicts that the cost of building large scale solar PV plants could match the cost of coal-fired generation in China by 2016″…. And just to be clear, that’s matching the ‘cost’ of coal fired generation without including the cost of direct and indirect externality costs associated with coal-fired generation. How much are is China spending on health issues relating to the horrid air quality for its 600+ million people living in Chinese cities?

  • Hugh Sharman

    To Michel

    “Suntech Power predicts that the cost of building large scale solar PV
    plants could match the cost of coal-fired generation in China by 2016″….what possible justification is there for this extraordinary claim?

    Grid-scale storage cannot be economic (without subsidy) until its on-site, all-in cost, grid-connected, reaches (say) $200/kWh. There is nothing on the market, except lead acid, that is less than $800/kWh.

    The global capacity of grid scale (non-pumped hydro) storage, the last time I looked, was well under a GW. China continues to build new coal at 70 GW per year. This growth must end soon which we all understand well enough. But solar (and wind) cannot replace dispatchable generation, watt for watt, until storage can distribute PV generation 24/7. We are (probably) decades away from that happening.

    This “context-free” calculation for the levelized cost of electricity means nothing so long as the more solar you install, the less operable the grid becomes.

    • http://www.reneweconomy.com Giles

      I suggest you learn more about the grid, and the way it operates. Both the CSIRO in Australia, and NREL in the US, have said the grid can cope with large amounts of solar before requiring additional storage. China is a long, long away from that, and storage will probably be below 200/kWh before the end of the decade, certainly if Elon Musk is right. That will allow even further penetration.

      • kyle carrington

        Exactly. There are no batteries in a grid solar system. At all. It’s purely augmentation to the grid, at this point, and that’s everywhere 1st and 2nd world. Only in 3rd world would you be storing energy. Furthermore, in high viability areas, you’d use solar thermal electric, not PV, in which case the storage comes in the form of stored molten salt, not electrolyte chemical energy storage.

    • Mark Dansie

      This is why low cost energy storage is so important. I am running the sun tech story tommorrow

      • Hugh Sharman

        The Holy Grail, Mark!! Will it ever materialize? It is written about in these pages as if it had already but in fact remains as elusive as ever!

      • marcdand

        I’m new to this site and have looked at some of the things you do Mark and I have a concept that you might like to see. Its based on a newly verified discovery/confirmation on a phenomenon. I took electromechanical engineering, or part of it and I was lucky enough to have a professor that let me pick his brain mainly on electron movement and and magnets. An interesting topic that I used to enjoy researching was how the electrons physically moved. I designed this device and a few applications for it such as a nucleus in a nanite cell or as a means of powering the equipment or on demand power necessary to run electrolysis on a boat or submarine. I believe its true potential is to be used in space, optimal operating temperature, ambient radiation, space for bigger applications. My cell is 6476480721. I’m not always around a computer so this is the best way to communicate directly if this has interested you.
        Cheers

  • Ian

    Glad you brought up the anti-dumping case for solar panels imported from china. This has got to be a ruse to further frustrate the uptake of solar power in Australia. Who cares if Chinese solar panels are sold below cost. If the Australian government won’t subsidise solar then at least let the Chinese government do it for them. The piddly number of solar panels produced by Tindo solar no where matches the number of panels required in this country.