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In its latest ‘Five Year Plan’, China committed $290 billion to clean energy investments, with the aim of generating 20% of the country’s energy from renewable sources by 2015.
This is a huge amount of investment to pledge to renewables, in fact so much so, that President Obama used his 2012 State if the Union speech to ask the US to invest more in renewables and prevent the Chinese from growing to dominate the global market for renewable energies. “I will not cede the wind or solar or battery industry to China?…?because we refuse to make the same commitment here.”
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Due to vast investments over recent years China now boasts 6.2 gigawatts of solar energy capacity and 68.3 gigawatts of wind, beating the US, which only has 5.7 gigawatts of solar capacity and 51.6 gigawatts of wind power.
This rapid expansion has led to many problems, and whilst China’s renewable energy industry may appear to be flourishing, on closer inspection huge cracks are very evident.
The $30 billion solar industry is rotten, it is overbuilt and heavily in debt and can only exist due to heavy government support. The problem is that it is now addicted to that government support, and analysts have suggested that even with billions of dollars of new loans it will still not be able to fully stand on its own.
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Then there is the wind industry. Not so much rotten, as wasted. 25% of China’s wind farms are not connected to the power grid, so the energy they produce is not used. This has occurred as a result of poor planning which allowed wind installations to be built without the corresponding transmissions lines necessary to carry the power generated.
China Datang Corporation Renewable Power, a state-run wind energy developer, saw their profits drop 76% over the first half of 2012 due to the fact that regional energy utilities didn’t have the capacity to take all of the energy that it was producing.
By. Joao Peixe of Oilprice.com
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