EXPANDING THE SOLAR MANUFACTURING SUPPLY CHAIN Presented By Chuks. Umezulora To change the image on this slide, select the picture and delete it. Then click the Pictures icon in the placeholder to insert your own image.

Contents Solar PV Manufacturing Supply Chain Sudden boom in global PV Production The story of subsidies China as a case study Conclusion Recommendation

Solar PV Manufacturing Supply Chain

Sudden boom in global PV Production

The Story of Subsidies Its important to note that Solar manufacturing supply chain cannot grow exponentially without an exponential growth in solar adoption. There seems to be a strong connection between solar adoption and government policies&incentives. Countries like Germany, US, Japan, China, e.t.c who we see today as major players in the solar industry have at the early stages received subsidies and incentives from their government. E.g, Federal Investment Tax credit in the US which provides a tax credit of 30% for solar investment costs, subsidies to electricity generation from solar technology in the form of “feed in tariffs” (FIT),etc., and other Tax Incentives. In the EU, nearly 100% of the new solar PV capacity since 1997 was installed in countries using FIT and nearly all countries that have growing solar PV markets have used FIT. FIT are prices paid for solar electricity fed onto the electric grid that are independent of the cost of electricity from alternative sources

China as a case study Until 2010 China’s domestic PV market has been very small due to lack of sufficient incentives in the country to promote domestic PV deployment. However, since early 2009 many incentives have been implemented in China. In the space of 8 years (2009 – 2017), China has become a major player in the Solar Industry worldwide Source: S. Zhang, Y. He / Renewable and Sustainable Energy Reviews 21 (2013) 393– 401)

Government Policies and Solar PV growth in China

S/N Description Year Objectives 1 Brightness and Township Electrification Program 1996 1. Provide power to 23 Million people without access to electricity averaging 100W/person 2. Renewable Energy Law and Relevant Policies 2005 National targets for the development of RE. signifying that the govt ensures a certain market scale and is crucial in directing Investment Mandatory connection and purchase policy which ensures grid companies sign an agreement with renewable electricity generators in their jurisdiction to purchase all of the electricity generated from the generators, and provide grid connection services An on-grid electricity price for renewables, which pays renewable electricity generators a fixed, additional amount for each kilo-watt of electricity generated, above the wholesale electricity price for desulfurized coal-fired power 4. Cost sharing mechanism where the cost of renewable energy generation and grid connection is divided amongst utilities and electricity end users Renewable Energy Development Special Fund, which offers additional financial support for activities such as science and technology research for renewables, standard setting, pilot objects, rural utilization of renewables, and the renewable resource assessments 3 The Rooftop Subsidy Program and Golden Sun Demonstration Program 2009 Upfront subsidy for rooftop systems (RMB 15/W) and BIPV (RMB 20/W) Expenses is covered by the Renewable Energy Development Special Fund Subsidy of 50% of the bidding price for the supply of critical components such as grid-connected PV Converters, PV Module, lead acid storage battery Applicable for PV projects not less than 50kW 4 Solar PV Concession Program Public tender for solar power projects with the first public bidding for a 10MW PV project Approved on-grid price of RMB 1.09/kWh 5 The National FIT Scheme 2011 1. Implemented by National Development and Reform Commission (NDRC), this scheme was aimed at boosting China’s energy portfolio and to increase the share of solar power in China’s energy portfolio 6 The 12th Five Year Plan for Renewable Energy Development 2012 1. Aimed at increasing solar power capacity and generation during the 12th FYP period at 21 GW and 25 GW 7 Free Grid-Connection Services by the State Grid Corporation of China (SGCC) Targeted to support the domestic Solar PV industry and accomplishment of the 12th FYP, China’s largest state owned power utility company (SGCC) announced free connection services for distributed solar PV electricity producers that are located close to customers with installed capacities of less than 6 MW. Services covered technological assistance, equipment testing, integration plan development, among others

Conclusion S/N Description Objectives 1 Incentives should be sufficient to drive predictable demand Incentives need to be substantial enough to affect fundamental market transformation Enough to drive solar PV technology costs down 2. Incentives should be stable and predictable Policy stability is critical to creating sustained solar PV market growth Policy must be in place for a long enough period of time to attract investments in manufacturing and the development of a mature industry The “rules of the game” need to be clearly and believably established such that any changes or alterations in the policy can be understood and anticipated ahead of time 3 Incentives should be transparent and streamlined Policies should be clearly defined and simple to understand, to allow a broad range of market participants (including individuals) to easily assess risks and make investment decisions 4 Sunset Mechanism Solar PV incentives should be structured with a transition to grid parity in mind The sudden global solar PV acceptance, growth and expansion is not “rocket science”. Countries who have experienced huge solar PV growth has at some point received subsidies and incentives from their government. The government is a major driver in the expansion of the Solar PV Manufacturing Supply chain According to PV group, successful solar PV incentives have the following characteristics (See table)

Policy Recommendation The government should introduce subsidies and incentives aimed at expanding the solar PV manufacturing supply chain Introduce an effective national FIT Scheme Learn from the best practices in the world Draw lessons from the solar PV growth in China Improved synergy between Government agencies and Stakeholders in driving nationwide solar PV acceptance, quality control checks, and more Foreign Direct Investments (FDI)

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