After initiating massive campaigns (20000 MW of solar power by 2020) to produce electricity using nuclear energy, wind energy, and conventional photo-voltaic solar panels, China now appears to be on the cusp of taking to the latest technology - concentrated solar power. This technology would use hundreds of thousands of mirrors at different inclinations to capture sunlight, produce steam and generate electricity using a conventional turbine.
Chinese companies have been aggressively exploring opportunities to get into manufacturing of equipments - mirrors, turbines, towers etc - for concentrating solar power plants, a move that could dramaticaly alter the economics of such plants as has been the case till now with thermal, solar, wind and nuclear power generation equipments.
Buoyed by ambitious Government targets, preferential land and other resource allocation, extensive subsidies, fiscal concessions and cheap capital 2% interest on loans), China has seized the global leadership in both electricity generation from renewable sources and manufacturing of equipments for these plants. In many respects, the development of massive capacity of power equipment (annual demand of $45 bn on them) at cheap prices amounts to considerable resource transfer from Chinese tax payer to the rest of the world - the leaked share of Chinese stimulus spending to benefit the world economy.
China is already a leader in the development of the cleaner "ultra-supercritical" technology based thermal power plants, which are estimated to reduce greenhouse gas emissions by a third. Standardization of equipment designs and bulk procurements by the limited numbers of generators, mostly state-owned, has seen fantastic capacity expansion among Chinese power equipment manufacturers, mostly privately owned.
Chinese companies are required by law to generate 8% of their power from renewable sources other than hydroelectric by the end of 2020, and look well set to easily surpass the same. The spectacular pace of capacity addition has meant that it looks set to achieve its target of 30,000 MW of wind energy by the end of 2010, a full ten years ahead of the 2020 schedule! It has set targets of increasing nuclear generation capacity from 9 GW now to 70 GW by 2020 and 400 GW by 2050.
On the flip side, concentrating power plants require cheap land and water (to condense the steam after it has been used to generate electricity) apart from solar exposure, resources increasingly scarce in China. Wind turbines are being built faster than the national grid can erect high-voltage power lines to carry the electricity to cities elsewhere. And solar panels are coming unstuck due to recurrent sandstorms that necessitates repeated cleaning up. But these are likely to remain minor pitfalls in the massive transformatyion in the Chinese and global electricity generation landscape.
Times article on China's efforts to make wind, solar and biomass energy to represent 8 percent of its electricity generation capacity by 2020, compared to less than 4 percent now in China and the United States.
China added 13,000 MW of wind power capacity in 2009, accounting for a little over a third of the 37,466 MW added during the year. India's performance in 2009 was dismal as was the case in 2008.
Update 3 (29/3/2010)
A Pew Report finds that with a 50% increase in investments in 2009 and a total commitment of $34.6 billion to wind power, solar energy and other forms of renewable energy, China has emerged as the world’s clean energy powerhouse. US invested just $18.6 billion and UK $11.2 billion in 2009. Further,China’s installed renewable energy capacity surged to 52.5 gigawatts, putting it just behind the United States, which had 53.4 gigawatts of capacity in 2009.
Update 4 (7/4/2010)
Debate on the sustainability of the current pace of growth of wind power.
Update 5 (9/9/2010)
This Times article chronicles how Chinese solar panel manufacturers have used generous subsidies by way of cheap land and low interest loans to dominate the global market.
Update 6 (14/2/2011)
Over the past decade, China's installed wind capacity has grown exponentially, from just 0.3GW in 2000 to 42.3GW last year, and now accounts for 22% of the world’s total wind power capacity.
Update 7 (2/9/2011)
The latest casualty in China's solar power surge is the bankruptcy filing by three American solar power forms, who together form one-fifth of the solar panel manufacturing capacity in the United States. Besides the bankruptcies in the United States, solar power companies in Germany, another big producer, have been laying off workers and retrenching. China exports 95 percent of the solar panels it produces.
Spurred by China's spectacular growth in capacity, the prices of polysilicon, the major component of the silicon wafers, have tumbled more than 80 percent in the last three years as output has caught up with demand. Solar panel prices have plunged by 30 to 42 percent per kilowatt-hour in the last year as manufacturers have sharply increased capacity, particularly in China. Costs for electricity generated by utility-scale solar installations now approach costs for natural gas in some markets, like California’s, when subsidies of as much as 30 percent of the price are included. However, costs remain well above the cost of electricity from coal.
Loans at very low rates from state-owned banks in Beijing, cheap or free land from local and provincial governments across China, substantial tax concessions, huge economies of scale and other cost advantages, combined with all other formal and informal government support have transformed China from a minor player in the solar power industry just a few years ago into the main producer of an increasingly competitive source of electricity.