Government policies and investment have transformed China into one of the world’s leading adopters and manufacturers of Renewable Energy technology.
Ambitious renewable energy targets and strategic government investment have helped China become a world leader in renewable energy manufacturing and power generation. In 2010, China surpassed the U.S. to become the world’s largest wind power producer with 44.7 GW of installed capacity. China renewable energy manufacturers produce more solar photovoltaic panels and wind turbines than any other country. By 2020, installed capacity of wind, solar and biomass power is targeted to more than quadruple, from less than 50 GW in 2010 to more than 200 GW in 2020. Given China’s installation track record, combined with reassessments of nuclear energy in the wake of the disaster in Japan, these targets are probably conservative.
The China Greentech Initiative developed three in-depth Opportunity Assessments for the Renewable Energy sector in 2010:
- China’s Domestic Solar Market Emerges
China plans to boost solar capacity 20-fold by 2020, from 800 MW in 2010 to more than 20 GW, including more development in western China, with technologies beyond the crystalline silicon (c-Si PV) solutions China has favored so far.
Already the world leader in solar panel manufacturing, China is poised to enter a new phase: developing domestic solar power generation capacity. In early concession rounds, western regions have been favored for large-scale projects using primarily domestically produced crystalline silicon PV panels. As technology and power generation costs decline, it is likely that China will install a mix of solar technologies to achieve its 2015 and 2020 solar power generation targets. China is reconsidering its energy targets in the wake of Japan’s nuclear crisis, which may increase solar power targets further to 10 GW by 2015 and 30 GW by 2020.
- China’s Wind Market Heads to Sea
As a new government priority, China’s offshore wind market is poised for takeoff; however, since offshore wind is more than twice as expensive to develop than China’s still abundant onshore resources, the market represents a paradox for investors.
China’s offshore wind market only began in 2009 with the construction of its first offshore wind farm near Shanghai, but government targets call for swift growth to 30 GW by 2020. Offshore wind capital costs in China are expected to be at least double onshore costs, yet the first concession round held in 2010 for four projects totaling 1 GW resulted in low bid prices—insufficient, it appears, for profitable ownership. These projects may be subsequently awarded higher tariffs by the government to ensure profitable operation, just as with early onshore wind farms. Given policy and technical uncertainties, the current market does not suit risk-averse developers. For foreign equipment and service providers, the market may be favorable, but due to pricing constraints there may be limited opportunities for foreign turbine manufacturers.
- Distributed Renewable Energy (DRE) Leadership and Potential
China is a leading player in DRE with significant capacity in small hydropower, household biogas digesters and rooftop solar water heating. However, without grid improvements, more cost-effective energy storage and subsidies, promising DRE technologies will not reach their full potential.
China’s push for rural electrification in previous decades promoted DRE technologies for the first time. China’s small hydro capacity, at 55 GW, is the largest in the world and supplies 50% of China’s rural electricity. Solar hot water heaters are also prevalent in China, covering more than 145 million square meters and accounting for more than 80% of the world’s solar water heating capacity. Most development has been government funded and driven,
although private financing models have been used successfully in wealthier urban areas for distributed rooftop solar.