Investors are rethinking their focus in the light of the global financial crisis. Many are betting on the solar industry, writes Jinrongjie.

Chinese and foreign investors have not downgraded their hopes for the solar power and photovoltaic industry as they have done for other sectors amid the unfolding global financial crisis.

A recent illustration was International Financial Corporation's (IFC) investment package with ENN Energy, a subsidiary of ENN Group, a clean energy manufacturer from Langfang, Hebei province. The package, which included a US$15 million equity boost and a US$121 million credit line, was designed to help the company build a thin-film solar power cell assembly line that will have a capacity to make 60 trillion watts of thin-film solar power cells a year when operational in the second quarter of 2009.

The investment followed Intel's US$20 million venture capital funding of Shenzhen Trony, a photovoltaic products maker and distributor.

LDK Solar (LDK.NY) chairman Peng Xiaofeng said the return on renewable energy projects is up to 20%. "The financial crisis isn't a blow to the photovoltaic industry as solar power electricity generation can reduce costs by 40-50%," he said.

Zhao Yuwen, director of the photovoltaic commission of the China Renewable Energy Society, told the newspaper that thin-film solar power cells are cheaper than normal power generation and this would speed up te rate at which they replace traditional power sources.

ENN Group spokesperson Zhang Guangjun said the company spent RMB14 billion (US$2.05 billion) introducing an automatic assembly line produced by US Applied Materials Inc in a bid to make 500 trillion watts of non-silicon thin-film solar power cells worth RMB20 billion (US$2.93 billion) by 2010.

China currently has more than ten solar power cell makers, most of which use silicon as a raw material. However, silicon is expensive and energy-consuming. Internationally, solar power energy is the focus. Shenzhen Trony focuses on solar power instead of silicon material.

An expanding greenback is nearing an end. The "carbon bank note" framework set by the Kyoto Protocol will ultimately wipe out energy gobblers from the capital market. "Governments around the world are encouraging solar power, wind power, tidal power and nuclear power as they can significantly reduce carbon emissions," Zhao said.

The photovoltaic industry has become the most sought-after target after Suntech Power (STP.NY) went public on the New York Stock Exchange in December 2005 launching a string of photovoltaic projects, including the Bird's Nest stadium designated for use throughout the 2008 Olympics.

In addition to ENN's projects, Jiangsu Best Solar Hi-tech has invested US$2.5 billion in two thin-film solar power plants in Suzhou, Jiangsu province, and Nanchang, Jiangxi province. The Suzhou plant is scheduled to become operational by the end of 2008 and the Nanchang plant in the first quarter of 2009. The plants will make cells for Best Solar Hi-tech, the world's largest thin-film solar power cell manufacturer.

Some people argue solar power is still too expensive. Shi Zhengrong, chairman of Suntech Power, said the company has invested US$1.2 billion over the past two years into the technology, including a recently disclosed plan to build a 50-trillion-watt-capacity thin-film solar power assembly line, because he expects the cost of solar power electricity generation to reduce to just RMB1 (US$0.15) per kilowatt hour by 2012.

China Guodian Corporation, one of the nation's top five power generators, said at the end of last month that it would invest RMB5 billion (US$731.21 million) in a polycrystalline silicon company in northwestern China's Ningxia province. The initial stage will cost RMB3 billion (US$438.73 million) and be able to produce 2,500 tons of polycrystalline silicon annually when operational by 2010. Final capacity is expected to be 5,000 tons but there have been reports that capacity could be as high as 10,000 tons.

This article originally appeared in Chinese on Jinrongjie on November 21, 2008. The China Perspective takes no responsibility for the accuracy of the original article.