At Rutgers University in New Jersey, 7,600 panels convert sunlight into electricity, saving some $200,000 in energy costs this year in the biggest solar-power experiment at a US college.
Yingli Green Energy Holding Co, China's second-largest solar-panel maker, supplied the $10 million project. Yingli is one of several Chinese manufacturers that have slashed costs to reduce global prices for solar modules by about 50 percent in two years. The drive made them more affordable for buyers from Rutgers to Wal-Mart Stores Inc, the biggest US retailer.
"It's all about economics," said Chief Executive Officer Al Bucknam of SunDurance Energy, the South Plainfield, New Jersey installer that picked Yingli over Western competitors on price and helped sell the deal to Rutgers as a money-saver.
"The ability of the Chinese to manufacture at scale is a very big reason why the cost of these panels has come down," said Kathleen A. McGinty at venture capital firm Element Partners in Radnor, Pennsylvania. "They're a big part of the reason why we can even start to talk about grid parity."
Price parity
Sun power may become as cheap as the retail price of grid-delivered electricity in certain markets as early as 2013, according to a June 29 report by Pike Research, a Boulder, Colorado clean-energy consultant.
The European Photovoltaic Industry Association, a trade group, forecasts parity by 2010 in some southern parts of Italy, by 2012 in several regions of Spain, and 2015 in Germany.
Solar installations are spreading worldwide as governments from China to the UK and Italy offer subsidies, costs fall and cities seek to create jobs. Rutgers got a New Jersey state grant for half its solar plant costs, which included installation and an undisclosed price for the Yingli panels. Wal-Mart last month finished installing solar modules on two California stores that provide as much as 30 percent of their electricity.
China's manufacturers grabbed 43 percent of the global photovoltaic-panel market in the last six years, pricing products as much as 20 percent cheaper than European offerings, according to Bloomberg New Energy Finance. Chinese firms shipped 3,300 megawatts of panels worth $6.6 billion last year, enough to power about 2.6 million US homes.
Asia's 'vast factories'
"The vast factories of Asia will drive prices down, just as they did with consumer electronics," said Jenny Chase, head of solar energy analysis for New Energy Finance, the London- based research firm owned by Bloomberg LP.
The downside for manufacturers is falling panel prices. That, together with Spain and Germany cutting subsidies for clean power, has sent investors away from most solar stocks.
China's largest panel producers, Suntech Power Holdings Co, Yingli, and Trina Solar Ltd, have all dropped on the New York Stock Exchange this year. Yingli lost 25 percent, Trina 13 percent and Suntech 37 percent in the year through July 21. The MSCI World Index fell just 6.9 percent in the period.
Some foreign competitors from Germany's Solarworld AG and Q-Cells SE to Marlboro, Massachusetts-based Evergreen Solar Inc. fared worse. Solarworld has lost 29 percent in value, Q-Cells dropped 50 percent and Evergreen plunged 56 percent.
Min Li, a Hong Kong-based energy analyst at Yuanta Securities, said Chinese solar stocks are now attractively priced. He rates Yingli and Suntech as a "buy." Overall, analysts favor Chinese over Western manufacturers.
Fourteen of 27 analysts tracked by Bloomberg recommend buying Yingli, compared with one "sell" rating. For Trina, all 22 analysts following the stock recommend buying it, while Suntech has 11 buy ratings and 8 sell recommendations.
In contrast, three analysts covering Q-cells rate the company a buy compared with 22 a sell. Evergreen has three buy ratings and 7 sell ratings. Solarworld is almost even, with 14 buys and 12 sells.
'Just a Start'
China's dominance in solar panels started in cities that subsidize clean energy. Baoding, a city of 1 million a two-hour's drive south of Beijing, has used subsidies to attract about 200 renewable-energy companies including Yingli, whose panels power 80 percent of the local street lights.
"That's just a start," said Lian Shujun, vice director of the city's renewable initiative.
State-run China Development Bank Corp lent a combined 116 billion yuan ($17 billion) this year to Yingli, Suntech and Trina, while the central government's Golden Sun program subsidizes as much as 70 percent of the cost of 294 solar projects. Beijing plans to install $1 billion of solar panels around the capital to heat water and light offices in 2012.
"China is beginning to think about what options are out there in terms of its new energy policy," said Lu Yeung, a Hong Kong-based China energy analyst at Bank of America Merrill Lynch. "It's not just fossil fuels, but how to make a green economy that is also a growth driver."
'Inevitable Choice'
The government is just getting started pushing solar, said Jason Liu, who quit his job at McKinsey & Co to become a vice president at Yingli last year.
"Developing renewable energy is an inevitable choice," he said.
The country is looking to firms like Yingli for renewable energy to reduce dependence on oil imports and coal.
Some European and US companies view China's solar growth as an opportunity. Germany's Q-Cells last year agreed to a manufacturing joint venture with China's LDK Solar Co.
Tempe, Arizona-based First Solar Inc, the world's biggest solar company by market value, has agreed with the government of Ordos, Inner Mongolia, to build a 2-gigawatt plant.
"It's only a matter of time, one or two years," Frank Haugwitz, a Beijing-based renewable energy consultant, said in a telephone interview.
