In recent years, China has emerged as the world’s largest manufacturer of solar photovoltaic (PV) panels. Driven largely by strong demand in Europe, almost all of the solar panels manufactured in China have been exported to overseas markets. However, the current global financial crisis, coupled with recently dampened financial incentives for solar power in some parts of Europe, has significantly contracted overseas markets. The solar manufacturing industry in China is, as a result, under intense pressure to fend off what appears to be a bursting “bubble.” By promoting China’s domestic solar market, however, the Chinese government is presented with a unique opportunity to sustain the domestic solar industry, create more jobs, and enhance energy and environmental security. To be spurred into action, however, China’s planners must appreciate the true value proposition of solar, understand the present bottlenecks limiting solar deployment, and respond with appropriate policy actions to overcome these hurdles so as to create a vibrant domestic solar market.
Few issues keep China’s national planners awake more than energy and environmental security. According to Cambridge Energy Research Associates, China obtained 80% of its electricity generation from coal in 2007
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