2008 was a rocky year for energy markets. Oil soared to $140/barrel, and then crashed to $40. Natural gas spot prices likewise jumped high to $13 MMBtu, then ended low around $6 (EIA). Investors, lulled by impending $200/barrel oil, poured record cash into renewable energy.
Below are some numbers from 2008’s first three quarters of China’s cleantech energy investment and development. The fourth quarter will probably post much smaller investment gains.
Venture capital investment in Chinese renewable energy quintupled in the first three quarters of 2008, rising from US$29.1 million in the same period in 2007 to US$165 million this year (MarketWatch).
Solar electricity generation-related venture capital investments raised US$85.2 million in China, up from under $4.6 million in 2007 (MarketWatch). The top energy capture efficiency of China’s photovoltaic cells is around 21% (PV Report, p41), which is competitive in the industry. Solar energy industry growth will likely be much slower in 2009. Businessweek cited concerns that worldwide solar growth may slow to just 15% in 2009, off from the 50% growth the industry has enjoyed every year since 2004.
China accounts for 11% of the market demand for solar power equipment. The US represents 9% and Germany dominates the industry with a 38% demand (Businessweek).
China produces significant solar photovoltaic capacity, but as of 2007 more than 90% of China’s local solar power manufacturing is likely exported (PV Report 2008, p11).
China’s Wind industry likely added an expected 7 GW of capacity in 2008,* which allowed China to leap-frog India into fourth place among countries with installed wind power. Comparatively, the United States added 7.5 GW (ABS Energy Research). Global wind energy installed capacity was 94 GW at the end of 2007 and may reach 120 GW by the end of 2008 (ABS and p 15 of the Global Wind Energy Outlook). 20 GW of capacity was added worldwide in 2007- 3.3 GW of that in China (Cleantech).
* NOTE: 1/10/2009 Caijing recently reported the actual added capacity was 4.66 GW.
China’s domestic manufacturing capacity of wind turbines and equipment consisted of 40 manufacturers at the end of 2007. Chinese manufacturing accounted for 56 percent of global wind equipment installed that year. As of 2008, “Domestic manufacturing capacity is about 8 GW and is expected to reach 12 GW by 2010.” (Cleantech).
The Chinese wind power market has changed significantly in the past four years. In 2004, 75% of the market demand was filled by foreign suppliers, in 2006 only 55% was, and in 2007 foreign suppliers’ share fell to 42.2%. Only 1.7% of capacity is constructed by joint ventures, the rest of capacity is produced and installed by Chinese companies. (p20). In that same time period, the China market has seen total installed wind capacity rise from under 1GW to 8GW.
Nuclear Power. China’s nuclear industry remained steady at 9GW of installed capacity as of December 2008. Nuclear energy accounts for about 1.3% of China’s total energy generation mix.
On August 1, China raised its planned development of nuclear power to account for 5% of China’s total energy mix by 2020 instead of the previously projected 4%. This would account for over 60 GW of power.
” The country would boost the development of the nuclear power industry by speeding up construction of nuclear power plants in the coastal areas and drawing up plans for the inland regions, said Zhang Guobao, director of the newly-established National Energy Bureau.”
As part of the development of new nuclear energy sources, on July 18, approval of development for a reactor on Hainan Island in Changjiang County was confirmed. China National Nuclear Corp. will construct the reactor. “[I]t is expected to come into operation in late 2014.” And, interestingly it is claimed that, “more than 70 percent of the plant’s equipment will be manufactured in China.”
Currently 1.3% of China’s energy (9 GW) comes from nuclear energy, originating from 11 reactors.
Long known for its polluting and dirty coal industry, did you know that China also has fast-developing and promising wind and nuclear industries? It needs to, especially since it became a net oil importer in the last ten years and is importing increasing amounts of coal to feed its economic expansion.
This article focuses on China’s Wind Industry.
“China intends to spend an estimated $200 billion on renewable energy over the next 15 years.” And as of April 2008, “the [Chinese] government has set a target for renewable energy to account for 10 percent of the country’s energy consumption by 2010 and 15 percent by 2020.” This may be a reasonable goal, given that China met its goal for installed wind-power generating capacity three years ahead of schedule.
In February 2008 a report was released that stated China’s wind power generation rose 95.2% to 5.6 million Kw hours in 2007. “The government plans to increase its wind power equipment to a combined installed capacity of 10 million kw by 2015, and to 30 million kw by 2020.”
To encourage further development; “The Chinese government has begun refunding value-added tax (VAT) and import duties on core wind power turbine parts and materials in a move to promote the development of clean energy.”
And feverish work has already begun:
In March, China announced the “creation of a high-level body to integrate its energy management, supervision and policies, functions that are currently dispersed among many government agencies.” This should allow for more streamlined development of the wind and renewables sector.
“China National Offshore Oil Corp. (CNOOC) plans to build the world’s biggest offshore wind farm… near Weihai City in eastern Shandong Province.” The whole project which will result in 1.1-2.5 million megawatt hours may take up to 10 years to complete.
“By 2010, China Power New Energy… plans to put into operation 1,500 megawatts (MW) of renewable energy capacity… It also plans to have another 1,500 MW under construction and a further 1,500 MW in the pipeline… That would be 50 percent higher than the company’s original target of having 1,000 MW of renewable energy capacity on stream, 1,000 MW under construction and another 1,000 MW in the pipeline… The company now had installed renewable energy capacity of 980 MW,”
Why the focus on wind? According to a 2007 research industry report by QYResearch “Wind power is the most popular renewable energy in China, compared to the solar energy industry; as its cost is much lower. Chinese wind power price is about 0.5-0.6RMB/KW.h while the traditional power price is about 0.2-0.3RMB/KW.h, but solar power price is about 8 times that of wind power price, therefore wind power is very welcome in China. ”
For a little perspective, The Earth Policy Institute has a lot of good data on the amount of wind capacity installed worldwide. As of 2007 Germany leads the world with over 22,247 MW, the US is second with 16,818 (and led the world in 2007 installed capacity of over 5,000 MW), Spain is third with 15,145 MW, then India with 8,000 MW, China with 6,050 MW, and Denmark with 3,125 MW.
China added 3,449 MW of wind energy in 2008. Each year, China has added greater and greater amounts of wind energy capacity. With the current positive regulatory environment, increasing production capabilities, and the proliferation of environmentally-based trade fairs showcasing cutting-edge technology, China is demonstrating that it wants to move to the forefront of clean energy technology development. As quoted at the Green Leap Forward; “The National Reform and Development Commission was considering almost tripling wind energy targets for 2020, from 30 GW to as much as 100 GW. To put that number in context, realize that current installed wind capacity is about 94 GW…globally.”
Considering China’s rapid progress thus far in wind energy development; it appears that within the next three to ten years China might very likely become one of the world’s major leaders in wind renewable energy.
Other Interesting Tidbits
* Junfeng Li at the WorldWatch Institute provides a nice analysis and chart listing of the major wind power producers in China.
* The Green Leap Forward had a good article on China’s Wind Power.
* China Wind Power Report: 2007
* China Brief on China’s new energy regulatory commission.
* Renewable and Alternative Energy News on China.
In a few hours I’ll post a more indepth article about Chinese wind power; but for this edition of “Isn’t That Odd?” I’ll discuss a little about some results of inefficient bureaucracies in China.
Similar to their counterparts in many state bureaucracies, China’s bureaucrats have a way of dropping the ball.
In January 2008, Reuters pointed out that: “China’s wind power generating capacity surged to 5.6 gigawatts by the end of last year, but over a quarter of it is still not connected to the grid because of bad planning.” With the creation of a National Energy Commission in March 2008, these inefficiencies might disappear, but some people who were hoping for a more comprehensive Ministry disagree.
I wonder if my earlier comment sunk in though, so I’ll repeat it: Over a quarter of wind-generating capacity installed in 2007 is still not attached to the grid- but why? Maybe because as the article goes on to say; “local governments are keen to jump on the renewable energy bandwagon as Beijing pushes greener growth, [therefore] they are approving new wind farms without proper planning.”
Chinese local governments, pursuing directives from the top have long been infamous for making grandiose plans that gain them plaudits from central planners, but don’t actually solve problems that the people are actually facing.
In Great Leap Forward times (1957-1959) local cadres gave “excess” food to the central government for redistribution while their citizens starved, because the cadres couldn’t admit the harvest was weak without admitting failure. In later times, shoddy buildings were constructed and polluting industries flourished because the important thing was the number of people employed, not the quality of the factory, or the buildings. This can have tragic consequences, as demonstrated by the collapses of shoddily-constructed schools as a result of the Sichuan earthquake.
So, in wind too, as in previous pushes toward “self-strengthening,” today’s Chinese government officials are making the same mistake as their predecesors did with the “backyard furnaces” (where steel was smelted en masse, but was of such low quality that all it really contribuited was greater pollution), and the project to eliminate birds (because they ate crops… somehow it was forgotten that insects, which birds eat, can be much more destructive.)
Likely, many of these wind generators are subpar- not up to international standards since the local cadres were more interested in gaining governmental plaudits than in really cleaning up the environment.
Oh well, that’s central planning for you. At least the turbines are there; some will work, and ultimately the cadres who know what they’re doing will (hopefully) be commended. (To take a pollyanna view of the situation.)
The question is, how many incompetent cadres will be reprimanded… But that’s a topic for another article.