First Solar To Build 2-Gigawatt Solar Power Plant in China
By Keith Johnson
Cassandra Sweet contributed to this post.
Arizona-based First Solar said today it signed a deal with Chinese officials to build a 2,000 megawatt solar-power plant in Inner Mongolia over the next decade at an estimated cost of $5 billion to $6 billion.
UPDATE: That figure is apparently what it would cost to build a similar plant in the U.S. today; building a large plant in China in the future would likely cost less, due to labor costs especially, say First Solar spokesmen.
For First Solar, which already has contracts to build smaller, though still utility-size, solar-power plants in the U.S., the Chinese deal could be a game-changer. “If you have two gigawatts, it could change the image of solar power from niche to nuclear-plant-size installations,” said First Solar chief executive Mike Ahearn in an interview.
The deal also shows, First Solar says, that China isn’t necessarily slamming the door on foreign competition in the clean-energy space. “I think they clearly want to be working with advanced technology and they’re looking for low-cost solutions,” Mr. Ahearn added.
That said, First Solar will probably end up building local manufacturing capacity to feed the big plant, part of a larger, planned Chinese renewable-energy park in the city of Ordos.
“I think there’s a clear expectation that we will build production capacity in China,” Mr. Ahearn said. The company plans to start with a 30-megawatt installation before ramping up installation to build the entire power plant by 2019.
Just as in the U.S., though, First Solar needs a couple of assists from the government to make the project a reality: subsidies and power lines.
First Solar’s deal with Ordos City is contingent on plans by the Chinese government to create a solar-power subsidy program, for example in the form of above-market tariffs that utilities would pay for solar power. Mr. Ahearn said he and others expect that the Chinese solar tariffs will be between 15 and 25 cents a kilowatt-hour. That’s fairly low compared to solar tariffs in other countries like Germany and Spain, but would probably be enough to make the solar power plant competitive with traditional sources of electricity.
Another concern is electricity transmission, the lack of which has dogged China’s development of wind power. Mr. Ahearn said Chinese officials are studying how to augment the region’s transmission infrastructure and its ability to handle intermittent power sources, such as electricity from solar panels.
“To do two gigawatts, that’s going to require some substantial infrastructure investments,” Mr. Ahearn said.
If it goes ahead as planned, the Chinese project could help First Solar cut the costs of solar power even further, Mr. Ahearn said, because large deals like the Ordos City contract and government programs that set targets and reasonable prices for solar-power installations will provide the scale and “visibility” that solar companies need to cut costs and prices, he said. |
