China is growing economically in leaps and bounds, which means it needs energy. Jumping into the solar power industry, it is both producing systems cheaply and using them.

The solar panel industry in China shows promise of huge expansion. China's solar panel industry has steadily shown 25 percent growth in the number of products exported over the past ten years, and this shows no sign of slowing down. Because of its low-cost manufacturing capabilities and the fact that demand for solar power within China itself is beginning to grow, the industry within China has great potential.

Both crystalline and amorphous solar panels are produced in China. The crystalline panels make up 90 percent of China’s total output. Amorphous panels are relatively new, but are growing in production because they cost less to make than the crystalline panels.

China has an enormous amount of manufacturing capability coming up in the next few years. This manufacturing is lower cost than other places for several reasons, including the fact that Chinese workers make an average of $200 per month, and all of the items necessary for making solar panels are now available domestically, with production of those growing as well. Additionally, the cost of doing business in China is much lower. They pay less administrative costs, research and development, peripheral costs, etc, than more developed countries. The machinery necessary for manufacturing solar panels is also being developed domestically, providing much less expensive equipment than could be gotten overseas. Because labor costs are so low, the Chinese assembly lines tend to be much more labor intensive with fewer machines.

The bottleneck in China’s solar panel production is the same as everywhere else– polysilicon. Although domestic production is growing it will not be enough to address future needs of the solar industry. Chinese producers use a combination of scrap and virgin polysilicon for solar cell production, which lowers cost. Low labor costs allow the viability of hand sorting of silicon wafers that are broken or recycled. Chinese firms are stockpiling polysilicon now to ensure lower costs as polysilicon prices keep increasing.

The Chinese government initiated programs extensively increase the amount of solar power used in the country, which will probably only benefit domestic suppliers and those foreign countries that are allied with them. The government intends to bring power to extreme rural areas, which are currently off the grid, with renewable energy systems. Areas of China such as Western China are ideal for solar power as it averages 9 to 11 hours of sun per day. Investment in the Chinese solar panel industry is a hot ticket.

Rick Chapo is with SolarCompanies.com - learn more about solar panels.

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