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Phoenix Energy Blog
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China's Dominance in the Solar Markets

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Between 2008 and 2013, prices of solar panels in China came down by a whopping eighty percent. This is by no means an ordinary achievement in a market that is extremely competitive and depends on technological revolutions. China’s first endeavors in the solar industry were primarily focused on small-scale rural projects. Today it is the world’s leader in supplying solar power to countries all across the globe. Amit Ronen of the Solar Institute of George Washington University comments “They fundamentally changed the economics of solar all over the world”. The way China has overtaken the US in the solar markets has been a hot topic for discussion among US government and business leaders. Unites States, which still holds most of the patents in the field, dominated the market for more than three decades. 

solar-2796471_1920The market took a dive when the supply of solar panels and equipment could no longer meet the rising demands. This led to a significant drop in prices of solar panels. China’s sheer dominance in all the aspects of solar power, right from manufacturing down to establishing solar communities came about via “unique, complex and interdependent set of circumstances” that cannot be repeated again. The markets are expected to grow further by 13% according to reports. The only way for the United States to come back in the race is by cutting costs and technological breakthroughs, which can only propel it to the second position by 2020.

 
Capturing the European market share

China's rise in the field of solar power began in the 1990s when they began supplying to Germany. Germany had back then started government-backed incentives programs to fuel its solar power usage. This led to an increase in demand for rooftop panels. Also, capital, knowledge and resources were invested to bring China to meet their growing demands. Following Germany, many other European countries like Spain and Italy followed up with their own solar programs which were again supported by Chinese solar imports.

The role of tax credits in solar growth

China was initially lukewarm in its drive for solar power and had only implemented solar grids in rural areas. This was mainly done to facilitate impoverished areas which did not receive power due to their distance from the main grid. China began hunting for experts, equipment and polysilicon supplies across the globe as they began meeting their European demands.

According to US-based experts when China brought in companies to work on their solar fields, they not only found skilled yet cheap labor, but were also met with tax credits instead of tax cuts. The establishment of solar power plants and panel manufacturing factories caused a rise in employment. This led to governors from most constituencies pressuring the government for further solar initiatives. The Chinese government has planned to provide almost $47 billion for development of solar projects in China. Under the new five-year plan implemented by China, the solar industry is set to receive lucrative loans and tax incentives from the government.

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