China bets on Nucler Free Japan

Even before Japan announced Sunday that it shut down the country's last working nuclear power plant, Chinese photovoltaic companies began tapping the Japanese market in the wake of the Fukushima nuclear crisis that followed a massive earthquake and tsunami in March last year.

Since the start of this year, at least 5 Chinese solar panel manufacturers, including Hebei-based Yingli Green Energy, Jiangsu-based Hareon Solar Technology Co., Ltd. and Shanghai-based Chaori Solar Energy Science & Technology Co., Ltd., have set up offices in Japan, eyeing the World's 3rd-largest economy for new business opportunities.

Suntech Power Holdings Co., Ltd., China's largest manufacturer of photovoltaic cells, set its foothold in Japan in Y 2006 by acquiring MSK Corporation, one of Japan's biggest solar energy players.

Japan used to rely heavily on nuclear power to fuel its economy, which was estimated at US$5.85-T in Y 2011.

Of the world's 24-gigawatt solar power installed capacity last year, Japan accounted for about 5% of the total, ranking 5th in the Worldwide installed photovoltaic panel module capacity last year, following Italy, Germany, the United States and China, according to IMS Research, a consulting company offering studies for the Global electronic industry.

Major Japanese photovoltaic cell maker Kyocera Corp. plans to build a 70,000-kilowatt solar power plant in Kagoshima starting in July, while other photovoltaic players such as Softbank Corp. and Sharp Corp. have also announced similar plans to fill the gap left by the shuttering of nuclear power plants.

China produces the world's largest number of solar panels, but the ongoing anti-subsidy and anti-dumping probes by the US government against Chinese manufacturers overshadows the Chinese photovoltaic industry's overseas growth potential, as more than 90% of solar panel products made in China are for export.

China itself is a vast market with great potential for the solar power industry as the country is stepping up efforts to cut the consumption of fossil fuels in order to reduce emissions of carbon dioxide and other pollutants.

In a pilot program called Golden Sun, China's Ministry of Finance and the Ministry of Science and Technology said the government will subsidize 1.71 gigawatts of solar power projects this year, with a subsidy of 5.5 Yaan (about 87 cents) for every kWh of solar power.

Wang Haisheng, an industrial analyst with Huatai United Securities, said the subsidized 1.71-gigawatt of solar power in China represents a share of 2.5% of the global market, while a total capacity between 5 gigawatts and 6 gigawatts will be installed in China this year.

The golden period for the photovoltaic industry is still yet to come, with great market potential to be explored, said Xiao Han, a renewable energy researcher with CIConsulting, a leading industry research institution in China.

Xiao said there are currently good merger and acquisition opportunities as the entire photovoltaic industry is struggling through hard times.

Currently, the number of Chinese photovoltaic enterprises is estimated at about 500, and about 33% of the total have suspended production due to overcapacity.

According to the China Renewable Energy Society, the production capacity of the Chinese photovoltaic industry reached 40 gigawatts last year but manufactured only 21 gigawatts, leaving many solar panel makers to grapple with losses.

To those players with strength, now is a perfect moment to invest in the photovoltaic industry, Xiao said.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.