July 29, 2008 -- The Kunming municipal government began to implement this month an elaborate program to transform the city's fledgling solar energy industry into a 60 billion-yuan (US$8.8 billion) industrial base in China by 2013.

Kunming, the capital of China's Yunnan province, receives an annual average sunshine of more than 2,400 hours. It has the potential to generate 1500 kilowatt-hours of electricity from solar energy, according to statistics from the Kunming municipal government.

Yankun Liu, director of the Kunming Science Bureau, said the municipal government will put in place favorable policies and a special fund to encourage private sector participation in the city's solar energy-based infrastructure development. The fund, which will be included in the municipal government's annual budget, will particularly finance LED for public lighting, solar photovoltaic projects, and the propagation of energy saving projects.

"Low-interest loans, tax exemption and other concessions or subsidies will be provided for institutions and enterprises engaged in the research and development, production and sales of solar products," Liu told Emerging China. Large-scale solar energy equipment users will also be given preferential treatment, he said.

It is part of the preferential policy framework announced by the Kunming Economic Committee in a news conference three months ago, concerning the policy environment, technology transfer, financial support, and product applications to optimize industrial development of solar energy. Kunming residents will also be encouraged to install solar water heaters on the roofs of their apartments.

"Solar products will be included in government's procurement policy," Liu said. "Green energy demonstration projects will be established to promote the application of solar energy products and to constantly raise community awareness of energy saving."

In China, Kunming is second only to Tibet in solar energy use. But Hebei, Shandong and Jiangsu provinces have overtaken Yunnan in solar energy development, according to Xiaobin Yang, director for policies and regulations at the Kunming Economic Commission.

The use of solar energy resources is still in the initial stage, limited to products such as water heaters and solar thermal applications, according to Shenghong Ma, an expert in the application technology of solar energy at the Chinese Academy of Sciences.

Ma said the use of solar photovoltaic technology, mainly photovoltaic cells and photovoltaic power stations, depends mainly on the number of crystalline silicon foreign enterprises can provide.

"The current worldwide global silicon purification relies on Germany's Siemens technology," he said. "Therefore, the lack of silicon purification technology has become the biggest bottleneck of domestic solar photovoltaic power stations. If Kunming is to become a big player in solar energy industry, it has to tackle the challenges in technology and investment."

Thus, it will take time to achieve the envisioned industrial scale status, Ma said.

However, Kunming's active stance in developing solar industry and its advanced technology in the research of substitute for crystalline silicon has begun to attract international players. Last May, a Singaporean company came to Yunnan to discuss a possible photovoltaic venture.

As of last year, the Kunming Economic Committee listed about 130 solar energy enterprises in the city. Of these, 118 enterprises produce solar lamps and solar water heaters, with a combined total production value of about 300 million yuan (US$ 43.8 million), and 10 enterprises are engaged in solar photovoltaic cells manufacturing, with a total production value of about 350 million yuan (US$51.2 million).