Solar Water Heater Industry in China

Solar water heaters—also called solar domestic hot water systems—can be a cost-effective way to generate hot water for average households. They can be used in any climate, and the fuel they use—sunshine—is free.

Solar water heater

Source: http://www.solarchoice.net/images/So...ater_Heater.jp.. Author: Solar Choice. Permission: Fair Use.

Solar water heating systems include storage tanks and solar collectors. There are two types of solar water heating systems: active, which have circulating pumps and controls, and passive, which do not. Most solar water heaters require a well-insulated storage tank. Solar storage tanks have an additional outlet and inlet connected to and from the collector. In two-tank systems, the solar water heater preheats water before it enters the conventional water heater. In one-tank systems, the back-up heater is combined with the solar storage in one tank.¹

With an economy having the pertinent potential to keep growing, China has put in considerable efforts to restructure its power mix such as the combination of energy sources used to generate electricity. Developing and expanding renewable energy use and energy efficiency has been extensively emphasized in a number of national economic strategies and official documents. China implemented its 11th Five-Year Plan in 2006. Stated in the Plan, practicing energy efficiency became obligatory as it called for a reduction of energy intensity, given that “energy consumption of per unit GDP will be lowered by 20% by 2010.”² The like also shows in the National Climate Change Plan, unveiled in June 2007. The National Climate Change Plan expressed determination to fight climate change by augmenting the proportion of electricity generation from renewable energy sources and increasing the efficiency of coal-fired power stations.³ Nonetheless, even though to what extent and how the current energy consumption trend will be changed are still under substantive discussion, there have already been plentiful measures making rapid strides, within which promoting environmentally-friendly vehicles such as hybrid, electric and fuel-cell vehicles,⁴ and solar energy oriented technology⁵ play a noticeable role. By offering massive incentives of favorable financial and tax policies to boost renewable energy related industry, China is ambitious to join the leadership in this field. ⁶

Solar water heater in China

Fig. 1 Final Energy Consumption by End Use (Ordinary Effort scenario)

Source: Lawrence Berkeley National Laboratory Report (LBNL-1036E). Author: Nan Zhou and Jiang Lin. Permission: Fair Use.

Heating hot water significantly accounts for a large part of energy use. According to a report published by Lawrence Berkeley National Laboratory, water heating accounts for 26% of building energy use in China. That is more than lighting, which accounted for 17% and cooling, for only 9% (Figure 1). Therefore, the adoption of relatively inexpensive solar water heaters provides an opportunity to remarkably diminish energy consumption in China.

Solar water heaters are one of the most commercialized and popularized clean energy technologies in China. Reported by Xinhua News, China’s state news agency, the total installed capacity of solar water heaters nationwide has reached nearly 90 million square meters, or roughly 60% of the world total in 2006.⁷ That said, over 10% of all Chinese households have embraced this technology.⁸ Kunming, capital of southwestern China’s Yunnan Province, stands out as China’s aspiring “solar city,” with more than half the city’s nearly 5 million inhabitants using the solar heaters.⁹ A typical device of a solar water heater costs at a minimum price of around 1500 yuan (US$ 217) and it can cover one hundred percent of heating needs during the summer and usually at least half during the winter, largely reducing electricity expenses of a family by 12 to 20%. ¹⁰

Solar Heaters on the rooftops of Kunming, Yunnan

Solar Heaters on the rooftops in Kunming, Yunnan

Source: http://www.greenlaw.org.cn/enblog/wp...arheaters1.jpg. . Author: Alex Wang. Permission: Fair Use.

Closeup of solar water heaters on the rooftops of Solar Heaters in Kunming, Yunnan

Closeup of solar water heaters on the rooftops in Kunming, Yunnan

Source: http://www.greenlaw.org.cn/enblog/wp...arheaters2.jpg.. Author: Alex Wang. Permission: Fair Use.

With a growth rate running at a 15 to 20% clip, the solar water heater industry had a production value of more than 20 billion yuan (US$3 billion) in China in 2006 and provided over 600,000 jobs.¹¹ 20% of urban roofs nationwide have been covered with solar water heaters and even some small villages have solar hot water heaters on almost every roof. In 2006, more than 6613 square meter building areas have installed integrated design of solar water heating systems in Yunnan,¹² which is very big progress for this historically poor province in China with a GDP per capita of 9000 yuan (US$ 1300) per year, about 1/6 that of Shanghai¹³ The off-grid, distributed nature of solar hot water heaters also makes them ideal for developing countries, since they don’t require much infrastructure investment. Since 2001, the Indian solar thermal market has rapidly grown at an annual rate of 43 % on average.¹⁴

Following on the success in the domestic market, Chinese solar water heater manufacturers are now looking to take their products and know-how to the global market. The largest solar hot water manufacturer in the world is Himin Group, based in eastern China’s Shangdong province, producing over 1 million solar systems annually and claiming a 14% market share in China. Recently, Goldman Sachs and CDH Investment have jointly invested nearly near $100 million in Himin, valuing the firm at more than $660 million dollars, and the money will be mainly used for further R&D and global expansion with projected sales growth in 2009 of 50 to 100 %.¹⁵

Fig. 2 Abatement Options - Buildings and Appliances Sector - 2030

Source: http://mckinsey.com/clientservice/cc...revolution.pdf. Author: McKinsey and Company. Permission: Fair Use.

Stressing the virtues of solar heating potential as well as other energy efficiency and power-saving technologies in buildings, the Chinese government is taking it as a promising way to reduce coal dependence on power generation, and a key solution to the global climate change. By installing a total of 150 million square meters of solar water heaters by 2010, the country could save about 20 million tons of standard coal, according to China’s mid-to-long term plan for developing renewable energy.¹⁶ The consultancy firm, McKinsey and Company even predicts that CO2 abatement cost can be as low as negative by the year 2030 by utilizing technologies such as solar water heaters (Figure 2).

In addition to solar heating, solar photovoltaic systems also attracted ample attention. The Chinese Ministry of Finance released a statement in March 2009, stating that solar projects larger than 50kW of output will be eligible for a subsidy of about $2.93 per watt. To be eligible for subsidies, mono-crystalline silicon based panels will have to have efficiencies greater than 16%, multi-crystalline greater than 14%, and thin film greater than 6%. The efficiencies required for mono-and multi-crystalline silicon cells are not bad, but the low 6% for thin film appears to be an effort to evince that the industry in China is looking to take the lead in solar manufacturing.¹⁷

Given the cheap cost of panels in China (under $3/watt), and total system install costs of around $5, this subsidy would cover more than half of the cost of the system and reduce the cost of power generation to as low as 14.5 cents per kilowatt hour.¹⁸ Thus, this high level of initial subsidy is extraordinary by anyone's standard, and will position a positive impact in the future development of the industry. It could foresee that some future performance standards would be built in, which would provide an economic incentive to push for greater cell conversion efficiencies or other manufacturing or installation innovations, consequently lowering the delivered system cost per watt in the long term. Nonetheless, even though the subsidy program is depicted as "temporary," it is certainly stimulating, motivating the solar industry to build up its domestic market in China.

Solar water heaters take off in China

Credit: New Scientist/YouTube

Footnotes

1. "Solar Water Heaters," U.S. Dept. of Energy, 2010. Retrieved on Feb. 28, 2010.

2. Ma, Kai. (2006). “The 11th Five-Year Plan: Targets, Paths and Policy Orientation”. NDRC minister on 11th five year plan. Retrieved on May 10, 2009 from http://english.gov.cn/2006-03/23/content_234832.htm

3. National Development and Reform Commission. (2007). China’s National Climate Change Programme. Retrieved on May 10, 2009 from www.ccchina.gov.cn/WebSite/CCChina/UpFile/File188.pdf

4. National Development and Reform Commission. (2006). The 11th Five-Year Plan (Full Text). Retrieved on May 10, 2009 from http://politics.people.com.cn/GB/59496/4208566.html

5. Ibid.

6. NPC Standing Committee. (2005). Renewable Energy Law of People’s Republic of China. Retrieved on May 10, 2009 from www.gov.cn/ziliao/flfg/2005-06/21/content_8275.htm; Ministry of Finance. (2009). Application of Building-mounted Solar Photovoltaic Financial Assistance Fund Management Interim Measures. Retrieved on May 10, 2009 from http://jjs.mof.gov.cn/jinjijianshesi...26_126489.html; Ministry of Finance and Ministry of Science and Technology. (2009). Tentative Management on Subsidies and Funds Measures for Popularizing Energy-Saving and New-Energy Vehicles. Retrieved on May 10, 2009 from http://jjs.mof.gov.cn/jinjijianshesi...05_111617.html

7. Lv, Fuming. (2007). “Solar Heating to Save 20 Million Tons of Standard Coal”. Retrieved on May 10, 2009 from http://www.gov.cn/jrzg/2007-04/28/content_600212.htm

8. Guo, Xueyi. (2007). “Developing Solar Heating to Address Environmental Problems”. Retrieved on May 10, 2009 from http://www.gov.cn/jrzg/2007-04/26/content_596769.htm

9. Ibid.

10. Zhejiang Daily. (2008). “China’s Solar Water Heater Topped No.1 in the World”. Retrieved on May 10, 2009 from http://www.newenergy.com.cn/Html/008...111_15105.html

11. Lv, Fuming. (2007). “Solar Heating to Save 20 Million Tons of Standard Coal”. Retrieved on May 10, 2009 from http://www.gov.cn/jrzg/2007-04/28/content_600212.htm

12. Ibid.

13. Wikipedia. “List of Chinese administrative divisions by GDP per capita”. Retrieved on May 10, 2009 from http://en.wikipedia.org/wiki/List_of...GDP_per_capita

14. Epp, Baerbel. (2008). “Ambitious Plans for Solar Thermal Technology in India”. Retrieved on May 10, 2009 from http://www.solarthermalworld.org/node/321

15. Chien, Kirby. (2008). “Goldman, CDH invest nearly $100 mln in China's Himin”. Retrieved on May 10, 2009 from http://www.reuters.com/article/rbssF...21495220081212; Zhang, Kelly. (2008). “Goldman Sachs, CDH invest nearly 100 mln usd in China's Himin Solar - UPDATE2”. Retrieved on May 10, 2009 from http://www.forbes.com/feeds/afx/2008...fx5813430.html

16. National Development and Reform Commission. (2007). “China’s Mid-to-long Term Plan for Developing Renewable Energy”. Retrieved on May 10, 2009 from http://www.ndrc.gov.cn/zcfb/zcfbtz/2...904_157352.htm

17. Ministry of Finance. (2009). Application of Building-mounted Solar Photovoltaic Financial Assistance Fund Management Interim Measures. Retrieved on May 10, 2009 from http://jjs.mof.gov.cn/jinjijianshesi...26_126489.html

18. China Tax. (2009). “The Central Government to Subsidize up to 50% on Solar Photovoltaic Buildings”. Retrieved on May 10, 2009 from http://news.stockstar.com/info/Darti...mnid=2369,1221

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