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U.S. firm's landmark solar deal with China starts off with a bang, then fizzles
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Steve Ye, the chief financial officer for competitor Solar Enertech in Shanghai, said: "I don't think the memorandum means anything. My guess is it was for show." Ye said the Inner Mongolian local officials "have been talking with lots of companies. I happen to be involved in some of the discussions."
As soon as the agreement was announced, Chinese solar companies began complaining loudly. China has thousands of companies manufacturing solar panels, many of them small start-ups, others exporting to the largest international markets in places such as Germany and the United States.
Han Xiaoping of China5e.com, an energy information Web site, said, "Of course Chinese enterprises are not satisfied -- how can an American company win such a big project . . . without even competing with Chinese enterprises?"
The Ordos project was supposed to operate under an arrangement in which the government's National Energy Administration would guarantee the company a price for the energy produced at the Mongolian desert farm. The price guarantee is essential to give clarity to the company's investors. (Although no cost figure has been announced, industry analysts say a similar project in the United States would cost at least $5 billion.)
But the price subsidy generated controversy among domestic Chinese solar producers. They said that if the government set the price too high, there would be enough money only for a few solar companies out of the thousands here. Others raised nationalistic concerns, questioning why the government should subsidize an American firm.
An official in Ordos confirmed that the process to build the plant is now wide open. Gao Gengui, energy section chief for the Ordos government's development commission, said the government was treating First Solar the same as all the competing Chinese solar companies, and he said First Solar should "go through the bidding process."
First Solar said in e-mailed statement that "we are still negotiating the economic framework conditions for the project with our local partners. We are also currently experiencing very strong demand for our modules in other markets."
"In light of these factors, we likely won't start construction of the Ordos project until 2011," the statement said.
Researcher Liu Liu in Beijing contributed to this report.
