China is planning to install 14 gigawatts worth of solar panels by the end of 2015, making it the largest market for solar energy, according to a GTM Research report.
Already a leading producer in solar panels, China is now aiming to host more than a quarter of the world’s solar energy supply. Out of a total of 55 gigawatts worth of solar energy worldwide, more than half of the installed panels will be located in the Asia-Pacific region by the end of this year.
Japan has begun to shift its energy reliance to renewable sources after the Fukushima nuclear power plant disaster.
The Chinese government formulated its 12th “Five Year Plan” in 2011 which aims to radically expand solar energy usage by 2016. The plan introduces large government subsidies and explains the industry’s economic potential. The largest Chinese solar farms have been erected in the Gobi desert.
The domestic demand for solar power may also eventually create a stable source of income for China’s largest photovoltaics (PV) producer, Yingli Solar. Currently, the government subsidies however do not reach companies quickly enough to create a stable cash flow, according to GTM Research analyst, Adam James. The bureaucratic process “leads to a really long backlog for payments”, said James. Yingli has issued a warning in early May concerning its financial struggles.
Despite current business risks, the market potential for solar energy in China remains promising, as the government continues its efforts to reduce carbon emissions.
GTM Research expects worldwide supply of solar energy to reach 135 gigawatts by 2020. One gigawatt of power can supply energy to approximately 700,000 homes per year.