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Figure 14.
Revenue trend of Yingli Green Energy, 2006-2014.
Source: Yingli Green Energy’s annual reports, 2007-2015.
Local content requirements have been another measure to protect domestic solar
industries. The Canadian province of Ontario introduced a local content preference rule,
which was to require the projects receiving feed-in tariffs to source certain percentage of
equipment in Ontario. India also set a local content requirement rule in its National Solar
Mission. Under Phase I, India required solar PV project developers using crystalline
silicon technology to use cells and modules produced in India. In Batch I, Phase II, India
required to use domestically produced cells and modules regardless of technology for 375
MW of the 750 MW program. First Solar, the U.S.-based corporation, showed concerns
about this measure in its 2015 report: “This set-aside effectively cuts the ability of First
Solar to compete in the Batch I, Phase II program in half.” Regarding this issue, the U.S.
government requested the WTO dispute settlement consultations with the Government of
India in 2013.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Other
Japan
US
China
Europe
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Solar manufacturers’ expansion to project development business is another factor
influencing the increase of the inefficiency of policies. Solar project developing is related
to many policy issues such as subsidies, permits, property rights, power purchase
agreements, interconnection and transmission arrangements, financing, and construction.
As the solar module manufacturers have started developing solar projects, they became to
be exposed to more policy issues than before.
Around 2010, many solar module manufacturers started expanding to project
development. Since then, the manufacturers have reported the risk factors related to
project development. For instance, in its 2014 report, Trina described the possibility of
non-compliance of land laws and regulations for its 120MW solar power project in
Jiangsu Province. Although it acquired land use right for its project, it did not complete a
series of following procedures. Trina was in the process to complete the procedure, but
“cannot ensure that the registration process will be completed in a timely manner or at
all.” Jinko Solar also reported significant delays in the listing of projects in the Subsidy
Catalog, which is required to receive central government subsidies in China in its 2015
report. The development of solar projects is highly regulated in China. According to
Jinko solar, the solar projects in China “are governed by different laws and regulations,
including national and local regulations relating to urban and rural planning, building
codes, safety, environmental protection, fire control, utility transmission, engineering and
metering and related matters.”
Conducting solar project development in the U.S. is also highly regulated. First
Solar, the U.S.-based corporation, said in its 2015 report: “We may be unable to acquire
or lease land, obtain necessary interconnection and transmission rights, and/or obtain the
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approvals, licenses, permits and electric transmission grid interconnection and
transmission rights necessary to build and operate PV power plants in a timely and cost
effective manner, and regulatory agencies, local communities, labor unions or other third
parties may delay, prevent, or increase the cost of construction and operation of the PV
plants we intend to build.”
In sum, the rise of policy risks has caused by additional policies as well as
existing policies. The newly introduced policies to protect domestic solar industry have
resulted in increasing risks to the global solar manufacturers. Moreover, since the
manufacturers have started expanding to a new business, existing policies have become a
new barrier for them.
The responses of the solar multinationals to the changing environment
The results of the qualitative content analysis reveal that the solar multinationals’
strategies have deeply changed after the global financial crisis. In the early days of solar
market with high demand, the solar multinationals focused on increasing manufacturing
capacity and securing raw materials. However, when the demand of modules has
decreased after the global financial crisis, the solar multinationals expanded their
business to solar project development.
Before the global financial crisis: Going upstream
Responding to the rapidly rising demand was the priority of the solar
manufacturers before the global financial crisis. To accelerate production, the
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manufacturers had focused on expanding manufacturing capacity, and securing raw
materials.
Most of the manufacturers had planned to increase manufacturing capacity. In the
2008 report, Suntech reported: “We intend to capitalize on the rapidly growing market
demand for PV products by leveraging our access to low-cost resources and expanding
our manufacturing capacity to grow our output and sale.” According to its intention,
Suntech had significantly expanded its manufacturing capacity since it had launched its
business in 2002. Hanwha SolarOne also announced its plan to expand capacity in its
2007 report: “In order to meet the fast-growing market demands for solar products, we
plan to significantly expand our production capacity in the next three years.” Figure 15
shows that the manufacturing capacity of the four solar module manufacturers has rapidly
increased until 2011.
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