Hepeng Jia/ Beijing, China 

China is already the world's largest producer and user of solar energy, but further developments in the industry are likely to be slow without a change in the energy market, experts say. 

The success of solar power in China has largely been driven by the solar heating panel industry, producing units that absorb the Sun's warmth to heat water. 

According to Luo Zhentao, industrial committee director of the China Renewable Energy Society (CRES), China produced 350 million square metres of solar heat panels in 2006, accounting for 75 per cent of the world's total.  

'Unlike Europe, in China we do not have a single yuan of government subsidy on solar heaters, but we have successfully developed a strong industry,' he told the 2007 Solar World Congress held late September in Beijing. The first such meeting in Asia, the congress attracted nearly 1000 delegates from some 60 countries. 

Low manufacturing costs and better technology have both been crucial to this success. In the mid-1990s, for example, scientists at Tsinghua University developed a low-cost glass tube to improve the efficiency of heat collection. 

But Yuchun Zhao, a Chinese solar energy expert at Australia's RMIT University, Melbourne, said that the most significant driver of the industry's growth has been consumers' eagerness to cut their electricity bills. 

Price war 

However, several factors are now beginning to impede this growth. A fundamental drawback of the system is that it cannot guarantee constant hot water, something that picky consumers now expect. And a competitive market that constantly drives down prices has led to lower quality products. Luo said that among 1000 solar water heater enterprises in China, only five have an annual sales volume of more than 100 million yuan (US$13.3 million). 'The price war and the lack of industry leaders will make technological innovation more difficult in the future,' he explained. 

Richer urban residents are not as strongly motivated to make savings on electricity costs, especially since 'many property management firms also claim solar heating panels damage the façades of their high-rises, forbidding residents to install solar heaters on their balconies,' said Wu Zhenyi, president of Tsinghua Solar, another major water heater producer in China. But he added that newly-released energy efficiency and renewable energy policies could reverse this trend. 

Headless sector 

Even though solar heating dominates the solar energy market in China, the country's photovoltaic (PV) industry has been booming in recent years, rising to become the world's third-largest PV cell manufacturer. The success is down to low labour costs and efficient production, said Xie Xiaonan, vice-general manager of Suntech Power, the largest PV cell maker in China. 

Yet the domestic market is failing to thrive. PV cells rely on silicon which is imported into China, and the finished products are almost entirely for export. 'We are a headless and tailless monster,' says Wang Hanfei, general manager of Jiangsu Province-based PV cell maker Solarfun. According to CRES president Shi Dinghuan, China's installed capacity for PV power is only 80 MW, which is just 0.016 per cent of the installed thermal power capacity.  

The lack of financial and policy support from the government, and the reluctance of traditional power generating firms to develop PV technologies, are the major barriers for China's development in domestic PV generation. So far, there is no beneficial pricing policy for PV electricity supplied to the grid, making it much more expensive than other renewables, such as wind power. 

In the coming year, several manufacturers of silicon materials will begin production in China. 'This will change our "tailless" feature, but we may remain headless for a long time,' Wang told Chemistry World. 'But without a strong domestic demand, our advantage in manufacturing costs will soon be reduced,' he added, appealing for the government to offer large subsidies to cut the price of PV power. 

Luo agrees: 'Common people do not understand reducing carbon emissions. To them, renewables must mean something cheap and more convenient.