For many Chinese, Hainan is the country's best-known tropical resort. Think ample sunshine, palm trees and humid breezes from the South China Sea. But for Yingli, the world's leading solar panel maker, the island is a market with tremendous potential for solar energy. This August, the company began construction of a 100 MW multi-crystalline silicon solar cell manufacturing plant in Hainan at a cost of 770 million yuan ($115 million), in order to meet strong demand and is one example of the China's inroads into solar energy use.

Some 1,100 solar panels were installed over the curved roof of the Beijing National Indoor Stadium for the 2008 Olympic Games; over 90 percent of residential buildings in China's Solar City Dezhou, Shandong Province, were equipped with solar water heaters in 2009; and in east China's Jiangsu Province, a solar power station has begun supplying power for Wuyuan County's school buildings. This is a clear indication that solar energy is now becoming an integral part of the country's economy.

Burning bright

The Chinese Government has made increasing efforts in supporting energy conservation and developing new energy sources in the past few years.

China announced, in its 11th Five-Year Plan (2006-10), that it would reduce energy consumption per unit of GDP by 20 percent in five years to 2010. According to data from the National Development and Reform Commission (NDRC), between 2006 and 2009, small thermal power plants with a total capacity of 60 million KW were closed; also phased out was inefficient production capacity of 87.1 million tons of steel, 60.38 million tons of iron and 214 million tons of cement.

In the same period, the government has allocated more than 10 billion yuan ($1.47 billion) to the research and development of energy conservation and emissions reduction technologies so as to stimulate innovation.

China has also raised its mid- and long-term targets for renewable energy, to meet the rapid development of the green industries. China will invest 5 trillion yuan ($750 billion) into renewable energy projects over the next decade. By 2020, the country will generate at least 15 percent of its energy capacity from wind, solar and other renewable energy sources, compared with current level of 10 percent.

New energy will play a major role in replacing traditional energy sources in future according to Gao Jifan, CEO of Trina Solar, one of China's largest solar module manufacturers. Gao said future development lies in innovation. An example is technological progress in solar energy.

China leads the world in solar cell production, with the eastern Jiangsu Province alone manufacturing about 25 percent of the world's solar cells, according to statistics released by the Jiangsu PV Industry Association. Yet the solar power industry relies on overseas supplies of its key raw materials, polysilicon, and exports nearly 90 percent of its finished products to Germany, Japan, the United States and other countries.

"Importing the raw material in the production of photovoltaic (PV) cells [at high prices] forced enterprises to quickly improve technologies to lower costs," said Gao in an interview with British daily Financial Times.

Another obstacle is the current shortage of polysilicon due to foreign monopoly over its supply. Industry analysts said the shortage has led to the rising price, which is a big threat to China's small and medium-sized solar cell makers.

To some extent, foreign suppliers have, in their hands, the power to direct which way China's solar industry is heading, according to Meng Xiangan, Secretary General of the China Renewable Energy Society.

But companies like Yingli are seeking to reverse this situation. Yingli's new monosilane-based polysilicon manufacturing technology means it is less influenced by overseas manufacturers and controls its own destiny throughout the entire production process.

Yingli expects to enjoy priority rights to commercialize advanced technologies in a laboratory. At the beginning of this year, the company secured government approval to build the first national-level laboratory for cutting-edge PV technology development in China.

"Technology innovation helps break dependence on foreign supply of raw materials, improve quality and lower cost of solar energy products," said Zhao Yuwen, Director of China Renewable Energy Society PV Solar Committee.