1 GW CSP project emerges in inner Mongolia but challenges remain

Sanhua Group, a Chinese listed company, plans to invest RMB 600 million (US $95 million) to install 600 dish-turbine units in Inner Mongolia as the first phase of a concentrated solar power (CSP) project. By the end of 2013, the first batch of the 100 dish-turbine units will be installed. After that, a combined heat and power system, including 500 dish-turbine units and two sets of 300 MW thermal power-generation systems will be built. Phase II includes plans to invest another RMB 60 billion to build a GW-scale solar thermal power base that is expected to attract other players in the value chain to cluster together in the base. Phase III plans to complete the installation of 10,000 dish-turbine units in total, reaching 1 GW of power-generation capacity.

This announcement is a following steady step after Sanhua's recent activities to develop CSP. In 2011, the company invested $10.6 million to buy 30% of HelioFocus, a modular solar thermal systems developer, controlled by IC Green Energy, the renewable energy investment arm of Israel Corporation, and the largest shareholder in HelioFocus with 40% shares. It is reported that IC Green Energy will invest $2.3 million in HelioFocus alongside Sanhua's investment. This can be regarded as a successful story of inducing a foreign leading technology to commercialize in large scale in China.

Against a backdrop of rapid expansion of China's PV industry in the past, large-scale solar thermal development has stayed remarkably inactive in the country. However, CSP has attracted the authority's attention in recent years. In the “National Industrial Restructuring Catalog” launched in May 2011 by the National Development and Reform Commission, solar-thermal power generation tops the list of encouraged sectors in the new energy category. During its 12th Five-Year Plan, China plans to increase solar power generation to 15 GW by 2015, which includes 3 GW from the CSP. As a megacity, Shanghai has been pushed to be a leader in solar thermal energy technology and projects.

However, considering the current bleak solar market, the exact size of this CSP project that will be finalized is still suspicious. At the very least, such a large project is impossible to be implemented by an individual company. That might be the reason that Sanhua intends to incorporate upstream and downstream partners to support its blueprint in the second phase of the project. However, the announced plan indicates the Inner Mongolia provincial government also has a desire to boost solar energy in the area, especially after the failed deal with First Solar in 2009. So far, this project has been the largest announced single CSP project in China to contribute to the country's 3 GW CSP target by 2015. Expect Chinese enterprises with in-house technology resources and robust balanced sheets to make a lot of noise in the next three years as they seek to deploy a solar energy offering in China other than solar PV.