Chinese new energy companies have four advantages in expanding into the Middle East: the first is technology innovation and production capacity; the second is global layout and market expansion; the third is policy support and market demand; the fourth is cost and economic benefits.
The Star Daily reported on December 5 (Reporter Qiu Siyu) that on December 4, the 2024 Photovoltaic Industry Annual Conference was held in Yibin, Sichuan.
At the special meeting "Overseas Photovoltaic Market Analysis and Investment Opportunities Seminar" during this conference, several experts including Ren Xiaopei, Director of the Asia-Pacific Region of the Global Solar Council; Si Junyan, Director of the New Energy Business Model and Risk Research Center of Shanghai Electric Power University; Zhou Guanxun, Research Assistant of the Solar Department at Infolink Consulting; and Fu Yike, Climate Project Director at Rena Global Consulting, discussed the opportunities and challenges faced by the photovoltaic industry in expanding abroad, as well as the development status of the photovoltaic industry in regions such as the Middle East and Africa.
Opportunities and Challenges for Photovoltaic Enterprises Expanding into the Middle East.
The Middle East market has always been a popular area for photovoltaic expansion. Many photovoltaic companies such as Jinkosolar, Trina Solar Co., Ltd., and Arctech Solar Holding are actively expanding in the Middle East market. Zhou Guanxun, Research Assistant of the Solar Department at Infolink Consulting, stated at the seminar that large government tenders will drive the development of the photovoltaic market in the Middle East and Africa.
From the perspective of Si Junyan, Director of the New Energy Business Model and Risk Research Center at Shanghai Electric Power University, Chinese new energy companies have four advantages in expanding into the Middle East: the first is technology innovation and production capacity, with the top ten global solar cell manufacturers all being Chinese companies; the second is global layout and market expansion; the third is policy support and market demand, as the policies in the Middle East aid in transforming the energy structure with rapidly rising demand for imported components; the fourth is cost and economic benefits, as photovoltaic electricity prices in the Middle East are starting to rebound, enhancing the economic viability of power station returns.
Meanwhile, the business environment in many parts of the Middle East is also relatively open. It has been reported that Saudi Arabia is one of the largest economies in the Middle East, and the Saudi government has implemented a series of measures to improve the investment environment for enterprises, such as simplifying registration procedures and reducing corporate taxes. In addition, Saudi Arabia has increased investment in infrastructure development.
Dubai is the economic center of the UAE, and the Dubai government is committed to simplifying administrative procedures and reducing business costs to facilitate investors. For instance, Dubai has established several free zones that allow 100% foreign ownership and exempt corporate income tax and personal income tax.
Indeed, in the process of going overseas, photovoltaic companies will inevitably encounter many challenges, and some international projects have ended in failure. "In the process of going to the Middle East, photovoltaic companies face a series of legal risks such as intellectual property and technology output, eco-friendly compliance; geopolitical risks and market risks such as foreign trade barriers in the project location; environmental risks due to unique natural conditions and cultural differences," said Si Junyan.
It is reported that there are significant differences between international EPC projects and domestic EPC projects in terms of mode philosophy, negotiation, and contract fulfillment at various stages. For example, domestic EPC projects generally emphasize price over process, while international projects focus more on processes and business, as well as cost control.
"Some companies did not fully consider the higher management costs of international projects when making project budgets. Additionally, some companies have unclear contract pricing adjustment mechanisms and did not emphasize comprehensive risk compliance management during the construction period," Si Junyan admitted. "In the process of doing international EPC projects, companies also need to manage supply chains to prevent delays and handle relationships with local labor and unions properly."
The energy cooperation between China and Africa is warming up, with several companies competing for the African market.
With the holding of the 2024 China-Africa Cooperation Forum Summit, market attention to China-Africa energy cooperation is gradually increasing. During the summit, China and Africa reached several bilateral energy cooperation achievements. Ruina New International Consulting expects this will bring a growth of over 720MW in renewable energy installed capacity for Africa.
At the "Overseas Photovoltaic Market Analysis and Investment Opportunities Seminar" held at this conference, Fu Yike, climate project manager at Ruina New International Consulting, conducted an in-depth analysis of the African photovoltaic market.
In her view, future China-Africa photovoltaic cooperation mainly has three models: Model one is to create a business-friendly environment for small and medium-sized private enterprises, encouraging bottom-up development of distributed solar projects; model two is to develop green industrialization related to solar projects, solar product manufacturing, and key minerals; model three is to pilot innovative ppp mode for deploying solar power projects in Africa.
Regionally, Fu Yike stated that the most suitable African countries for Chinese photovoltaic investment include South Africa, Egypt, Rwanda, Zimbabwe, and Zambia.
Currently, several photovoltaic companies, including longi green energy technology, jinkosolar, trina solar co., ltd., and ja solar, have established a presence in Africa. Longi green energy technology has set up a representative office in Africa and has utility-scale photovoltaic projects in South Africa, Egypt, Tunisia, Burkina Faso, Togo, and Uganda. According to statistics from ruina new international consulting, the company's capacity layout in these regions is 300+MW, 600+MW, 120MW, 20MW, and 19MW respectively.
Jinkosolar has expanded into South Africa, Egypt, Kenya, Nigeria, and Zimbabwe, with its Cape Town solar module factory having a capacity of 120MW. Trina solar co., ltd. mainly conducts trade and services through local dealers in Africa, with a presence in South Africa, Morocco, Egypt, Kenya, Ghana, and other regions.
Regarding other markets, Zhou Guanxun mentioned at this seminar that with the gradual improvement of green energy trading, the photovoltaic sector in Southeast Asia will welcome new opportunities. S&p global's chief analyst for clean energy technologies, Jin Feng, stated: "The annual new photovoltaic installations in South Asia are expected to account for approximately 6% of the global total. Additionally, China's export of photovoltaic modules to South Asia is expected to increase by 50% year-on-year."
