A Beijing-based consultancy group said research and development is key to overcoming particular obstacles for solar and wind in China.
CCID Consulting Co. said China’s renewable energy industry generally faces a number of risks in terms of stronger policies and market access. But its report put more emphases on technological factors.
Boosted by the state’s energy conservation policy and the trend of solar-integrated buildings, installation of solar water heaters in newly-built residential buildings has been driving the domestic demand, its study said.
But investors of the solar water heater sector will have to pay close attention to technical R and D of new-style water heaters, solar water heater and building integration competitiveness and growth capacity.
Issues in the photovoltaic sector are more complex. Still at the take-off stage, PV has an unevenly developed industry chain.
In the upper end of the chain, the sector primarily relies on imports for polysilicon supplies due to limited domestic production capacity. In the middle part of the chain, 95 percent of the solar batteries are produced for export
But the PV component production at the end of the industry chain faces overcapacity and low profit margins due to insufficient investment and low technical content, CCID Consulting said.
On the whole, the relatively young domestic photovoltaic industry has significant potential for market demand, however, it currently has a low added value due to restrictions on core technologies and limited state supports.
Therefore, investors of the upper stream of the industry chain should have a strong R and D capability, and those of the lower stream should pay close attention to the state’s policies.
When it comes to wind power, the upper end of the industry chain is faced with the bottleneck of weak R and D capability, small installed capacity and small scale of equipment production.
The lower end is also confronted with the awkward situation of wind power failing to be grid-connected due to the grid’s limited carrying capacity.
New investors need to secure reliable equipment suppliers and investigate into the carrying capacity of the local power grid in order to guarantee the profitability of local wind farms.