Since news broke in the last week about plans by Beijing to introduce huge subsidies to support solar-based power generation, there has been a tsunami of media coverage. Most of the reporting has focused on the ensuing surge in share prices of China’s giant PV cell manufacturers, the lack of detailed information on how the policy will work, and debate among analysts about whether it’s a good thing or a bad thing.

Few seem to be taking note of Beijing’s obvious motive: addressing the massive overcapacity problem of the country’s overgrown PV solar industry. As noted in previous posts, China’s PV cell manufacturing sector was built up to address export markets in the West, which have dried up due to the global economic crisis. This latest policy move is an attempt to ease the pain by stimulating domestic consumption as a substitute. In effect, Beijing is saying: Invest in solar generation facilities, not production of solar components.

On a related note, the following article from Renewable Energy World makes a number of good arguments why U.S. solar equipment vendors should target India’s electricity-starved market.

As a reader, I walked away asking myself: Why shouldn’t China also view the market on the other side of its border as an opportunity to solve its overcapacity problem? Why not subsidize exports to India as well? Or better yet, sit down with New Delhi to negotiate mutually beneficial trade terms that would make the Indian market more palatable to Chinese PV cell makers, while at the same time helping stimulate a durable growth market right next door? By the same token as they’re being asked to get to work in China, Chinese engineering firms could jump to address unmet energy needs in India as well, no?

(image courtesy of economatters.files.wordpress.com)