China, the world's top energy consumer, will more than double its installed solar power capacity this year from 2012, the government said on Wednesday, driving up shares of U.S.-listed Chinese solar companies.
China aims to add 10 gigawatts (GW) of installed solar power capacity this year, up from 7 GW at the end of last year, the government said on its website , citing an annual national energy work conference this week.
China's export-focused solar panel industry has been hit hard by excess capacity and sliding foreign demand as Europe cuts subsidies for green power. Panel prices fell by 30 per cent last year, virtually erasing firms' profits.
As a result, Chinese producers are increasingly turning to their home market, which has become one of the world's biggest for solar energy development.
The goal for 2013 will put China within easy reach of its stated target of 21 GW of installed solar power capacity by 2015.
Shares of Trina Solar Ltd. and Yingli Green Energy Holding Co. rose more than 7 per cent in morning trading, while those of JA Solar Holdings Co. Ltd. climbed 6 per cent. Shares of JinkoSolar Holding Co. Ltd. were up 4 per cent.
"I don't understand what the market is getting excited about," Morningstar analyst Stephen Simko said.
"If you look at how much supply there is in the world relative to demand, even if China grows by 10 GW this year, it really is not enough to fix the problems that exist in the solar sector."
China's official Xinhua news agency, quoting an industry insider, reported last month that the country may almost double its upper limit for solar power capacity to 40 GW by 2015.
China's willingness to prop up its ailing solar sector kicked off a rally in solar stocks late last year. The stocks welcomed 2013 with an even sharper rise, after a company controlled by Warren Buffett's Berkshire Hathaway Inc. said it would pay up to $2.5-billion (U.S.) for two SunPower Corp. solar projects in California.
But analysts and investors have repeatedly dismissed the run-up in stock values as overdone.
"The solar stock run-up is not justified at all based on the reality that all these companies still have no means of making money in 2013," analyst Mr. Simko said.
China also plans to raise installed wind power capacity by nearly 30 per cent in 2013.
The country said it will add 18 GW of installed wind power capacity this year, up 29 per cent from 63 GW at the end of 2012 and add 21 GW of hydro-power generation capacity, up 8.4 per cent from 249 GW in 2012.
There are 30 nuclear power generators under construction, with a total capacity of 32.73 GW, it said.
China said total installed power generation capacity was 1,140 GW by 2012, an increase of 58 per cent from 720 GW in 2007.
Renewable energy in China will amount to 478 million tonnes of standard coal by 2015, accounting for more than 9.5 per cent of total energy consumption, the government has said.