When it comes to China, the country has long delayed on introducing a national feed-in tariff that will be required to really stimulate rapid growth in its solar market, and recent commentary from Chinese officials indicates that they might delay by a year in setting a national solar policy that takes into account the problems with policies in Europe. Additionally, the profit margins on Chinese solar projects to date have not been comparable to profits for solar companies in markets like Europe. There has been analyst conjecture that Chinese solar companies will sell modules at a loss in China just to secure the long-term opportunity.
"China lacks an FIT system, which has been successful in most of Europe, and initial projects won through a tender process have been at very low ASPs/margins. In addition, China's underdeveloped grid could hinder market growth as transmission upgrades are not keeping pace with renewables deployments," wrote Wells Fargo analyst Sam Dubinsky on Wednesday. Chinese officials could be looking at additional solar installations because China has ramped solar capacity so rapidly that if it doesn't increase its own domestic take as Europe declines many Chinese companies will be out of business after significant investment by the Chinese government.
The analyst added about some specific implications that are positive for Chinese solar stocks, "On a positive note, the Chinese market favors scaled/low-cost/integrated domestic manufacturers such as Yingli Green Energy (YGE), which won 70% of panel contracts in the last round of bidding, and Trina. Note that Hanwha SolarOne (HSOL), has also been gaining traction in China, though the company will likely need to move more integrated longer-term if it wants to scale the business."
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