LITTLE ROCK — At Rutgers University in New Jersey, 7,600 panels convert sunlight into electricity, saving some $200,000 in energy costs this year in the biggest solar-power experiment at a U.S. college.
Yingli Green Energy Holding Co., China’s second-largest solar-panel maker, made the panels for the $10 million project. Yingli is one of several Chinese manufacturers that have slashed costs to reduce global prices for solar modules by about 50 percent in two years. The drive made them more affordable for buyers from Rutgers to Wal-Mart Stores Inc.
“It’s all about economics,” said Chief Executive Officer Al Bucknam of SunDurance Energy, the South Plainfield, N.J., installer that picked Yingli over Western competitors on price and helped sell the deal to Rutgers as a moneysaver.
China is reducing prices and moving to dominate solar energy in the way Japanese manufacturers ruled consumer electronics decades ago. The price declines inch the cost of solar energy toward what’s called grid parity or renewable electricity at the same prices charged for conventional power.
“The ability of the Chinese to manufacture at scale is a very big reason why the cost of these panels has comedown,” said Kathleen A. Mc-Ginty at venture capital firm Element Partners in Radnor, Pa. “They’re a big part of the reason why we can even start to talk about grid parity.”
Sun power may become as cheap as the retail price of grid-delivered electricity in certain markets as early as 2013, according to a June 29 report by Pike Research, a Boulder, Colo., clean-energy consultant.
The European Photovoltaic Industry Association, a trade group, forecasts parity by 2010 in some southern parts of Italy, by 2012 in several regions of Spain, and 2015 in Germany.
Solar installations are spreading worldwide as governments from China to the United Kingdom and Italy offer subsidies, costs fall and cities seek to create jobs. Rutgers got a New Jersey state grant for half its solar-plant costs, which included installation and an undisclosed price for the Yingli panels. Bentonvillebased Wal-Mart last month finished installing solar modules on two California stores that provide as much as 30 percent of their electricity.
China’s manufacturers grabbed 43 percent of the global photovoltaic-panel market in the past six years, pricing products as much as 20 percent cheaper than European offerings, according to Bloomberg New Energy Finance. Chinese firms shipped 3,300 megawatts ofpanels worth $6.6 billion last year, enough to power about 2.6 million U.S. homes.
“The vast factories of Asia will drive prices down, just as they did with consumer electronics,” said Jenny Chase, head of solar energy analysis for New Energy Finance, the London-based research firm owned by Bloomberg LP.
The downside for manufacturers is falling panel prices. That, together with Spain and Germany cutting subsidies for clean power, has sent investors away from most solar stocks.
State-controlled China Development Bank Corp. so far this year has extended $24 billion in loans to Yingli, Trina Solar, Suntech, Solarfun Power Holdings Co. and others, according to data collected by New Energy Finance. Thatexceeds the $18.2 billion the U.S. government disbursed in fiscal stimulus funds for cleanenergy companies through May 2010.
Skeptics argue China’s solar industry is thriving on subsidies that obscure the true costs of solar, according to Kenneth Dewoskin, senior director at Deloitte China.
China Development Bank lent a combined $17 billion this year to Yingli, Suntech and Trina while the central government’s Golden Sun program subsidizes as much as 70 percent of the cost of 294 solar projects. Beijing plans to install $1 billion of solar panels around the capital to heat water and light offices in 2012.
The government is just getting started pushing solar, said Jason Liu, who quit his job at McKinsey & Co. to become a vice president at Yingli last year.
“Developing renewable energy is an inevitable choice,” he said.
Some European and U.S. companies view China’s solar growth as an opportunity. Germany’s Q-Cells last year agreed to a manufacturing joint venture with China’s LDK Solar Co.
Tempe, Arizona-based First Solar Inc., the world’s biggest solar company by market value, has agreed with the government of Ordos, Inner Mongolia, to build a 2,000-megawatt plant - a level of power that only the biggest fossil fuel plants exceed.
Such opportunities are fading as China acquires the expertise to do large-scale solar projects itself, Frank Haugwitz, a Beijing-based renewable energy consultant, said.
Information for this article was contributed by Ying Wang, John Duce, Jeremy van Loon and Chris Martin of Bloomberg News.
Business, Pages 10 on 07/26/2010