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Page added on September 23, 2011

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The new focus on Chinese renewable energy, often in a negative light

Alternative Energy

In recent years US and European clean-energy companies have rushed to cash in on China’s renewables boom, selling solar photovoltaic panels and wind turbines as fast as Chinese authorities could erect them.

Now that relationship has turned sour, as Western companies complain that China is unfairly subsidizing its domestic renewables industry and stealing technology.

For instance, when US PV manufacturers Solyndra, SpectraWatt and Evergreen Solar all recently filed for bankruptcy, they cited competition from Chinese PV producers as significant factors.

As prices for solar PV equipment have plummeted–42% in the last year alone–China’s PV manufacturing sector has emerged as the pacesetter for global production in international PV markets. It’s a market that is now marked by bulging warehouses full of equipment and shrinking profit margins.

But a new report from Standard & Poor’s raises questions about Chinese lenders’ support for the country’s solar PV industry. “The primary source of these [PV] price declines has been Chinese manufacturers that have enormously expanded global capacity and that continue to fully utilize their plants despite lack of demand,” said S&P, which like Platts is owned by the McGraw-Hill Companies.

The result? Inventories among solar PV equipment producers, particularly in China, have swelled. Global production capacity of about 30 GW in 2011 will far outstrip expected demand of 15-20 GW, according to the study.

To date, China’s banks have largely financed this buildup through almost-zero interest debt, which “is being used by Chinese solar companies to achieve economies of scale, to offer extended credit terms to customers to augment their already industry-leading cost positions, and to gain market share,” the study said.

What’s more, a new Chinese government policy will offer feed-in tariffs for PV power generation, which the nongovernmental organization The Climate Group called “a major step forward in accelerating development in China’s domestic solar market.”

US lawmakers are crying foul. Senator Ron Wyden, Democrat-Oregon, who chairs
the Senate Finance Subcommittee on Trade, said in a letter this month to President Obama that China is winning the race to create green jobs by essentially dumping cheap solar panels on the US market.

“We need only look at the bankruptcies of major American innovators and producers of solar panels to see the material injury these imports appear to be inflicting on our domestic industry,” Wyden wrote. “Unless the US takes aggressive action to combat the import surge of Chinese solar panels and the unfair trade practices that China employs, our efforts to facilitate the creation of the new jobs our economy needs will be substantially undermined.”

The Obama administration can take a range of actions to level the playing field against Chinese solar imports, Wyden said, including launching a Department of Commerce investigation on whether to impose antidumping duties on Chinese solar panels, and pursuing a case against China at the World Trade Organization.

Wyden’s charges follow moves this year by the Chinese government to reduce its support for domestic wind-turbine manufacturers in the wake of criticism from the Obama administration and the United Steelworkers that China’s system of subsidies amounted to unfair trade practices.

Are the failures of American PV companies largely the fault of China? The Solar Energy Industries Association, a US trade group, attributed Solyndra’s bankruptcy to the harsh realities of a maturing industry in a competitive marketplace.

“You’re going to see winners emerge who find innovative ways to offer consumers the most competitively priced products,” SEIA President and CEO Rhone Resch said in a statement.

In addition, Solyndra manufactured–in contrast to the familiar flat-panel solar technology–an unusual cylindrical PV panel that never caught on in the marketplace.

Other charges go beyond accusations of unfair government support. US technology company American Superconductor Corp said September 14 that it is initiating legal actions against China’s Sinovel Wind Group, charging Sinovel–a major wind turbine producer and former AMSC client–with “criminal misconduct” by infringing on AMSC’s intellectual property rights.

AMSC, which makes frequency converters and other electrical equipment used in
wind-power systems, said the filings follow “an intensive investigation conducted by both AMSC and law enforcement.”

Based in part on evidence obtained through the investigations, AMSC believes that Sinovel illegally obtained and used AMSC’s intellectual property to upgrade its 1.5-MW wind turbines in the field to meet proposed Chinese grid codes “and to potentially allow for the use of core electrical components from other manufacturers.”

Sinovel denies that it pirated AMSC’s intellectual property. It said that AMSC had failed to meet Sinovel’s requests that AMSC upgrade its systems and that AMSC technology “has been failing to adjust to rapid developments in the global wind power technology market, particularly in China.”

These cases–following the clash between the Obama administration and the Chinese government over China’s state support for its wind-turbine makers–could mark the opening volleys in intensifying policy and legal battles over renewable-energy trade practices.

Though the breakneck pace of China’s broad economic growth appears to be slowing, its committment to renewable energy development, and to developing a thriving and internationally competitive domestic renewables industry, remains strong. China’s determination to bolster its own renewables manufacturing and development industries, then, appears likely to further embroil it in controversies over international trade.

At the same time, the lucrative commercial opportunities that initially attracted Western renewables companies should continue to make China a prime focus for foreign clean-energy investments. An electricity market with potentially 1 billion customers is tough to ignore.

Platts



2 Comments on "The new focus on Chinese renewable energy, often in a negative light"

  1. Harquebus on Sat, 24th Sep 2011 12:19 am 

    It takes more energy to produce solar Pv’s than they can collect during their lifespan. Second law of thermodynamics. It is a waste of energy building them. It is only a matter of time before the whole renewable energy con is exposed.

  2. DC on Sat, 24th Sep 2011 7:07 am 

    Amerikans never waste an oportunity to complain about ‘unfair’ foreign competition. Which in amerikan, means, compeition involveing foreigeners. Now if the Chineese are stealing technology, thats bad yes, but of course, proof is needed for such accusations. As for the other evils China is quilty of, what about amerika? Amerika has no clean energy policy, or indeed, much of a energy policy of any kind, besides invade countries that have lots of oil. No real concrete policy involving renewables has come out of the states, nor should we expect one to. Other countries are agreesively promoting RE sources and backing it up with real action, and, suprisinely, to amerikans anyhow, getting results. That amerikans should complain about that, while doing everyting in there power to ensure that fossil-fuels remain king, while renweables get slightly more than lip-service, is no ones fault but there own.

    I mean, we all know that the so-called ‘free-market’ will never deliver RE at the rate and scale we need to make a difference. Thats because there is no free-market for energy. Its all controlled by fossil-fuel interests. If substantial state support for RE is what is needed, maybe amerika should take a page form china instead of complaining about it constantly.

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