Development Trends and Strategic Recommendations for the Photovoltaic Industry _ **Research Institute of Zhenjiang City

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In today’s world, fossil fuels such as coal and oil are frequently in short supply, and environmental pollution is becoming increasingly severe. Solar energy, as the most promising renewable energy source, is gaining increasing favor due to its unlimited reserves, widespread availability, clean nature of utilization, and practical economic benefits. Vigorously developing the photovoltaic industry and actively exploiting solar energy have received unprecedented attention worldwide, and have become an important part of countries’ sustainable development strategies. I. The basic concept of the photovoltaic industry The photovoltaic industry, also known as the solar cell industry, is an industry that utilizes solar-grade semiconductor electronic devices to absorb solar radiation energy and convert it into electrical energy. The photovoltaic industry includes photovoltaic materials, cell modules, photovoltaic equipment, and photovoltaic application systems. (1) Solar power generation method. There are two ways of generating electricity from solar energy: one is the photothermal-electric conversion method, and the other is the direct photovoltaic conversion method. 1. Light-heat-electric conversion method. Power generation by utilizing the thermal energy produced by solar radiation generally involves solar collectors converting the absorbed thermal energy into steam, which then drives a turbine to generate electricity. The previous process is the light-to-heat conversion process ； The latter process is the thermoelectric conversion process. The disadvantage of solar thermal power generation is its very low efficiency and high costs; the investment required is estimated to be 5–10 times higher than that for conventional thermal power plants. A 1,000 MW solar thermal power plant requires an investment of $2–2.5 billion, with an average investment of $2,000–2,500 per kilowatt. Therefore, at present it can only be used on a small scale in special situations; large-scale use is economically unviable, and it cannot compete with conventional thermal or nuclear power plants. 2. Direct photoelectric conversion method. By utilizing the photoelectric effect, solar radiation energy can be directly converted into electrical energy; the basic device for this photoelectric conversion is the solar cell. A solar cell is a semiconductor device that converts solar energy directly into electrical energy through the photovoltaic effect; when sunlight hits the panel, it transforms the solar energy into electrical energy, generating an electric current. When many batteries are connected in series or parallel, a solar cell array with a relatively high output power is formed. Solar cells have three advantages: durability, cleanliness, and flexibility. Solar cells have a long lifespan, allowing for long-term use with a single investment ； Compared to thermal power generation and nuclear power generation, solar cells do not cause environmental pollution ； Solar cells can come in various sizes – from large power plants with capacities of millions of kilowatts to small solar panels that supply power to just one household. This is something that other power sources cannot match. (II) Photovoltaic power generation systems. Including solar cell modules, batteries, controllers, inverters, etc. 1. Solar cells and modules. Solar cells are the core component of photovoltaic power generation systems, as well as the most valuable part; investments in them typically account for 60% of the total investment in such systems. They can be divided into two main categories: one is crystalline silicon cells. Including monocrystalline silicon cells, polycrystalline silicon cells, and silicon-based cells. Due to the easy availability of crystalline silicon in nature, as well as the fact that its processing techniques are well-suited to the standards of modern chemical and electronics industries, crystalline silicon cells have become the dominant type in the photovoltaic cell market, accounting for nearly 90% of the photovoltaic market share in 2007. Among them, monocrystalline silicon cells have the longest development history, the most mature technology, and the widest range of applications. The theoretical photovoltaic conversion efficiency is 24–25%, while that of actual products is 15–18%. Polysilicon is formed by the aggregation of single-crystalline silicon particles; its theoretical photoelectric conversion efficiency is 20%, while that of actual products ranges from 12 to 14%. Although monocrystalline silicon cells have a slightly higher conversion efficiency, due to their high energy consumption and the need for highly pure quartz crucibles at the manufacturing stage, which are extremely costly, the use of polycrystalline silicon has gradually surpassed that of monocrystalline silicon since 1998, thus taking a dominant position in the market. Another type is thin-film coated batteries. These include amorphous silicon thin-film solar cells, polycrystalline silicon thin-film solar cells, and thin-film solar cells made from multiple compounds (such as gallium arsenide, cadmium telluride, copper indium selenide, copper indium gallium selenide, etc.). Thin-film batteries are made from extremely thin photosensitive materials, which are attached to or coated on inexpensive glass, stainless steel, or plastic substrates. Compared to crystalline silicon cells, thin-film coated cells have a lower photoelectric conversion efficiency (among thin-film types, the copper indium gallium selenide cell boasts the highest conversion efficiency, with large-area modules achieving 12% efficiency; other thin-film cells such as cadmium telluride generally have efficiencies of 6–9%). However, due to their low cost and wide applicability, they hold a significant place in the solar cell market and represent an important direction for future development. At present, amorphous silicon cells, copper indium gallium selenide cells, and cadmium telluride cells have been commercialized, while the commercialization of polycrystalline silicon thin-film cells has just begun. In addition, research and development on the newly emerging organic polymer solar cells and nanocrystal solar cells have already begun. 2. Battery. Affected by changes in solar radiation intensity, the input energy for photovoltaic power generation is unstable; therefore, the generated direct current must first be stored in batteries. The investment in batteries for energy storage accounts for about 15%–20% of the total investment in photovoltaic power generation systems. They are generally lead-acid batteries; in small and micro systems, nickel-metal hydride batteries, nickel-cadmium batteries, or lithium batteries can also be used. Its characteristics directly affect the system’s efficiency, reliability, and power generation cost. According to the operating requirements of batteries in photovoltaic systems, they must possess characteristics such as deep-cycle discharge capability, a long cycle life, strong resistance to overcharging and deep discharging, the ability to operate with little or no maintenance, tolerance to large temperature differences, and high energy efficiency. 3. Controller. The function of a solar controller is to control the operating status of the entire system, and it provides overcharge protection as well as overdischarge protection for the batteries. In areas with large temperature differences, a qualified controller should also have functions such as circuit short-circuit protection, reverse connection protection, lightning protection, and temperature compensation, as well as additional features like light-controlled switches and time-controlled switches. There are mainly four types: bypass, series, multi-stage, and pulse controllers. 4. Inverter. The direct output of solar cells is generally 12V, 24V, or 48V DC electricity. To be able to generate electricity and supply it to 220V appliances, it is necessary to boost the direct current electricity generated by the solar power system and convert it into alternating current electricity; therefore, a DC-AC inverter is required. Inverters are divided into power-frequency and high-frequency types based on different step-up principles, and into grid-connected inverters and off-grid standalone inverters depending on their intended use. The investment in controllers and inverters accounts for about 20–25% of the total investment in photovoltaic power generation systems. (III) Photovoltaic crystalline silicon cell industry chain. The photovoltaic crystalline silicon cell industry chain consists of four stages: the first is material manufacturing, in which silicon raw materials are processed through purification and refining to become crystalline silicon ； The second is silicon wafer manufacturing, which involves melting crystalline silicon to form rods or ingots and then cutting them into wafers ； Third is cell manufacturing, where silicon wafers are transformed into battery cells through semiconductor processing techniques ； Fourth is module manufacturing, which involves connecting and encapsulating solar cells to form modules; this includes processes such as cell testing, front-side welding, back-side stringing, lamination, edge trimming and framing, wiring box welding, and testing and inspection. These four components, together with photovoltaic application systems, form a complete industrial chain. The silicon material and silicon wafer segments are part of the upstream of the industry ； Batteries and components fall into the midstream segment ； The application system segment lies at the downstream end; the number of enterprises involved in this area is increasing significantly, and the distribution of enterprises across the entire photovoltaic industry chain takes on a pyramid shape. Solar cell modules account for over 60% of the total cost of photovoltaic power generation systems ； In the cost of crystalline silicon solar cell modules, polysilicon raw materials account for 35%, silicon ingots account for 20%, silicon wafer cutting accounts for 15%, cell manufacturing accounts for 10%, and module assembly accounts for 20%. From the perspective of the value chain, the huge profits resulting from the global shortage of polysilicon capacity mean that over 60% of the profits in this industry chain come from the polysilicon raw material stage. According to estimates by international agencies, between 2005 and 2010, the average pre-tax profit margin of the global photovoltaic industry was around 20%–25%. The pre-tax profit margin for polysilicon purification was approximately 35%–50%, which is much higher than the 10%–15% pre-tax profit margin in the mid- and downstream stages of the industry. (IV) Trends in photovoltaic cell technology. In terms of the development trends in photovoltaic technology, there are two main aspects: one is to reduce the cost of crystalline silicon cells through advancements in manufacturing techniques and processes. 1. Purification technologies and processes. This is the biggest bottleneck restricting the photovoltaic industry chain. Generally, the purity of polycrystalline silicon used to manufacture solar panels needs to reach 99.9999%. Currently, the main traditional processes for polysilicon production internationally include the modified Siemens process (silicon trichloride reduction method), the silane method, and the fluidized bed method. However, the key technologies and processes for purification have long been monopolized by a few companies, resulting in high market prices for solar-grade polysilicon. Looking ahead to the next few years, research on new-generation low-cost, high-purity polysilicon production technologies will become increasingly active, and some new technologies are already beginning to emerge. 2. Ultra-thin cutting technology. Producing thinner silicon wafers and reducing losses during the cutting process are key aspects in improving the efficiency of silicon material utilization and lowering the production costs of components. The thickness of solar cells that are widely used internationally today is around 180–240 micrometers. It is predicted that by 2020, the thickness of these cells will be reduced by half, to around 100 micrometers. In terms of wafer cutting technology, internal circular cutting and multi-wire cutting are currently widely used. Internal circular cutting is a traditional processing method; the material utilization rate is only around 40%–50%, and it is not possible to process silicon wafers with large to medium diameters exceeding 200 millimeters. Multi-wire cutting is a new silicon wafer cutting technology that has emerged in recent years. It relies on metal wires to drive silicon carbide abrasives for grinding purposes in order to cut silicon wafers, and it features high cutting efficiency, low material loss, good surface quality of the wafers, and the ability to cut large-sized materials. As an advanced cutting technology, multi-wire cutting will gradually replace traditional inner-circle cutting in the future and become the main method for slicing silicon wafers. 3. Technologies for the recycling and utilization of waste liquids and gases. Data shows that when high-purity polysilicon is produced using chemical methods, more than 8 tons of silicon tetrachloride are generated for every ton of polysilicon purified, in addition to waste liquids and gases such as trichlorosilane and chlorine gas. Raw recycled silicon tetrachloride is a highly corrosive, toxic liquid that is difficult to store. However, if silicon tetrachloride, trichlorosilane, hydrogen chloride, and hydrogen can be effectively separated from waste liquids and gases, they can be reused in the system. If silicon tetrachloride can reach a purity of over 99.99%, it becomes a highly valuable by-product suitable for use in fiber optic production (currently, all silicon tetrachloride used in fiber optic manufacturing in China is imported from abroad). Currently, international manufacturers such as Wacker in Germany already possess advanced technologies for the recovery and recycling of silicon materials from exhaust gases. The second is to develop thin-film batteries. Thin-film photovoltaic cells require very little silicon, resulting in costs that are several times lower than those of polycrystalline and monocrystalline silicon cells. At the same time, it is both an efficient energy source and a new type of building material, making it easier to integrate seamlessly into buildings. Therefore, thin-film solar cells are recognized as the key focus for the future development of the international photovoltaic cell market. Countries such as Japan, Germany, and the United States are accelerating research and development as well as the commercialization of thin-film photovoltaic cells, in an effort to develop technologies for such cells that are low-cost and suitable for large-scale use. According to the European Energy Association’s projections, thin-film photovoltaic cells will account for 20% of photovoltaic cells by 2010. Some experts also estimate that by 2013, thin-film solar cells are expected to be on par with crystalline silicon solar cells. (5) Photovoltaic power generation application products. Solar photovoltaic power generation applications include solar lighting, solar chargers, as well as various photoelectric conversion devices and accessories. Currently, solar lighting technology has made significant advancements and is now widely used in applications such as lighting in building corridors and urban lighting systems. In particular, breakthroughs have been achieved in the field of building-integrated photovoltaics (BIPV). Urban lighting involves using solar panels as a power generation system; when the batteries are charged to a certain level, the automatic protection system built into the control system causes the solar panels to disconnect from the power supply, thereby providing automatic protection ； It is activated at night to deliver output current, thereby enabling various load lamps to produce a lighting effect. For lighting in building corridors, solar panels are installed on the rooftop or roof surface; a separate power storage control system is used, with dedicated wires to transmit power to the corridors. Sound and light sensors along with timing controls are employed to enable automatic activation and shutdown of the lighting. Solar lighting fixtures, including solar lawn lights, garden lights, landscape lights, high-mast lights, signal lights, and beacon lights, generally use LEDs or DC energy-saving lamps. Building Integrated Photovoltaics (BIPV) introduces the new concept of \"buildings generating energy\", which involves integrating photovoltaic power generation into buildings, primarily their roofs and walls, so that the buildings can use green and environmentally friendly solar energy to produce electricity. There are two ways to integrate photovoltaic technology with buildings: one is to combine the building with a photovoltaic system, which involves installing the packaged photovoltaic modules on the roofs of residential homes or buildings, and then using them together with inverters, batteries, controllers, loads, and other devices to create a power generation and lighting system ； Another approach is to combine architecture with photovoltaic devices, integrating these devices into building materials. Photovoltaic modules are used in place of roofs, windows, and exterior walls, resulting in products that combine photovoltaic functions with building materials. Such products can serve as building materials, generate electricity using green solar energy, and at the same time reduce the cost of BIPV systems. This will surely accelerate the industrialization and commercialization of solar building energy-saving technologies. II. Current Status and Trends of the Global Photovoltaic Industry The main application areas for the photovoltaic industry are grid-connected power generation, off-grid industrial applications, and electricity supply in developing rural areas. Of this, grid-connected power generation accounts for about 70%. The cost of photovoltaic grid-connected power generation is high, and it has no advantage over conventional electricity in the short to medium term. Based on calculations of the power generation costs of photovoltaic cells, the cost of generating electricity from solar power connected to the grid is currently about 10 times that of conventional power sources such as thermal power. This cost is not likely to decrease significantly in the short to medium term; only through industrial policy subsidies and the scaling up of the industry can the market for photovoltaic applications continue to develop. (1) The global photovoltaic market is developing rapidly. In the 1980s, various countries enacted legislation, introduced incentive policies, formulated development plans, and provided strong support to promote the industry, which led to its rapid growth. Solar photovoltaic power generation has become the fastest-growing and largest industry in the field of renewable energy, second only to wind power generation in terms of industrial development. According to the latest data from the reputable business research firm Solarbuzz, in 2007 the global installed capacity of photovoltaic module systems increased by 2826 MW, representing a year-on-year growth rate of 62%. The total global installed capacity of photovoltaic modules reached 9450 MW, generating revenues of $17.2 billion. Between 2000 and 2007, the global cumulative installed capacity of photovoltaic systems experienced an annual compound growth rate of 30.83%, showing rapid expansion. Europe is currently the largest consumer market for the global photovoltaic industry. Among them, Germany added 1,328 MW of new photovoltaic capacity in 2007, a 38% increase compared to the previous year, accounting for 47% of the global increase in photovoltaic capacity. Spain follows closely behind, ranking second in the world with 640 MW of new capacity added, representing a 4.8-fold increase. In addition, the U.S. market also performed well, with 220 MW of new capacity added in 2007, representing a year-on-year increase of over 57%; in contrast, Japan had a poor performance, with only 230 MW of new capacity added, a year-on-year decrease of 23%. According to predictions by the European Photovoltaic Industry Association (EPIA), the global cumulative installed capacity will reach 12–15 GW by 2010, and 30 GW by 2012, with a compound annual growth rate of over 30%. In 2020, photovoltaic power generation will account for 1% of global electricity production, and by 2050 this figure is expected to rise to around 25%, making it an important source of energy supply ； The size of the global solar power generation market will grow from $11 billion in 2005 to $51 billion by 2015. (II) Global solar cell production capacity is expanding significantly. The global photovoltaic industry is concentrated in four regions: Europe, the United States, Japan, and China, and it has been expanding at an accelerating pace in recent years. 1. In terms of batteries and components. In 2006, the global production of solar cells was 2500 MW, representing a year-on-year increase of 44.8% (see Table 1). China surpassed Japan and Europe to rank third in the world. In 2007, global production reached 3,436 MW, an increase of 37%, with capacity reaching 5,000 MW ； Among them, the global production of thin-film solar cells reached 400 MW, an increase of 1.1 times compared to the previous year; these cells accounted for 12% of the total global solar cell production, up by 3.8 percentage points. According to the latest data from the China Solar Energy Association, China’s solar cell production in 2007 reached 1,188 MW, surpassing that of Europe and Japan to rank first in the world ； China, Europe, and Japan account for 35%, 30%, and 26% of the global share respectively. Europe’s total battery production reached 1,060 MW, while Japan’s was 900 MW; Europe thus surpassed Japan for the first time. In Germany, Q-cells achieved a production volume of 390 MW, surpassing Sharp and ranking first in the world. Table 1: Output and market share of the top 11 global photovoltaic cell manufacturers in 2006
Company | 2005/MW | 2006/MW | Growth/% | Market Share/%
Sharp (Japan) | 428.0 | 434.4 | 1.5 | 17.4
Q-Cells (Germany) | 160.0 | 253.1 | 58.2 | 10.1
Kyocera (Japan) | 142.0 | 180.0 | 26.8 | 7.2
Sanyo (Japan) | 125.0 | 155.0 | 24.0 | 6.2
Mitsubishi (Japan) | 100.0 | 111.0 | 11.0 | 4.4
Schott Solar (Germany) | 95.0 | 83.0 | -12.6 | 3.3
BP Solar (UK) | 90.0 | 85.6 | -4.9 | 3.4
Suntech (China) | 80.0 | 157.5 | 96.9 | 6.3
Motech (Taiwan, China) | 60.0 | 102.0 | 70.0 | 4.1
Shell Solar (Netherlands) | 59.0 | 86.0 | 45.8 | 3.4
Isofoton (Spain) | 53.0 | 61.0 | 15.1 | 2.4
Other companies | 335.0 | 791.4 | 136.2 | 31.6
Total | 1727.0 | 2500 | 44.8 | 100

2. Regarding polysilicon. In 2007, global production of solar polysilicon was 27,000 tons, representing a 15% increase on a year-on-year basis; this growth rate was much lower than the 44.8% increase in battery production. Among them, the top ten major manufacturers produced 14,000 tons. Polysilicon is generally divided into electronic-grade polysilicon and solar-grade polysilicon, with purities of over 10 nines and over 6 nines respectively. Approximately 10–13 tons of high-purity polycrystalline silicon raw material are required to produce 1 MW of crystalline silicon solar cell modules. Currently, global polysilicon production is concentrated in 10 manufacturers controlled by 7 companies in Japan, the United States, and Germany. According to estimates by international experts, in 2007, 90% of the global production capacity of 5,000 MW in solar cells relied on polysilicon materials. If production ran at full capacity, and assuming that advanced technologies require 9 tons of polysilicon per megawatt, then 40,000 tons of polysilicon would be needed. In 2007, however, only 27,000 tons of silicon materials were available for use in the photovoltaic industry, resulting in a shortage of 13,000 tons. Between 2001 and 2003, the selling price of solar-grade polysilicon remained at 25 dollars per kilogram. It began to rise year by year starting in 2004; by 2005 it exceeded 50 dollars per kilogram. In 2006, the price of bulk material surpassed 100 dollars per kilogram. By the end of December 2007, the price of bulk material exceeded 400 dollars per kilogram for the first time, and it has since remained above 300 dollars per kilogram. Currently, the world’s top 10 polycrystalline silicon producers are implementing expansion plans (see Table 2). The production of polycrystalline silicon for use in solar energy will double compared to last year’s level in 2008, reaching 27,000 tons, and it is expected to rise to 40,000 tons by 2010. The global total amount of polycrystalline silicon used for solar energy is projected to be between 60,000 and 80,000 tons. Table 2: Production Plans for Polysilicon by the Top 10 Global Manufacturers from 2007–2010
Company | 2007 | 2008 | 2009 | 2010
Semiconductor | Solar | Semiconductor | Solar | Semiconductor | Solar | Semiconductor | Solar
Tosoh (Japan) | 4200 | 1000 | 4200 | 1100 | 4200 | 2000 | 4200 | 2000
Mitsubishi (Japan) | 1450 | 200 | 1450 | 200 | 1450 | 200 | 1450 | 200
Sumitomo (Japan) | 800 | 1300 | 1300 | 1300 | 0
Hemlock (USA) | 5000 | 5000 | 5000 | 7100 | 5000 | 9500 | 5000 | 14000
Asimi (USA) | 1500 | 1500 | 2000 | 3000 | 2000 | 3000 | 2000 | 3000
SGS (USA) | 2000 | 8500 | 8500 | 0 | 8500
MEMC (USA) | 1200 | 1100 | 1300 | 1400 | 1500 | 1500 | 2000 | 3000
Mitsubishi (USA) | 1350 | 150 | 1350 | 150 | 1350 | 150 | 1350 | 150
Wacker (Germany) | 3200 | 2800 | 5000 | 5500 | 5000 | 8500 | 5000 | 9500
MEMC (Italy) | 800 | 800 | 1200 | 1600 | 0
Total | 19500 | 13750 | 22400 | 26950 | 23000 | 33350 | 23900 | 40350
Ratio (Semiconductor/Solar): 1:0.70, 1:1.20, 1:1.45, 1:1.69
(III) Industrial policies driving a shift in market focus have become a fundamental characteristic of the global photovoltaic market. Differences in industrial policy support across countries have driven the shift in the global photovoltaic market. Phase 1: Before 1996, the U.S. photovoltaic market accounted for 32.1% of the global market share, with a compound annual growth rate of 25%, making it the center of the world’s photovoltaic market. Phase 2: Between 1996 and 2002, Japan’s photovoltaic market maintained an average annual growth rate of 35%, emerging as the largest consumer of photovoltaic products in the world. Phase 3: From 2003 to the present, the EU has become the dominant force in this market. This was made possible by the solar energy subsidy policies in Germany and Spain, which rapidly facilitated the development of a market hub in the EU. Currently, 90% of China’s solar energy products are exported to the EU. In recent years, Japan has adjusted its subsidy policies, leading to a decline in the market. Germany and Japan account for a large share in photovoltaic grid-connected power generation, mainly through residential rooftop systems, thanks to their **effective guidance and incentive measures. Germany uses two main methods to encourage the use of photovoltaic power generation: first, it purchases solar electricity generated by households at a high price and integrates it into the national grid, at a purchase price of 0.53 euros per kilowatt hour; meanwhile, the cost for households to use solar electricity remains the same as the regular electricity price, at around 0.21 euros per kilowatt hour. This approach encourages households to install solar power generation systems on their roofs ； Secondly, priority is given to loans, with a 3% interest subsidy provided to encourage residents to purchase and install solar power generation equipment. Japan’s subsidy approach is as follows: residents’ investment in installing solar power generation equipment is subsidized by **50%, the electricity generated is fed into the grid and purchased at a high price, while the cost of electricity for residents is lower than that purchase price.** The United States has also established a photovoltaic power generation program and implemented the “Million Roofs” initiative. Other countries in Europe have also formulated development plans and policies for photovoltaics, which has significantly contributed to the rapid growth of the global photovoltaic industry. Looking at the structure of the global photovoltaic market in 2006 and 2007, the European market accounted for over 70% of the global share; the Japanese market saw a decline, while the American market continued to grow steadily. This is directly related to the level of support provided by the photovoltaic industry policies in each region. Therefore, the demand in the global photovoltaic market at present is driven more by exogenous policy measures; it can be said that future growth in demand for the global photovoltaic market will depend on the strength of industrial policies. These are the basic characteristics of the current global photovoltaic market. (IV) The global photovoltaic market is facing new adjustments. In recent years, high polysilicon prices have had both direct and indirect effects on the photovoltaic industry. On the one hand, the huge profits from polysilicon have fueled enthusiasm for investing in the photovoltaic industry, directly contributing to its emergence on the global stage and making it a key focus for energy investment. From 2006 to 2007, global investment in photovoltaic technology flowed primarily into the upstream polysilicon sector, leading to rapid expansion of production capacity. According to statistics from international professional organizations, by the end of last year, a total of 133 polysilicon projects were under way worldwide. The period of extremely high profits for polysilicon over the next few years will gradually come to an end. A decrease in the cost of polysilicon will facilitate a healthy adjustment within the photovoltaic industry chain, reduce costs across the entire industry, and have a positive impact on its development. On the other hand, the large-scale investment in polysilicon has led to redundant construction and unplanned, low-level expansion in certain areas. As a high-energy-consuming and highly polluting upstream production process, uncontrolled expansion of polysilicon production may have a negative impact on the photovoltaic industry policies in these regions. Energy constraints and policy adjustments will tend to favor thin-film batteries, thereby facilitating structural changes in the photovoltaic battery industry. Between 2008 and 2012, the growth rate of polysilicon production capacity will gradually exceed the growth rate of actual demand. By 2011, supply and demand for polysilicon will reach a basic balance, and the price of polysilicon will return to $100 per kilogram. The trend in the supply-demand balance of polysilicon will effectively change the landscape of the photovoltaic industry’s development. III. Current Status and Trends of China’s Photovoltaic Industry (1) Abundant solar energy resources, and the photovoltaic industry has been included in China’s renewable energy plans. Our country is rich in solar energy resources, with an average annual solar radiation level ranging from 1,050 to 2,450 kilowatt-hours per square meter ； Among them, areas with more than 1,050 kWh per square meter account for over 96% of the country’s total area, and they receive solar radiation equivalent to 170 million tons of standard coal each year. Two-thirds of the country has more than 2,000 hours of annual sunshine. Compared to countries at the same latitude**, it is similar to the United States, but performs better than regions such as Europe and Japan. The regional advantages and abundant resources are highly suitable for the development of the photovoltaic industry. The enactment and implementation of China’s Renewable Energy Law has provided impetus for the development of the photovoltaic industry. Article 17 of this law explicitly stipulates that **units and individuals are encouraged to install and use solar energy utilization systems such as solar water heating systems, solar heating and cooling systems, and solar photovoltaic power generation systems. Article 19 stipulates that the on-grid electricity price for renewable energy power generation projects shall be determined by the price regulatory authority under the State Council, in accordance with the characteristics of different types of renewable energy power generation and the conditions in various regions, following the principles of promoting the development and utilization of renewable energy and ensuring economic rationality. Such prices shall be adjusted from time to time in line with the progress of technologies related to the development and utilization of renewable energy. On this basis, Articles 24 to 26 further specify specific measures such as special funding support, credit assistance, and tax incentives for renewable energy sources, including photovoltaic power. **The National Development and Reform Commission promptly issued the \"Interim Measures for the Management of Prices and Cost Allocation for Renewable Energy Power Generation,\" which set out relevant regulations regarding the pricing of renewable energy power generation, including photovoltaic power, as well as cost payment and allocation, thereby clarifying the measures for providing support. It is expected that as the domestic photovoltaic industry and market develop rapidly, additional supportive policies will be introduced one after another. In accordance with China’s Medium- and Long-Term Development Plan for Renewable Energy and the photovoltaic development roadmap, by 2020 China aims to rapidly increase the installed capacity of solar power generation from 5 MW in 2005 to 8 GW, and to reach 30 GW by 2030. This means that over the next ten-odd years, from now until 2020, the compound growth rate of China’s solar power generation capacity will be over 25%, and the total investment in solar power generation will reach 95 billion yuan; the market prospects are generally favorable. (II) China’s photovoltaic application market has not yet been fully activated. In 2007, China’s new installed capacity for photovoltaic power generation was 26 MW, an increase of only 16 MW compared to the previous year. Despite this relatively low starting point, the growth rate was astonishingly high at 160%; the total installed capacity for photovoltaics reached 106 MW, representing a 32.5% increase year-on-year. This growth rate is on par with the average global growth rate, but it still accounts for only 1.16% of the world’s total installed capacity. In the early 1990s, photovoltaic power generation in our country was mainly used in the communication and industrial sectors, including microwave relay stations, satellite communication ground stations, program-controlled telephone switches, as well as cathodic protection systems for water gates and oil pipelines. Since 1995, it has been primarily used in specialized applications and remote areas; over 40 photovoltaic power plants of various scales have been built, and approximately 150,000 household photovoltaic power systems have been deployed. After 2000, China’s photovoltaic technology entered the stage of large-scale grid-connected power generation, with the construction of megawatt-class photovoltaic grid-connected demonstration systems beginning. Since 2002, the **National Development and Reform Commission has launched the ‘Lighting Project for Villages Without Electricity in Western Provinces’, using photovoltaic and small-scale wind power to address the electricity supply issues in nearly 800 villages without electricity across 7 western provinces. “During the 15th Five-Year Plan period, Daxing District in Beijing built China’s first 50-kilowatt rooftop photovoltaic grid-connected demonstration power station, while Shenzhen established the largest photovoltaic grid-connected power station in Asia to date, with a total capacity of 1 MW and an annual power generation capacity of around 1 million kWh. Its design and installation were integrated with the exhibition halls of the Shenzhen International Garden and Flower Expo. Recently, a grid-connected power generation system with a total capacity of 100 kilowatts was installed at the main stadium of the Beijing Olympics. Overall, however, breakthrough progress has not yet been achieved in solar grid-connected power generation and solar building applications. According to the development plan for China’s photovoltaic market, grid-connected power generation and the integration of photovoltaics with buildings will become key areas of focus starting from 2010. With the introduction of substantial subsidy policies, the photovoltaic market could see rapid growth in 2015. (III) China’s photovoltaic industry, particularly the battery sector, is developing rapidly. China’s photovoltaic power generation industry began in the 1970s, and entered a period of steady development in the mid-1990s. By the end of 2006, the production capacity for photovoltaic cells reached 1200 MW with a production volume of 450 MW, while the production capacity for photovoltaic modules reached 2000 MW and the production volume was 800 MW, making it the third-largest producer of photovoltaic cells after Japan and Germany. In 2007, China’s solar cell production reached 1,188 MW, surpassing that of Japan and Europe and ranking first in the world. By the end of 2007, 10 companies in China’s photovoltaic industry had gone public overseas, with a total market value of $17.865 billion. There are over 500 photovoltaic enterprises and R&D institutions in the country; among them, there are nearly 20 companies dealing with polysilicon materials, around 30 companies engaged in rod drawing and ingot casting as well as silicon wafer processing, 150 companies focused on battery and module production, and more than 200 companies producing photovoltaic equipment and related materials ； There are also a large number of companies specializing in photovoltaic applications, with over 100,000 employees. 1. Crystalline silicon purification and wafer processing. The production bases for monocrystalline and polycrystalline silicon, which are part of the upstream segment of the photovoltaic industry chain, are mostly located in the central and western regions, such as Ningjin in Hebei, Luoyang in Henan, Leshan and Emei in Sichuan, Yunyang and Wanzhou in Chongqing, and Xinyu in Jiangxi. The key companies include Hebei Ningjin Jinglong Group, which is dedicated to the research, development, production, and sales of solar monocrystalline silicon rods. Its products account for around 70% of the domestic market share and over 20% of the global market share, making it the largest manufacturer of solar monocrystalline silicon in the world. The company’s subsidiary, JA Solar, is listed on the NASDAQ stock exchange in the United States. Jiangxi Sunwoda LDK has an annual production capacity of 15,000 tons of silicon material and 1,600 megawatts of silicon wafers; it is currently the largest producer of solar polycrystalline silicon wafers in Asia ； Zhejiang Yuhui Sunshine Energy Co., Ltd., with an annual production capacity of 80 megawatts of monocrystalline silicon, was listed in the UK in August 2006 ； Luoyang Zhongsi High-Tech Co., Ltd. is building a polysilicon production facility in Yanshi, Henan, with an annual output capacity of 3,000 tons ； Sichuan Xinguang Silicon Industry Company’s 1,260-ton polysilicon project is the **only high-tech demonstration project of 1,000-ton scale for polysilicon approved by the National Development and Reform Commission. In addition, there are more than a dozen projects that have been completed or are under construction. Examples include Asia Silicon Industry’s 6,000 tons of production capacity in Qinghai, invested in by Wuxi Suntech; Jiangsu Daquan’s 10,000 tons of production capacity in Wanzhou, Chongqing; Jiangsu Sunshine’s 4,500 tons of production capacity at Sunshine Silicon Industry in Ningxia; Shenzhen Nanbo A’s 5,000 tons of production capacity in Yichang; Sichuan Leshan’s Tongwei Group’s 10,000 tons of production capacity; Hebei Tianwei Yingli’s 5,000 tons of production capacity; and Yunnan Aixin Silicon Technology’s 10,000 tons of production capacity. 2. Processing of crystalline silicon solar cells and modules. The companies that produce solar cells include Wuxi Suntech, China Electric Power (Nanjing), Jiangsu Linyang (Nantong), Shenzhen Tuori, Baoding Tianwei Yingli, Xinyu SVLDK, Xinjiang New Energy, and Changzhou Trina Solar. The production volumes of Wuxi Suntech and China Electric Power in Nanjing rank among the top ten in the world. Last year, Wuxi Suntech’s solar cell production capacity reached 500 MW, with output of 350 MW; its sales volume exceeded 10 billion yuan. It has now ranked among the top three companies in the global photovoltaic cell industry and has become the largest solar cell manufacturing base in China. By 2010, the production capacity was planned to reach 2600 MW, making it the world’s largest solar cell manufacturing base. 3. Production of amorphous silicon thin-film solar cells. Shenzhen Tuori is the only company in China that is listed on the A-share market and specializes in the production of thin-film solar cells. In 2006, the only project under the **10th Five-Year Plan** – namely, the \"technology for manufacturing high-efficiency, low-cost amorphous silicon solar cells and its industrialization\" – was completed, achieving a conversion efficiency of 6%. From 2004 to 2007, for four consecutive years, it ranked first in the country in terms of exports of amorphous silicon solar cells, accounting for 8.7% of the global market share. Recently, China Photovoltaic Energy Technology Co., Ltd. partnered with the Japanese company ULVAC to invest $220 million in Yantai, Shandong, to produce thin-film solar cells; by 2010, the production capacity is set to reach 64 MW per year. Hunan Xiangtou Group and the American company PPC have invested 550 million yuan in the development of thin-film batteries. Shanghai is in the process of establishing the largest photovoltaic equipment manufacturing base in the country, while Suntech Power has invested nearly 100 million dollars in Shanghai for thin-film battery projects. (IV) China’s photovoltaic equipment market is growing steadily, but high-end equipment still relies on imports. Starting in 2003 and up to December 2006, China installed 47 new standard solar cell production lines (25 MW per line) within just 4 years. Based on the current average investment of 30 million yuan per line of equipment, the equipment market is as large as 1.4 billion yuan. If the investments in purchasing equipment for manufacturing materials, such as polysilicon ingot furnaces, single-crystal furnaces, cutters, and wire saws, to address the shortage of silicon wafers are taken into account, the total market value of such equipment in China exceeds 2.5 billion yuan. About one-third of this market is occupied by domestic equipment. In 2005, approximately 330 sets of such equipment were sold, generating sales revenue of nearly 400 million yuan; in 2006, this figure rose to 700 million yuan. According to the development plans of the top 10 companies in the industry, by 2010, China will add another capacity of over 3,000 MW for related manufacturing facilities. Even with the current mainstream domestic configuration approach that combines mature domestic equipment with imported equipment, it still provides equipment manufacturers with a market worth at least 3.6 billion yuan. If fully imported equipment is used, an equipment investment of 8.4 billion yuan will be required. China’s photovoltaic equipment manufacturers now basically possess the capability to produce complete sets of equipment for solar cell manufacturing, as well as equipment for photovoltaic power generation. Some products, such as diffusion furnaces and plasma etching machines, are being exported in small quantities. Eight out of the 11 types of equipment used in large-scale solar cell production lines can be supplied; among these, 6 types (diffusion furnaces, plasma etching machines, cleaning/texturing machines, quartz tube cleaning machines, low-temperature drying ovens) already play a dominant role in domestic production lines. Two types (tubular PECVD machines and rapid sintering furnaces) coexist with imported equipment, but their share is gradually increasing. Three types (fully automatic screen printing machines, automatic sorting machines, and flat-bed PECVD machines) rely entirely on imports, and no significant progress has been made in this regard yet. Laminators and solar simulators used for component production are widely applied in the industry. Among silicon wafer processing equipment, single-crystal furnaces hold a dominant position in the domestic market thanks to their excellent cost-performance ratio, and are exported in large quantities to Asia. Breakthroughs have been achieved in multi-wire cutting machines, and polycrystalline silicon ingot furnaces are set to be introduced on the market soon. The key 24-pair rod reduction furnace used in high-purity silicon material purification equipment has also been developed successfully with the support of the **\"863\" Program. There are currently over 40 companies in the country engaged in the research, development, and production of solar photovoltaic equipment, of which 10–15 are key players. The main manufacturers include: The 48th Research Institute of China Electronics Technology Group is the largest supplier of solar cell equipment in the country. The diffusion furnaces, plasma etching machines, low-temperature drying/high-temperature sintering furnaces, and tubular PECVD systems it produces account for the majority of the domestic market for such equipment, and these products are also being exported. Single-crystal furnaces and polycrystalline ingot furnaces are gradually being introduced to the market. The multi-wire cutting machine developed by Shanghai Rijin Machine Tool Co., Ltd. has been put into production. Factories affiliated with Xi’an University of Technology, Beijing Jingyuntong Company, Beijing Jingyi Century Company, and others specialize in the production of single-crystal furnaces, offering products with high cost-performance ratios. Shenzhen Jiejiachuang Company specializes in the production of cleaning/texturing equipment. Beijing Qixing Huachuang Electronics Co., Ltd. produces cleaning machines, diffusion furnaces, and other devices. Shanghai Solar Technology Company and Hebei Qinhuangdao Aoruite Company are engaged in the research and development as well as production of laminators used in module manufacturing. In China, manufacturers that produce batteries, controllers, and grid-connected inverters for energy storage on a considerable scale include Harbin Guangyu, Jiangsu Shuangdeng, Shenzhen Huada Ennos, Hefei Sungrow Power Supply, and Shanghai Fuhua, among others. Internationally renowned major photovoltaic equipment manufacturers still hold the majority of the market share. Japanese companies such as TAKATORI, NACHI Machine Tool Co., Ltd., and NTC, along with Swiss companies M&B and HTC, are leaders in wire cutting machines, among which HTC is a pioneer in wire cutting technology. The diffusion furnaces, tubular PECVD systems, drying/sintering furnaces, cleaning, etching, and texturing equipment, as well as PN junction etching devices produced by the German company Centrotherm, represent the highest standards in the world today. The flat-panel PECVD equipment produced by German companies Roth&RaU and OTB, as well as by the Japanese company Dōtsu, is internationally leading. The fully automatic screen printing equipment from companies such as Baccini in Italy, DEK in the UK, and ASYS in Germany essentially dominates the global market. The film equipment from Applied Films in the United States, the rapid sintering equipment from Despatch in Japan, and BTU in the United States (which has acquired RTC) are notable. The polysilicon ingot casting furnaces produced by GT Solar in the United States, as well as the single-crystal furnaces in Japan, are at the international forefront among such devices. The contactless electromagnetic welding technology developed by Swiss company Komax offers a new approach to the welding process in component production, raising it to a new level. Batteries for energy storage, controllers, and grid-connected inverters are mainly found in regions such as Germany, Austria, Japan, and North America. American companies Powerware, SENRY, and GNB, along with the German company SunPower, rank among the top 4 in the world in terms of battery production and sales, with total sales exceeding 4 billion dollars. Morningstar in the United States and Steca in Germany rank among the top in the world in terms of controller sales. SMA of Germany is the world’s leading supplier of inverters; the installed capacity of its products exceeds 2.5 GW. It holds 80% of the European market and 75% of the U.S. market. It is also the largest supplier in China, with sales reaching 300 million euros in 2007. Companies such as Fronius from Austria, Studer from Switzerland, Xantrex from Canada, Sunpower from the United States, as well as Sharp, Sanyo Electric, and Mitsubishi Electric from Japan are leaders in this field. Currently, grid-connected photovoltaic inverters for 1–10 kV have dropped to around $550–990. At this year’s second International Solar and Photovoltaic Conference, the American company AES introduced the world’s first high-power, transformer-free grid-connected inverter. According to industry experts, in the future, competition in the photovoltaic equipment sector will focus on kiloton-scale silicon material purification equipment, equipment for processing large-size thin silicon wafers, high-efficiency thin-film battery production equipment, as well as high-performance, environmentally friendly batteries and grid-connected inverters. 5. The development of the photovoltaic industry in our province is among the best in the country. Our province’s photovoltaic industry ranks among the top in the country, boasting a solid industrial foundation; it has initially developed a pattern of \"two cores, multi-point development, and driving progress from key points.\" That is, with Wuxi Suntech and CEEC (Nanjing) as the key enterprises, it drives the surrounding areas such as Zhenjiang, Yangzhou, Changzhou, and Xuzhou. Our province ranks among the top in China in terms of the production scale of its photovoltaic industry. Wuxi Suntech and Nanjing Zhongdian rank among the top 10 globally in terms of production and sales volume. The Suntech Photovoltaic Industrial Park and R&D center, covering an area of 680 mu, are currently under construction in the Wuxi High-Tech Zone ； It possesses certain capabilities in independent research and development, and has two world-class scientific research teams from Suntech Power in Wuxi and Nanjing CECC, which possess the core technologies in the photovoltaic industry ； It boasts a high level of industry organization; in March 2006, at the initiative of the Provincial Department of Science and Technology, 25 key enterprises including Wuxi Suntech and Nanjing CECC formed China’s first solar photovoltaic industry alliance and carried out a series of activities. Yangzhou has made the solar photovoltaic industry one of the four industries it aims to develop into sectors worth 100 billion yuan each, and has already achieved some breakthroughs. Construction has begun on Jiangsu Shunda Group’s project to produce 3,000 tons of solar-grade polysilicon per year ； Jiangsu Huafu, in collaboration with Tsinghua University and other institutions, has developed a polymer nanopolymer-based photovoltaic energy storage battery that is the first of its kind in China. This battery went into commercial production this year, with annual sales reaching 1 billion yuan ； Norwegian company Metocafte is a global high-tech enterprise specialized in the recycling of silicon slurry. This year, it has partnered with Jiangsu Shunda, investing $25 million in the first phase, with an annual production capacity of 40,000 tons. A 5-square-kilometer photovoltaic industrial park planned and constructed in Xuzhou City. Companies such as Zhongneng Silicon Industry, Hebei Jinkao, Jiangsu Aide, and Taiwan Maodi have already set up operations there, and it is expected that the photovoltaic and optoelectronic industry will generate an output value of 5.5 billion yuan this year. The first phase of Jiangsu Zhongneng’s project, with an annual production capacity of 1,500 tons of solar-grade polysilicon, has been completed and put into operation; the subsequent phase with an annual capacity of 6,000 tons is under accelerated construction ； Maodi Group, Taiwan’s largest listed company in the battery materials sector, has set up operations in Xuzhou. It invested 280 million dollars to acquire Jiangsu Aide Co., Ltd. and began building crystal silicon production lines there. Suzhou is committed to building a solar photovoltaic industry base, and a number of enterprises with large-scale production capabilities have rapidly emerged. Currently, there are over 30 photovoltaic enterprises in the city, of which 3 are parent companies that are listed on the stock market. In 2007, the total production capacity of solar cells and modules reached 300 MW, with a total output value of nearly 5 billion yuan. Suzhou’s photovoltaic industry features five major product segments: crystal silicon solar cell manufacturing, solar cell equipment manufacturing, solar photovoltaic glass manufacturing, photovoltaic integrated application products, and solar cell auxiliary products, thus forming a complete industrial chain. The leading company, CSI Artesun, has invested in establishing 5 enterprises for research and development, production, and integrated applications in Suzhou. By 2007, the company’s total output value exceeded 300 million dollars; it has become an important international manufacturer of solar power generation products and related applications, and it was listed on the NASDAQ stock exchange in the United States in 2006. Research and development of the next generation of solar cells has also begun. The Suzhou Institute of Nano-Tech and Nano-Bionics, affiliated with the Chinese Academy of Sciences, is undertaking the **973 major basic research project – “Research on Key Scientific Issues Related to Wide-Spectrum, High-Efficiency Third-Generation Solar Cells Based on Nanoscale Structures.”** It is also planning to establish 3–5 platforms for the testing, development, and production of solar cell-related equipment. By 2010, the city planned to establish 1 R&D center (platform) at an internationally advanced level to drive and support the technological development of the photovoltaic industry; 2–3 leading enterprises in this sector with complete industrial chains, a scale of over 20 billion yuan, and international competitiveness; and 10 key enterprises in the domestic industry that led in terms of performance and had an industrial scale of over 1 billion yuan. The city’s solar photovoltaic industry has a production capacity of 4,000 MW for cells and modules, with a total output value ranging from 80 to 100 billion yuan. III. Challenges Faced by the Development of China’s Photovoltaic Industry At present and in the coming period, China’s photovoltaic industry enjoys favorable development opportunities; however, it also needs to confront existing and potential problems. 1. Silicon raw material issues. Crystalline silicon material, as the main raw material for photovoltaic power generation, accounts for about 35% of the total cost of solar panels. Although our country holds 25% of the world’s silicon reserves, its refining technology is far behind that of developed Western countries; as a result, it remains trapped in a vicious cycle of exporting quartz sand at low prices, importing silicon materials, processing them into wafers, and then exporting the solar cells and modules. At present, most of the high-purity silicon raw materials required by solar cell manufacturers rely on imports. Most domestic crystalline silicon manufacturers operate at a scale of around 100 tons per year, which is still a significant distance from the currently recognized minimum economic scale of 1,000 tons per year and the optimal economic scale of 2,500 tons per year ； Moreover, the production line’s process equipment is outdated; compared to international standards, material and energy consumption is more than twice as high, resulting in products that lack competitiveness. Investing in a polysilicon production line with a capacity of around 1,000 tons requires an investment of about $100 million. It needs a power installation capacity of 98,000 kilowatts, with an annual electricity consumption of 250 million kWh. The issues of high energy consumption and environmental pollution have not yet been resolved. 2. The issue of inversion between industry and market. At present, China’s photovoltaic power generation market has not yet fully developed. Over 95% of solar cells and modules are exported abroad, mainly to Germany, as well as to Spain, Italy, and other countries; the domestic market share is very small. There is a reversal between the industry and the market, with solar cell production being a typical industry in which the technology and raw materials are sourced from outside, sales and the market are also located abroad, while manufacturing takes place domestically. In this way, on the one hand, high profits are earned by foreign manufacturers, while domestic companies only receive low fees for acting as contract manufacturers” ； We export clean energy abroad, but keep the energy consumption and pollution for ourselves. On the other hand, once foreign markets encounter obstacles and the domestic market fails to develop, many solar cell manufacturers will find themselves in trouble. 3. The issue of technological progress. China’s solar industry suffers from weaknesses in terms of equipment, manufacturing processes, talent, and core technologies; aside from a few companies, the overall quality of its products is inferior to that of developed countries. For example, although some domestic companies have mastered the improved Siemens process, certain key steps and techniques involved, such as the recycling of exhaust gases and waste materials as well as methods for reducing energy consumption, are completely restricted ； Grid-connected inverter/control products have not yet achieved commercial production through independent research and development; these products rely mainly on imports ； Battery technology for energy storage is not yet satisfactory, has a short lifespan, and so on. The development of standardized testing laboratories is relatively lagging behind. At present, there are 3 **-level solar cell module testing laboratories in our country, namely the Shanghai Institute of Space Power, the Quality Supervision and Testing Center for Chemical and Physical Power Sources under the Ministry of Information Industry (No. 18 Institute in Tianjin), and the Quality Inspection Center for Photovoltaic Power Generation Systems of the Chinese Academy of Sciences. However, these laboratories are not recognized internationally; certification is still required for products to be exported to Europe and the United States. 4. Issues related to policy support. On the one hand, according to the industrial planning goals set by the National Development and Reform Commission, the cumulative installed capacity of photovoltaic power generation was only 1,800 MW by 2020, accounting for just 0.227% of the total national electricity generation capacity at that time. Last year, China’s battery production capacity reached 1,188 MW; it is expected to reach 1,800 MW this year, and 5,000 MW by 2010. The planned market capacity for total photovoltaic power generation is not only much lower than that of wind power, but also stands in sharp contrast to the huge production capacity available. On the other hand, since 2006, **biomass and wind power generation have been promoted through the establishment of special tariff rates, and grid companies have been required to undertake mandatory purchases of electricity generated from renewable sources**; however, solar power generation has not yet been fully included, being limited to **key demonstration projects**. The biggest drawback of solar power generation is its high cost. In China, the current price for solar photovoltaic power generation is around 3 to 4 yuan per kilowatt-hour, which is more than 10 times higher than the price of thermal power, which is less than 0.3 yuan per kilowatt-hour. Therefore, there is an urgent need to **implement corresponding support policies. Although our country has successively introduced the Renewable Energy Law and the Interim Measures for the Management of Renewable Energy Power Generation Prices and Cost Allocation, there is a lack of specific operational details. Substantial policy push is still some time away. 5. The issue of overheated investment. Domestic companies generally tend to follow the trend, rushing in whenever things look promising, which can lead to excessive investment and hinder the healthy and orderly development of the industry. According to a study by Chi’ang Consulting, as of May 2008, there were 34 manufacturers in China that had started building projects for the production of high-purity polysilicon. Four of these companies—Dongqi Emei, Xinguang Silicon Industry, Luoyang Zhongsi, and Jiangsu Zhongneng—already possessed the capacity to produce on a commercial scale. In total, 37 production projects were under construction, and once they were fully operational, the production capacity would reach 68,000 tons, exceeding the total global production capacity. What’s even more surprising is that the long-term production plans announced by these manufacturers exceed 170,000 tons, with most of this capacity set to be realized by 2012. IV. The Current Development of the Photovoltaic Industry in Our City Although the photovoltaic industry in our city started late, it has grown rapidly. According to statistics, there are currently 15 enterprises in our city engaged in the photovoltaic industry and related supporting industries. These enterprises are mainly located in Yangzhong City, Danyang City, and Zhenjiang New Area. Their products include polysilicon purification, cutting of silicon rods and wafers, processing of solar cells and modules, as well as products for solar power lighting applications. In 2007, the sales revenue of the city’s photovoltaic industry was approximately 2 billion yuan. The main enterprises and products include: 1. Polysilicon smelting. Daquan Group Co., Ltd. Based on the adoption and adaptation of world-class technologies, through independent innovation, China’s first polysilicon production system of a thousand-ton scale using a fully automated closed-loop manufacturing process was developed. A polysilicon smelting project was invested in in Wanzhou District, Chongqing, primarily to supply upstream materials for our city’s Huiguang Silicon Energy Company. The project is being built in two phases; the first phase has a capacity of 1,500 tons, with an investment of 960 million yuan, and it was successfully put into operation on July 8 this year ； The second phase will involve 1,500 tons, with an investment of 800 million yuan. By March next year, Daquan’s total polysilicon production capacity will reach 3,300 tons, with annual sales amounting to 8 billion yuan. Once fully completed, the project will have an annual production capacity of 10,000 tons of polysilicon, making it China’s largest polysilicon production base. 2. Production of silicon wafers, solar cell modules, and accessories. China Electric Power Group Co., Ltd. Developed through a partnership between China Electric Power Group and an Australian research team, the company has a registered capital of 88.8 million US dollars; it is engaged in the research, development, manufacturing, sales, and technical services of solar cells. To date, 6 internationally advanced silicon solar cell production lines have been built in Jiangning District, Nanjing, resulting in a production capacity of 192 MW. The designed total production capacity is 600 MW, with total output worth approximately 15 billion yuan. China Energy Photovoltaic has been successfully listed on the NASDAQ stock exchange in the United States. Zhenjiang HuanTai Silicon Technology Co., Ltd. It possesses 32 Czochralski crystal growth furnaces and 8 of the world’s most advanced modern multi-line production lines for cutting single-crystal and polycrystalline silicon wafers; its products are primarily supplied to photovoltaic companies such as Wuxi Suntech. In 2007, the company produced approximately 9 million monocrystalline silicon wafers, holding a 10% market share ； There were approximately 18 million polycrystalline silicon wafers, accounting for a market share of around 12%, with sales in that year exceeding 1 billion yuan. The company’s long-term goal is to achieve sales of 20 billion. Glory Silicon Energy (Zhenjiang) Co., Ltd. It was jointly invested and built by three companies – **Huahui Silicon Technology Co., Ltd., Wuxi Suntech, and Jiangsu HuanTai** – serving as an important supporting manufacturing facility for Wuxi Suntech. With a total investment of 500 million US dollars, the project plans to introduce 650 sets of internationally advanced polishing furnaces, slicing machines, and ingot casting equipment in phases, in order to build a 900MW solar silicon wafer production base. Once fully completed, the project will have the capacity to produce 450 million polycrystalline silicon wafers per year, with annual sales expected to exceed 20 billion yuan, making it the largest silicon material production base in Asia. Zhenjiang Dacheng Silicon Technology Co., Ltd. Located in Zhenjiang New Area, it is engaged in the production and research and development of single-crystal silicon rods and wafers for solar cells. In April 2007, the slicing workshop with an annual production capacity of 10 million silicon wafers went into operation; that year, 15 million silicon wafers and 220 tons of single-crystal rods were produced, generating an output value of 900 million yuan. It is expected that once full production capacity is achieved, an annual production capacity of nearly 1 billion yuan will be established. The company has established a strategic partnership with Nanjing CEC and is actively developing products such as photovoltaic cells, photovoltaic modules, photovoltaic system solutions, and photovoltaic applications. Jiangsu Crown Yuhua Photovoltaic Co., Ltd. Located in Xinba Town, Yangzhou, it was built with an investment of $20 million by American Crown Renewable Energy Co., Ltd. It is primarily engaged in the manufacturing of photovoltaic cell modules, which are sold to markets in Europe and the United States. The project is expected to be completed and put into operation in 2008, with a battery module production capacity of 15 MW in phase 1 and 100 MW in phase 3. Jiangsu New Era Silicon Materials Co., Ltd. The company is located in Sanmao Town, Yangzhong City. Its main products are solar-grade and semiconductor-grade silicon materials, with an annual production capacity of around 50 tons. The manufacturing processes and technical standards employed are at an advanced level in China. The company is investing $3 million to build one slicing production line, with completion and operation expected in 2009. Jiangsu Shangkun Photovoltaic Technology Co., Ltd. Located in the Yangzhong Economic Development Zone, its main products are solar photovoltaic accessories (junction boxes), and it currently holds a market share of around 25% in the domestic market. Danyang Hairun Semiconductor Co., Ltd. It mainly produces high-purity polysilicon, and the production line is currently under construction. It is expected that once the project is completed, it will be able to produce 500 tons of high-purity polysilicon per year, primarily to supply Jiangyin Hairun Photovoltaic Technology Co., Ltd. Zhenjiang Baohong Photovoltaic Co., Ltd. Located in Sanmao Town, Yangzhong City, with a total investment of 7.58 million US dollars and registered capital of 3.826 million US dollars, it is mainly engaged in the design, manufacturing, and sales of solar silicon wafers. The company has 7 wire cutting machines, with a production capacity of 1.8 million silicon wafers per month. A project to expand the photovoltaic industry is currently under construction; once completed, it will be able to produce 50 tons of single-crystal silicon rods and 3 million silicon wafers per month, with an annual output value of around 2 billion yuan. 3. Solar power generation equipment and application products. Jiangsu Nanzi Tonghua New Energy Power Co., Ltd. It is a high-tech enterprise affiliated with Nanzi Tonghua Group Company, specializing in the research, development, and manufacturing of complete sets for photovoltaic grid-connected power generation systems, standalone power generation systems, wind power generation systems, inverters, emergency power supplies, and uninterruptible power supplies. At present, the photovoltaic grid-connected inverters developed by Nanzi Tonghua have passed the evaluation and assessment by domestic experts from organizations such as the Photovoltaic Committee of the China Solar Energy Society, Tongji University, and Fudan University, and have become cutting-edge products in the field of photovoltaic power generation in China. China-Australia Photovoltaic Energy Technology Co., Ltd. Located on Huancheng North Road in Yangzhong City, it is primarily engaged in the research, development, and production of photovoltaic lighting systems. Its product range includes solar lawn lights, garden lights, street lights, landscape lights, and high-altitude advertising lights. Zhenjiang Yuning Energy Technology Co., Ltd. Located in Dantu Industrial Park, the company is primarily engaged in the development and production of solar photovoltaic products, including various civilian and military solar photovoltaic power generation systems, solar chargers, mosquito killers, etc. It currently has 10 production lines for solar photovoltaic products, with an annual output of 3 to 4 million sets of such products. Danyang Tianning Energy Technology Co., Ltd. Located in the Jiangnan Industrial Park in Eling Town, Danyang City, it mainly produces solar lawn lights, street lights, garden lights, and decorative lights. Its annual sales amount to around 300 million yuan, with a market share of about 1% in the domestic market. Jiangsu Wenrun Optoelectronics Co., Ltd. It is mainly engaged in the development and production of LED semiconductor light-emitting devices and optical sensing elements of various wavelengths, LED green lighting sources, LED display components, semiconductor lighting sources, solar lawn lights, garden lights, and other products. Its sales exceeded 400 million yuan in 2007, making it the largest LED packaging enterprise in China. Through an analysis of the current development situation, the photovoltaic industry in our city exhibits the following characteristics: first, the industry has reached a certain scale of development. The photovoltaic industry in our city has only begun to develop in recent years, but it is growing at a rapid pace, with related enterprises following suit quickly as well. Many enterprises have been established and put into operation, and projects under construction are progressing rapidly; production capacity and output value are expected to experience explosive growth in the coming years. Second, the industrial chain is becoming increasingly complete. Led by Daquan and Huahuang Silicon Energy, an industrial chain ranging from \"polysilicon—silicon wafers—solar cells and modules—to solar lighting fixtures\" has been established, with the upstream and downstream sectors of the photovoltaic industry initially connected. Third, a trend of industrial clustering is beginning to take shape. In the Yangzhong Economic Development Zone and Zhenjiang New Area, a number of photovoltaic manufacturing enterprises have gathered, forming close relationships of interdependence and coordinated cooperation among them. Fourth, the level of industrial technology is continuously improving. Driven by the relevant municipal departments, the photovoltaic manufacturing enterprises in our city focus on introducing advanced technologies from home and abroad and mastering them, emphasize industry-university-research cooperation with colleges and research institutions, and make use of the networking resources of internationally renowned photovoltaic experts from Zhenjiang to raise the technical level of the industry. Overall, however, there are also some issues that deserve attention. First, the photovoltaic enterprises in the region are relatively small in scale, lacking key enterprises to provide support ； Secondly, it relies mainly on silicon wafer cutting and processing, with operations taking place outside the company; as a result, enterprises are dependent on others, making it difficult to increase their profits and tax revenues ； Thirdly, there is a lack of strong support in terms of talent and technology; for example, Huahui Silicon Energy has yet to resolve the issue of slurry recycling during silicon wafer cutting ； Fourth, the photovoltaic industry lacks the capability for self-sufficient equipment supply. V. Strategic suggestions for accelerating the development of the photovoltaic industry in our city. In the coming period, the prospects for the development of the photovoltaic industry are very promising. It is also certain that competition among various regions in this field will become increasingly fierce. For our city, it is an urgent task to formulate development plans based on the current status and potential advantages of the photovoltaic industry, to organize the industrial layout properly, to implement support measures, and to encourage key enterprises to grow stronger, so as to gain an advantage and take the initiative in future competition. 1. Accelerate the formulation of a development plan for the photovoltaic industry. We have listed the photovoltaic industry as one of the emerging industries that our city will focus on developing in the current period and for some time to come, and have formulated specific plans and guidance catalogs for the new energy industry. It is necessary to clarify the strategic orientation and firmly establish the goal of developing the photovoltaic industry into a pillar industry of our city, as well as turning our city into a photovoltaic industry hub with international influence. It is necessary to clarify the development goals: by 2012, efforts should be made to achieve sales revenue of over 40 billion yuan for the city’s photovoltaic industry. The city should have 2 photovoltaic enterprises with annual sales exceeding 10 billion yuan, 2 enterprises with sales exceeding 5 billion yuan, and 1 enterprise with sales exceeding 2 billion yuan. Additionally, the production capacity should reach 3,000 tons of polysilicon, 500 million silicon wafers, and 600 MW of solar cells per year. The relevant municipal departments need to conduct a thorough review and analysis of the photovoltaic industry chain, create a map of this chain, identify the bottlenecks that need to be overcome, provide enterprises with comprehensive macro-strategic guidance, and offer insights for the allocation of scientific and technological resources as well as for attracting investment in the future. 2. Carefully develop photovoltaic industrial parks. On August 3, the “Jiangsu (Zhenjiang) Solar Photovoltaic Industrial Park” located in Yangzhong was officially inaugurated. It is necessary to adopt a management approach of \"specific areas, specific management, specific policies, and specific services\" in order to turn photovoltaic industrial parks into high-standard industrial zones that integrate training, research and development, business offices, incubation centers, demonstration sites, and industrialization bases, thereby fully reflecting the green, environmentally friendly, and modern characteristics of industries that are on the rise in the 21st century. Leveraging the industrial park, it drives development in Danyang, Dantu, and Zhenjiang New Area, facilitating the transformation of our city’s photovoltaic industry from a scattered structure to one that is more concentrated. Pay attention to improving the construction of public technology service platforms in industrial parks. Establish our city’s photovoltaic industry association as soon as possible. 3. Vigorously foster key enterprises. Accelerate at full speed the photovoltaic projects currently under construction, particularly key projects such as Daquan New Energy, Huahui Silicon Energy, and Crown Yuhua, to ensure their prompt commissioning and operation. It is necessary to provide proper services and support to existing photovoltaic enterprises, and to foster a group of industry leaders with strong capabilities in independent innovation, advanced technology, and outstanding performance in their core businesses, thereby driving continuous improvement in the overall level of the industry. Given our city’s strong capabilities in the manufacturing of mechanical and electrical equipment and its obvious advantages in this field, we pay close attention to the development trends of battery manufacturing equipment, photovoltaic power generation equipment, and products related to photovoltaic power generation. We make great efforts to attract leading enterprises in the manufacture of photovoltaic equipment ； At the same time, it actively encourages existing enterprises to develop new solar power generation products with broad market potential, in order to build a Zhenjiang brand. Key photovoltaic cell manufacturers are encouraged to carry out strategic reorganizations of enterprises along the industrial chain in line with their development needs, so as to concentrate various resources in key enterprises and avoid low-level duplication of construction and fierce competition. In particular, small and medium-sized enterprises should be restricted from launching polysilicon purification projects. Select key photovoltaic products, organize professional investment promotion efforts, and continuously supply resources such as technology, capital, and talent to the city’s photovoltaic industry. Formulate and implement relevant policies and measures to provide targeted support for the photovoltaic industry in terms of finance, taxation, and land use; fund scientific and technological research as well as major technology development projects in this sector, and award rewards for significant scientific and technological achievements ； Enterprises in the photovoltaic sector that meet the criteria are given the same treatment as high-tech enterprises, and active assistance is provided to help them apply for **-level high-tech enterprise status, as well as for national and provincial special funding ； For the land allocation quotas and land prices required for the construction of key photovoltaic projects, a certain discount is granted on the basis of the prices applicable in industrial parks under similar conditions. To ease the financing challenges associated with such projects, local authorities can contribute the project land as equity, reselling those land shares later when the project owner has the means to do so. 4. Establish an effective investment and financing mechanism. The photovoltaic industry is both a technology-intensive and a capital-intensive industry. At present, photovoltaic enterprises in our city generally face difficulties in securing funds and financing. **Departments should fully play their organizational and coordinating roles by establishing a platform for matching capital supply and demand between banks and enterprises, effectively addressing the issue of information asymmetry regarding capital supply and demand on both sides, and establishing sound mechanisms for investment and financing guarantees. They should also encourage policy-based financial institutions and commercial financial institutions to increase credit funding for key projects in the photovoltaic industry. Encourage enterprises to actively utilize various new financial products, broaden their financing channels, gradually increase investment in technology development, and become the main drivers of such investment. Support leading enterprises in creating the conditions to go public and raise funds on the domestic main board and the SME board. Exploit various channels to attract private capital from society as well as venture capital into the photovoltaic industry. 5. Increase efforts in training photovoltaic professionals and attracting expertise. It is necessary to fully utilize the city’s photovoltaic talent resources and give full play to the role of the \"Three Great Figures from Yangzhong\" in China’s photovoltaic industry (Shi Zhengrong, Chairman and CEO of Suntech Power) ； Zhao Jianhua, General Manager of Nanjing CE PV ； Yang Huaijin, the CEO of Hebei JA Solar Company). Given the characteristics of the photovoltaic industry, it is necessary to establish an effective talent incentive mechanism to strengthen the team of technical leaders and senior managers, as well as to secure key technical personnel, management staff, and workers in critical positions. Create a favorable environment and implement preferential policies to attract high-level talents from home and abroad to work in the town. Through various forms such as academic education, vocational training, continuing education, and on-the-job training, technical and management talents are cultivated in all aspects, providing strong intellectual support for the development of the photovoltaic industry. 6. Organize scientific research efforts on key photovoltaic technologies. Guide enterprises to strengthen cooperation with well-known domestic universities and research institutions in the photovoltaic industry, and promote the integration of industry, academia, and research. Enterprises are encouraged to focus on key common technologies such as low-cost, high-purity silicon production processes, processing of large-size thin solar cells, new processes for manufacturing high-efficiency solar cell modules, recovery of silicon slurry and treatment of waste liquids and gases, research on new types of solar cells, as well as environmentally friendly batteries for energy storage and high-performance grid-connected inverters. By means of introducing technology and talent, commissioning research and development, and carrying out collaborative R&D, they should strive to make breakthroughs first, create results and products with independent intellectual property rights in our city, and seize a competitive edge in the market.