SHANGHAI (Reuters) - Chinese solar developer Renesola is banking on the growing appetite for small projects on city rooftops after hiving off its struggling manufacturing business last year, a senior executive told Reuters.
The strategy underscores how many industry officials see solar projects on roofs and in car parks as the best available option, with chronic land shortages forcing conventional renewable power developers to take steps such as building on depleted mining areas.
China’s solar sector has seen rapid growth, with newly installed capacity reaching a record 53 gigawatts last year, but manufacturers are now coming under pressure from the land constraints, falling subsidies and a decline in project approvals.
“There is still a lot of room for growth - every year, there are lots of new buildings and factories, and throughout the regions there are buildings that still have no solar,” said Liang Xiaoliang, Renesola’s chief financial officer.
While central government subsidies for smaller ‘distributed generation’ (DG) projects fell to 0.37 yuan per kilowatt-hour this year from 0.42 yuan, regions like Shanghai and Zhejiang are offering additional support to meet targets, he added.
China’s DG capacity nearly tripled to 29.66 GW last year, spurred by growing demand from building owners, who pay zero construction costs and receive discounted power.
Renesola is targeting around 400 MW of capacity in China by year-end, and does not plan to get involved in larger-scale plants.
“There are land issues, (grid) interconnection issues, curtailment issues, as well as the postponed payment of subsidies,” he said, adding that a distributed project needed only two permits, compared to 11 for a large-scale plant.
Though solar still struggles to compete with conventional energy sources, some expect it to achieve cost parity within just a few years. China itself has cut solar costs by 90 percent in the last decade, offsetting the subsidy declines.
Liang said a project built in Xinjiang in 2011 cost about 10-11 yuan per watt, while some industry estimates now say prices could fall to as low as 1.5 yuan by 2020.
The government is also offering alternative means of support, including a scheme compelling regions to ensure a fixed proportion of their power comes from renewables.
Renesola, formerly a polysilicon wafer producer, last year transferred its manufacturing assets and debts to chairman Li Xianshou in exchange for additional equity, switching its business model to downstream generation projects in the process.
Reporting by David Stanway; Editing by Joseph Radford