Chinese solar pricing an appeal -Chevron

Chevron Energy Solutions president Jim Davis talks to reporters during the Reuters Alternative Energy Summit in San Francisco, California October 13, 2010.

SAN FRANCISCO (Reuters) - Chinese solar panels have become very competitive with products from Japan and the United States, particularly on price, the head of Chevron Corp's (CVX.N) energy efficiency and renewable power division said.

"We're seeing the Chinese panel manufacturers being selected more and more for a number of our jobs. They are making great panels, no doubt about it," Jim Davis, president of Chevron Energy Solutions (CES), told the Reuters Global Climate Change and Alternative Energy Summit on Wednesday.

"The challenge is always driving cost down, and they've done a good job of bringing costs down," he added.

But Davis said the decision on which panel supplier to choose often came down to availability, since it was a global market and many panels ended up in Germany, Spain or Italy.

"So it's a procurement challenge at times on availability, not just on price or the efficiency of the panels," he said.

CES focuses mainly on cutting energy use among its largely public-sector clients through improved lighting or better insulation, while also adding renewable energy to the mix.

Education and schools make up 20 percent to 30 percent of its business, which Davis said had revenue in the "hundreds of millions," while federal customers include the U.S. Postal Service and military bases.

Chevron itself is CES's largest customer, with the second-largest U.S. oil company spending $7 billion on energy a year and targeting $100 million worth of energy savings this year. Davis said that Chevron's spending is not booked as revenue for CES.

CES competitors in energy efficiency include Honeywell International Inc (HON.N), Johnson Controls Inc (JCI.N) and Siemens AG (SIEGn.DE), Davis said. While CES did have preferred suppliers, it aimed to remain unwedded to particular products.

Davis, who started what became CES at utility PG&E Corp (PCG.N) before Chevron bought the unit in 2000, believes his San Francisco-based outfit can replicate in the next 10 years its average 20 percent annual growth over the past decade.

He expects growth to be driven by legislative measures to cap carbon emissions as well as a push for Americans to do a better job of conserving energy.

"At some point in the future we'll have a price for carbon, to where there's going to be incentives to become more energy efficient," Davis told the summit in San Francisco.

"This country is going to have to. We use more energy per capita than any other country in the world," he said. "Whenever we get an energy efficiency gain in a technology, we typically just build something bigger with it. We don't capture it."

(Reporting by Braden Reddall; Editing by Steve Orlofsky, Phil Berlowitz)