Chinese solar developers come up second best in the sunniest nations along the New Silk Road

Chinese players, who are known for their cutthroat approach domestically, are unable to make a breakthrough in emerging markets because of their rivals’ access to cheaper funding

PUBLISHED : Wednesday, 18 October, 2017, 3:17pm
UPDATED : Wednesday, 18 October, 2017, 10:29pm

Chinese solar developers, known for their aggressiveness in bidding for domestic projects at surprisingly low prices to expand market share, seem to have hit a wall in nations covered by Beijing’s Belt and Road economic development initiative.

Industry insiders said that Chinese firms’ lack of success in emerging solar markets was due largely to rivals’ access to low-cost funding. This should serve as a reminder to the country’s solar players that having the world’s largest solar equipment, materials and power generation industry is no guarantee of competitiveness outside their home market.

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“In India, the competition is so fierce that Chinese firms can hardly compete with the low bid prices there,” Zou Peng, deputy general manager at Xinjiang Uygur autonomous region based TBEA Xinjiang Sunoasis, told the Photovoltaic Exhibition and Conference in Beijing on Tuesday.

“In Pakistan, Egypt and Africa, the pace at which bid prices declined from one round of project tender to the next was even faster than in China.

“For Chinese firms, the Catch-22 is either to enter and endure losses, or face not being able to gain a foothold in these markets.”

He noted that Chinese firms were unable to compete with rivals in the Middle East and South Asia because of their access to low cost financing and cheap land, even though most of their solar panels are made in China.

Xu Yang, vice president of GCL New Energy Holdings, one of the biggest Chinese solar project developers, said it and Chinese partner Trina Solar only came fourth among 27 bidders in a recent tender for a 300 megawatt project in Saudi Arabia.

Abu Dhabi renewable energy firm Masdar and French partner EDF Energies Nouvelles, which jointly bid just 1.78 US cents per kilowatt-hour, won the bid. It was a quarter of the power price of a typical project in China, or for that matter a coal-fired power plant in the nation.

Xu said such a low price can be viable in China only if the project is located in sunny regions like Xinjiang, with the government offering almost free land use, waives taxes, promises to buy all the power generated and offers low cost financing.

“We [at GCL] pay 7 to 8 per cent interest rate on our loans, while in the Middle East the cost is only slightly above 1 per cent,” Xu said.

Qin Haiyan, director of Chinese Renewable Energy Society, said solar power firm Delhi-based Azure Power Global this week won a 250 MW project at 4.9 US cents per kWh.

India is the world’s third largest solar power market accounting for 18.8 per cent of global installations this year, figures from IHS Markit showed.