China is set to become the global leader in solar energy in 2015. The country is targeting emerging markets for its solar push, most recently in Pakistan and in Kenya. Its solar companies, coupled with large lines of credit supplied by the state-owned banks, are partnering with emerging market governments for these projects.
In its domestic market, the country has installed an impressive 5.04 GW worth of solar energy plants in Q1 2015 — more than the US installed in the entire year of 2014. In all, China generates 33.12 GW of solar energy. It plans to add another 17 GW to that by the end of 2015, which if met will make China the number one country in solar energy generation, passing Germany as the world leader in solar. Germany currently has an installed capacity of 38.2 GW, and should reach 40 GW by the end of 2015.
China’s supply of solar power technologies outpaces its demand, which has caused the government to push for expansion to overseas markets. China has made 81 overseas investments in solar projects over the last decade, according to a report from the World Resources Institute. Most of these projects were in developed markets such as the US, Germany and Italy; but China is also targeting emerging economies, such as those in Pakistan, South Africa, Bulgaria, and most recently, Kenya.
Africa Benefits from China’s Surplus
In Kenya, an unnamed Beijing-based solar company is partnering with Sunyale Africa Limited, the key player in Kenya’s solar market, to create Kenya’s first solar technology transfer and training center, which will be located in Nairobi. The Solid State Lighting Technology Transfer Center, which was inaugurated last week, will offer skilled labor training for locals and assembly and production of solar products. It will help bolster the country’s nascent solar energy market. Sunyale Africa launched last year, with the help of Chinese and Kenyan investors.
“There is a huge market for solar solutions in rural areas and urban slums,” Sunyale Africa CEO Dang Song told China’s Xinhua News Agency. “The new center will help meet this demand through assembling of state-of-the-art solar lighting systems for households and institutions.” An estimated one in four homes in Sub-Sahara Africa (SSA) are connected to an electricity grid and as little as 10% of rural populations in SSA have access to grid electricity, according to the South Africa Institute of International Affairs.
Solar Tech Plays Role in Newly Formed Pakistan-China Economic Corridor
Earlier this month, the Chinese government announced a project in Pakistan with China-based Yingli Green Energy Holding Company, a solar panel manufacturer. Yingli is supplying solar panels for a solar power plant that will generate 1.6 million kilowatt hours of electricity for Pakistan’s Parliament House. The project, around $60 million by some estimates, was completely funded by the Chinese government.
“We are delighted to make this breakthrough in Pakistan’s emerging solar market and help Pakistan’s Parliament House to go green alongside our partners,” said Liansheng Miao, Chairman and CEO of Yingli Green Energy. “It is an honor to contribute to these two countries’ efforts to strengthen their relationship.”
Pakistan, which averages 320 days of sunlight per year, is plagued by severe and frequent power shortages, while as much as 44% of the country’s residents are off-grid. The region’s solar market is poised to take off. In 2014, Chinese firms pledged to invest $20 million in Pakistan’s energy sector, in exchange for a ownership of a few coal mines. The investment will go towards solar and hydro power plants, and the creation of a Pakistan-China Economic Corridor.
Chinese firms are also behind a 10,000 acre solar park in the province of Punjab that will generate up to 1,000 MW of solar energy once completed. China Exim (Export Import) Bank and China Development Bank provided funds for a $1.5 billion contract on the solar park. The China-based company Zonergy was awarded the contract for the construction of the Quaid-i-Azam Solar Power Park in Bahawalpur. It will be the largest solar power park in the world when completed by the end of the year. The park will generate around 1.271bn KWh of electricity annually, providing electricity to 4,500 acres worth of resident homes and businesses, and will provide an estimated 3,300 new jobs.
Goldman Sachs Sees Green Future for China’s Solar Sector, Too
Goldman Sachs announced earlier this year it will pay $100 million for convertible bonds that give it the rights to buy a 45% stake in a new solar power venture, with partner firm GCL New Energy Holdings, “for the purpose of acquiring and holding solar power generation assets in the PRC with a predictable cash flow stream in order to fund a regular and increasing dividend to public investors of the company,” GCL New Energy Holdings said in a statement.