Chinese Lawmakers' New Renewable Energy Policy Will Benefit Solar Companies

The Chinese congress has drawn a picture for China after the economic recovery - that is, massive raw material demand in its over 10% growth for the years to come. As a part of its ambitious energy policy, Chinese law makers has started to make new policy for renewable energy, according to the official renewable energy network. The new policy will focus on expanding domestic market for renewable energy. For the time being, China domestic market only occupies less than 10% of global demand, this will change quickly when new stimulus kicks in. A real boost to China's renewable energy market will likely be seen in the coming year.

According to Mr. Ren Dongming, vice director of the Renewable Energy Development Center under the NDRC, "Part of the CNY 210 billion spending distributed between November 2008 and March 2009 has already gone to local wind turbine manufacturing and household biogas in rural areas." This explains why the domestic wind turbine makers such as A-Power Energy (APWR) is ramping up capacity to Giga Watt level through a joint venture with GE (GE), and foreign turbine makers such as Vestas and German Furlander Wind Generation expanded in China. It is very likely China will adopt wind energy sooner than U.S.

On the solar energy front, a leadership shift in Chinese market is working. Yingli Green Energy (YGE) is replacing Suntech Power (STP) to become the leading lowest cost PV producer in China and around the world. Yingli Green also had better a quarter than Suntech Power and 2009 guidance is much better than the rest of its Chinese peers. Yingli is the only company that reported strong revenue growth in the fourth quarter of $258.1 million, up 21 percent year-on-year. According to a Chinadaily report, Yingli Green is now the lowest cost solar cell manufacturer in the world as it uses four processing procedures. Most of the other solar cell producers, like Suntech, only make solar cells and modules, buying products of the first two procedures (read here). However, withthe new renewable policy coming to the industry, all Chinese solar makers, including LDK Solar (LDK), Solarfun (SOLF), Renesola (SOL), China Sunenergy (CSUN), Trina Solar (TSL), JA Solar (JASO), and U.S. solar names, including First Solar (FSLR), Sunpower (SPWRA), will benefit from it.