Buses are parked in a parking building powered by solar energy in Shanghai. (Photo : Getty Images)
From a struggling, rural-oriented program in the 1990s, China's solar electric panel industry has grown to become the global leader in the highly competitive high-tech market, and could soon become the world's largest source of renewable energy.
An article by Scientific American said that China was able to bring world prices of solar panel down by about 80 percent between 2008 and 2013.
"They fundamentally changed the economics of solar all over the world," Amit Ronen, director of the Solar Institute of George Washington University, said.
According to the article, China was able to surpass the U.S., which invented the technology. It also has majority of the world's patents and for more than three decades, it led the industry.
One reason for this is that the plunging prices had greatly affected the U.S. solar industry and it can no longer provide for more than a third of the growing demand for solar panels, the U.S. Department of Energy (DOE) said in a report.
According to the department report, all aspects of solar and manufacturing have been dominated by China and the markets are expected to expand by 13 percent a year.
These "unique, complex and interdependent set of circumstances" have led to China's dominance in the global solar industry, the report said.
In conclusion, the report said that the U.S. may emerge as the second largest solar panel manufacturer by 2020 if it starts to innovate, reduce its costs and develop newer technology.
China's rise in the industry began in the late 1990s when Germany urge China to make solar panel to meet the German demand, providing them the capital, technology and expert people.
The timeline of China's rise began in the late 1990s when Germany, overwhelmed by the domestic response to a government incentive program to promote rooftop solar panels, provided the capital, technology and experts to lure China into making solar panels to meet the German demand.
"The Chinese took it and basically ran with it," Donald Chung, one of the authors of the DOE report, said.
After that, China hired more solar experts, bought machinery and supplies to meet the surge in orders as Spain and Italy expanded their own solar incentives.
The Chinese government also supported the industry as it acquired solar firms and invited to move to China, where skilled labor is low and they were given tax credits. Solar companies also enabled local government to provide jobs to their constituencies and urged firms to put up factories.
Under China's five-year plan, expansion of renewable energy is one of the seven business categories that got special attention from government, through tax incentives and loans.
Expanding renewable energy became one of seven categories of business that receive special attention including loans and tax incentives under China's five-year plan.
As the country built the largest solar manufacturing industry in the world, it lowered the prices of solar panel and helped create a world-wide glut or surplus. The domestic demand for solar also surged as China paid people for electricity generated by solar roof.
The country also led the solar market in terms of PV installation and total installed capacity, surpassing the U.S. in the third and fourth place, respectively, the report said.
In October, Liu Zhenya, former chairman of China's state-owned power company, State Grid Corp., came to the United Nations to present his plan to set up a global power grid, called the Global Energy Interconnection, that could transmit 80 percent renewable energy by 2050.
His idea drew U.N. support and planned a new international group to build the grid called the Global Energy Interconnection Development and Cooperation Organization (GEIDCO), with Liu as chairman.
The power grid is expected to bring more energy and energy-generating income to poorer nations, the report said.
Once the global grid is complete, "the world will turn into a peaceful and harmonious global village with sufficient energy, green lands and blue sky," Liu said.