Sanyang fights for low-cost solar power projects challenged by the industry

● China Guangdong Nuclear: A quote below 1 yuan/kWh is reasonable;

● Datang: Price is expected to recover costs within 10 years;

● Guodian: The other two reported low prices can not guarantee that the project will continue to operate after 20 years is a problem

The results of the tender for the 50 MW trough solar thermal power concession demonstration project in Inner Mongolia, the first domestic solar thermal power generation project, will be announced soon. Two of the three power companies that participated in the bidding have reported a price of less than RMB 1/kWh, which has been referred to as “vicious competition” by the industry and is not conducive to the healthy development of the CSP industry.

Among them, Datang New Energy Co., Ltd. ("Datang New Energy") reported the lowest price, including tax price 0.9399 yuan / kWh, China Guangdong Nuclear Solar Energy Development Co., Ltd. (hereinafter referred to as "China Guangdong Nuclear Energy") is 0.9800 yuan / kWh. Yesterday, an executive of Datang Renewable Energy said in an interview with the “First Financial Daily”: “The company’s price is reasonable, given the consideration of the 10% yield rate.” In an interview with the newspaper yesterday, senior officials also stated that winning the bid for the first CSP project is not only a strategic cooperation with the national CSP industry, but also conducive to the company's early deployment of the field of light and heat.

The price is reasonable?

The demonstration project of the 50 MW trough solar thermal power generation concession project in Inner Mongolia that was opened on January 20th is expected to open the door to China’s CSP. Although only 11 companies purchased bids and 3 companies participated in the bid, the results of bid opening still attracted widespread attention in the industry.

Datang New Energy's executives told reporters: "The company's price is expected to recover costs within 10 years." According to the executives, the quote was obtained after comprehensive costs, Datang New Energy Technology and experience and German Sun Millennium Corporation reached a cooperation intention; in terms of procurement of core equipment, two partners Huang Ming Solar Group (hereinafter referred to as “Huang Ming”) and Tian Wei (Chengdu) Solar Thermal Power Development Co., Ltd. (hereinafter referred to as “Tianwei”) Solar energy").

"Huang Ming has earlier deployed in the field of CSP, and the heat collection tube technology is excellent. Tianwei Solar, as a long-term supplier of equipment for the company, has a cooperative agreement with the supply of heat collectors and other equipment." He said that the company originally planned to German Sun Millennium Company cooperated, but due to the over-quota offered by German Sun Millennium Corporation heat collection tubes, and the quotes provided by Huang Ming and Tianwei Solar have a cost advantage of 50%~70%, they finally chose to cooperate with domestic enterprises in terms of equipment.

Compared with Datang New Energy, which focuses more on cost, CGNPC Solar is more focused on project technology and experience.

Previously, outsiders believed that CGNPC's solar energy was a must for the project because of its joint bidding with German Solar Millennium Corporation. In 2003, China began to plan this 50 MW CSP project. At the China-Germany Science and Technology Forum held in 2006, the project was formally established as a Sino-German cooperation project. German Sun Millennium Company established a joint venture company with Inner Mongolia Green Energy New Energy Co., Ltd., specializing in the feasibility study report and implementation of the project.

“The German Solar Millennium Company is more familiar with this project and has rich practical experience in the solar thermal power station and system integration of the project. This provides us with a feasibility study report and implementation details that will help control the cost.” China Guangdong Nuclear Power Solar High-level said.

Industry questioned

Although Datang New Energy and China Guangdong Nuclear Power both believe that their respective prices are reasonable, some people in the industry are skeptical.

Meng Xianji, vice chairman of the China Solar Energy Association, said in an interview with this newspaper that the European CSP has already been in the commercial operation stage and that each kWh still needs 27 euro cents (about 2.4 yuan). "There is no comparison with China's CSP. The industry base and key equipment are still dependent on the status of imports. Datang and China General Nuclear are unrealistic in their pricing."

Not only are some experts, even Guodian Group, the two largest competitors of the company, also do not approve quotes below RMB 1/kWh. Its offer is 2.2543 yuan/kWh. In an interview with the newspaper yesterday, senior officials of a company under the Guodian Group stated that the quotation given by the group is to consider the cost per kilowatt plant, annual power generation, operation and maintenance costs, labor costs, etc., while the other two companies reported low prices. Whether it can be guaranteed that the project will continue to operate after 20 years is a problem.

"Blindly pursuing scale and ranking, under the pressure of the SASAC to give top three reservations in the industry and fourth place, it is unreasonable for some companies to refrain from making profits," said the top executive of the company under the Guodian Group. In the past, Guodian Group had relatively high quotations in many bidding projects."

According to the Feasibility Study Report of the German Solar Millennium Corporation in October 2008, the total cost of the project is about 1.8 billion yuan, and the average annual total generating capacity is about 120 million kWh, calculated over a 25-year operation period. Achieve 8% of the internal rate of return on capital, after-tax electricity price to reach 2.26 yuan / kWh.

For the cost of the project, CGNPC Solar said that the core technology of heat collection tubes is currently mainly in the hands of a few companies in Europe and the United States, and the company is still not assured about domestic technology, so even though the price of similar products in foreign countries is close to the price of domestic enterprises, 2 Times, but only high-priced procurement of Germany SCHOTT, Siemens and other companies' equipment.

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