The Challenges Ahead in 2010
Source:Chief Editor, CCEN   Date:2010-01-06   Author:Tom Pellman

I may be biased given my line of work but 2009 seemed to be break-out year for renewable energy in China. True, the wheels were already in motion. Renewable laws have been on the books here since 2006, and scores of both foreign and domestic cleantech firms have been busy in China for the last decade or so. But 2009 may be remembered as the year the world suddenly realized China was “going green,” by some metrics.

 

At time of writing, China has already become the world’s third-largest producer of wind power by capacity, and is now projected to reach a capacity of a mind-boggling 150GW by 2020. The solar industry is growing equally rapidly – its original 2020 goal has been revised up more than five times the original figure to 20GW. Hydro, biomass and geothermal are all humming along as well. Nuclear energy (clean, but not renewable) is hitting milestones too.

 

More impressive, last year at this time, editors were filling up pages with premonitions of economic doom and gloom, but now, one year later, we’ve seemed to weather the worst of the storm. Will 2010 be a continuation of this impressive momentum for China’s clean energy industries? In fact, if you look sector by sector, things may not be as rosy as those impressive capacity figures first indicate.

 

For China’s wind power industry, two unresolved issues still weigh heavily. First, transmission capacity has not kept pace with the number of turbines coming out of factories. Power lines in China still cannot generally handle intermittent power sources like wind, and the country’s wind resources are located far from end-users. The result is a country now producing far more wind turbine blades (the easy part) than it can install and use (the difficult part).

 

China’s wind industry was also hit hard in the second half of 2009 by news that the UN had stopped awarding Chinese wind power projects funds from the Clean Development Mechanism (CDM) under the Kyoto Protocol. With this major source of funding now apparently dry, investors in China’s wind industry are suddenly unsure of how profitable building wind farms can be. Look for developments in this story in the coming months.

 

China’s solar industry is also facing serious overcapacity issues that will likely come to a head in 2010. Specifically, production of polysilicon worldwide ballooned last year as Chinese manufacturers scaled up production and their counterparts in Europe and the US followed suit.

 

Here is a sobering statistic: Next year, solar capacity worldwide is expected to reach nearly 25,000MW but only 25% will actually be utilized. The source of those figures, the Information Network, forecasts that as many as 50% of producers could fail next year. This weeding out may ultimately be a healthy process for China, which has more than 400 solar power companies, but certainly not a painless affair.

 

As this edition’s interview with COFCO’s Hao Xiaoming discusses, China’s biomass companies are also facing challenges. China’s restrictions in sources for ethanol will pose serious problems for the industry’s long-term development unless new technological breakthroughs in fields like wood fibers arise.

 

It will be an exciting year, challenges and all. It’s worth remembering that despite all these daunting challenges, clean energy still has the government’s blessing in a major way. As mentioned, the country’s long-term goals and energy needs mean renewables will undoubtedly continue their overall upward trajectory, even if 2010 takes a hit or two on the chin.

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