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China plans to light up Africa with solar

China plans to build solar power projects in 40 African nations, aiming at cutting the continent’s reliance on fossil fuels and open a new market for Chinese manufacturers, the biggest producers of solar panels.

The programme would require $100 million (R672m) in investment, Sun Guangbin, the secretary-general of photovoltaic products at the China Chamber of Commerce for Import & Export of Machinery and Electronic Products, said in a recent interview

The projects would use competitive bidding and Chinese-made panels, Sun added.

China is branching into clean energy after investing $10 billion last year in Africa, where its traditional targets have been oil, minerals and construction. That will help feed its burgeoning solar industry led by JA Solar Holdings and Suntech Power Holdings, the largest makers of cells used in photovoltaic panels that turn sunlight into power.

“China needs new emerging markets to consume their solar products besides Europe, and Africa could be one of them,” Sun said. “We’ll begin investigating this month in Africa to determine a suitable project in each country, such as installing solar panels on the rooftops of schools and hospitals.”

Shares in the country’s two biggest solar cell makers are cheaper than most of their peers based on profit outlook.

Shanghai-based JA Solar is trading at five times expected 2011 profit. Suntech, with headquarters in Wuxi, has a multiple of eight. Those are below the average 14 times profit of the 37 member Bloomberg Global Leaders Solar index.

Renewable energy is one of the seven “strategic emerging” industries that the Chinese government said it would promote in the next five years.

Each installation in Africa would cost between 10 million yuan (R10.4m) and 20 million yuan, Sun said. The chamber was authorised by China’s Ministry of Commerce to manage the inspection of sites with a group of engineers, he added.

Terms of the tender process were not disclosed.

South Africa, the continent’s biggest economy, derives about 90 percent of its power from burning coal, one of the most polluting ways to make electricity.

Developing renewable energy is one of eight measures that China’s Premier Wen Jiabao proposed in 2009 to aid Africa. The country plans to build 100 clean energy projects on the African continent.

The export value growth of Chinese photovoltaic products, primarily solar cells, would slow to about 60 percent this year, compared with a 107 percent increase last year, Sun said. This was due to an oversupply as European nations, the biggest market in recent years, cut subsidies for solar farms, Sun added.

Monocrystalline cell prices declined 7.5 percent last month to $1.14 a watt from April and multicrystalline cells were down 8.7 percent at $1.09 a watt, according to Bloomberg New Energy Finance.

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