UPDATE 2-China's plans to ramp up capacity in 2013 adds to solar shine

Wed Jan 9, 2013 11:48am EST

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(Adds analyst comments)

BEIJING Jan 9 (Reuters) - 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 (www.gov.cn), 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 percent 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 percent in morning trading, while those of JA Solar Holdings Co Ltd climbed 6 percent. Shares of JinkoSolar Holding Co Ltd were up 4 percent.

"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. (link.reuters.com/tyg64t)

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 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 Simko said.

WIND POWER PUSH

China also plans to raise installed wind power capacity by nearly 30 percent in 2013.

The country said it will add 18 GW of installed wind power capacity this year, up 29 percent from 63 GW at the end of 2012 and add 21 GW of hydropower generation capacity, up 8.4 percent from 249 GW in 2012.

There are 30 nuclear power generators under construction, with 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 percent 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 percent of total energy consumption, the government has said.

For a table of China's renewable energy targets for 2015 and 2020: (Reporting by Judy Hua, Chen Aizhu; Additional reporting by Swetha Gopinath and Vishal Krishnan in Bangalore; Editing by Clarence Fernandez and Supriya Kurane)

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