VZCZCXRO5019
RR RUEHCN RUEHGH
DE RUEHGZ #0497/01 2300904
ZNR UUUUU ZZH
R 180904Z AUG 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0853
INFO RUEHGZ/CHINA POSTS COLLECTIVE 0226
RUEHBJ/AMEMBASSY BEIJING 0662
RUEHSH/AMCONSUL SHENYANG 0174
RUEHCN/AMCONSUL CHENGDU 0163
RUEHGH/AMCONSUL SHANGHAI 0164
RUEHHK/AMCONSUL HONG KONG 0228
RUEHIN/AIT TAIPEI 0174
RUEHKO/AMEMBASSY TOKYO 0021
RUEHML/AMEMBASSY MANILA 0022
RUEHBK/AMEMBASSY BANGKOK 0052
RUCPDOC/USDOC WASHDC 0015
RHMFISS/DEPT OF ENERGY WASHINGTON DC 0021
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0130
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC 0007
RUEAIIA/CIA WASHDC 0217
RUEKJCS/DIA WASHDC 0213
RHHMUNA/HQ USPACOM HONOLULU HI
UNCLAS SECTION 01 OF 02 GUANGZHOU 000497
SENSITIVE
SIPDIS
BEIJING FOR DOE
USDOC FOR MAC 4420
USDOE FOR OFFICE OF THE SECRETARY
USDOE FOR INTERNATIONAL AFFAIRS
USDOE FOR FOSSIL POLICY AND ENERGY
STATE FOR EAP/CM, EEB/ESC
STATE PASS USTR FOR CHINA OFFICE
E.O. 12958: N/A
TAGS: ENRG ECON SENV PGOV CH
SUBJECT: Solar Energy in Guangdong - A Big Supplier Trying to
Increase Local Demand
1. (U) Summary and comment: Guangdong is a major producer of solar
energy equipment in China, but local demand for solar energy is
still low. The province has set ambitious targets for increasing
solar energy use. The provincial government has initiated
demonstration projects and has taken advantage of national subsidy
programs to expand the use of solar energy. Nevertheless, solar
energy firms still call for more government support to increase
demand in China, which will likely be an increasingly important
market for companies that have in the past relied almost entirely on
exports. End summary and comment.
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Energizing the Solar Industry: Increasing Demand
--------------------------------------------- ---
2. (U) Guangdong is ranked number one in the production of solar
water heaters in China, but only 5% of Guangdong's households use
them. More than 200 companies in Guangdong produce approximately
20% of China's solar water heaters, but most are made for export.
Guangdong's solar cell manufacturers do not fare any better in
retaining their products in Guangdong. The provincial government,
with the support of the central government, is now looking for ways
to transition from solely producing solar energy systems to
increasing domestic demand and utilization of solar energy.
3. (SBU) According to Zheng Lepeng, Chairman of the Guangdong Solar
Energy Association, Guangdong's history in the solar energy sector
is extensive. Zheng noted that the Guangdong Institute of Energy
Conversion developed the nation's first solar water heater and in
the past Guangdong's solar cell manufacturers were at the forefront
of China's solar cell industry. However, Zheng believes that
recently Jiangsu and Zhejiang provinces have placed a greater
emphasis on developing alternative energies, and Guangdong's overall
solar energy industry and policy now lags behind them.
4. (SBU) The province has ambitious goals for the expansion of solar
energy use. Guangdong has set a 2010 target to reach a 30%
household usage rate for solar water heaters. Zheng also points out
that the province aims to have a 20 megawatt installed capacity for
solar power generation. The central and provincial governments have
enacted several policies and subsides to stimulate the consumption
of solar energy. Zheng said the policies could potentially kick
start the photo-voltaic industry in China. However, he noted that
the impact had been small so far in Guangdong because implementation
guidance is still lacking. Industry contacts told us that some of
the new policies could represent a turning point in the industry.
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Subsidies and Demonstration Projects
------------------------------------
5. (U) The use of solar power in Guangdong is still largely in the
demonstration phase, with applications in a few street lights and
20-30 demonstration projects around the province. Among the most
prominent programs, the provincial government is subsidizing solar
water heater usage through demonstration projects in rural
communities. One project in a village in the Xijiang District of
Shaoguan Municipality was rolled out in 2007 with assistance from
the Guangdong Economic and Trade Commission and the Guangdong
Financial Department. Under the program, 62 households installed
"economical solar water heaters;" The RMB 1,600 cost of each heater
was shared by the provincial government (RMB 300), local government
(RMB 500) and each rural household (RMB 800). A second
demonstration project was launched in 2008 involving 1,449
households in rural areas of Heyuan City. Provincial authorities
GUANGZHOU 00000497 002 OF 002
expect that over 8,000 solar water heaters will be installed in
rural areas this year through this program.
6. (U) The province is also taking advantage of central government
support programs to increase solar energy consumption. In concert
with the central government's "Solar-Powered Rooftops Plan,"
Guangdong province hopes to have 100,000 rooftop solar cells
installed by 2010. The "Solar-Powered Rooftops Plan" will subsidize
the project at a rate of RMB 20 (US$3) per watt of solar energy.
For some projects, the plan has subsidized as much as half of the
total cost of the solar cells.
7. (SBU) Local governments in Guangdong also have programs to
increase usage of solar energy. According to Zheng of the Guangdong
Solar Energy Association, the Foshan Economic and Trade Bureau
launched a pilot program in 2008 to encourage use of solar water
heating systems in textile companies in Foshan. Provincial
officials believe the program was a success, and the Guangdong
Economic and Trade Commission is trying to create a similar expanded
program for the entire province.
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Enterprises Want More
---------------------
8. (SBU) Liu Jun, Sales Manager at Guangdong Fivestar Solar Company,
told us that the success of his company was due to its own efforts
rather than government support, but still called for more assistance
for the solar energy industry. He said enterprises were looking for
implementation of long term incentives that go beyond demonstration
projects. They want sustainable subsidies to encourage the
necessary capital commitments to increase and improve solar energy
products. Liu called for direct support to enterprises, alongside
users of solar energy products.
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Enterprises Attempt to Grow Domestic Demand
-------------------------------------------
9. (SBU) According to Liu, his company has tried to develop a
stronger domestic distribution network and generate media publicity
to increase solar energy utilization in Guangdong and more
importantly expand sales. The company also sponsors demonstration
projects that increase consumer awareness of energy saving methods
available through the use solar energy. Most solar energy companies
in Guangdong still appear to cater to a foreign consumer. However,
with some developed countries cutting subsidies for solar energy and
the global financial crisis slowing the development of solar energy
projects overseas, Chinese companies may be increasingly looking to
the domestic market for future growth.
GOLDBECK