China Looks to Renewables

China’s economy continues to grow at break-neck speed. The Middle Kingdom is already the world’s second largest consumer of oil after the United States. The ferocious growth guzzles resources -- especially energy.

Last year alone, China generated 620 Gigawatts of electricity. One hundred and twenty Gigawatts were added to the grid; that’s the equivalent of the entire generating capacity of countries like Germany or France.

Not enough power

Within the next three years, China wants to increase its energy generation capacity by another third. “Energy supply is a bottleneck for China’s economic development,” said Hu Jinglin from China’s finance ministry.

China needs to develop other energy sources, not just for environmental reasons, but also to “improve energy security,” Hu Jinglin said.

However, some 70 percent of China’s energy still comes from coal-fired power stations. China’s coal reserves are huge and exploiting them is cheap.

But most power stations lack even the most basic air filters and often release huge plumes of black smoke into the air. According to the World Bank, 16 of the world’s 20 most air-polluted cities are in China.

There are alternatives

In the town of Dongying in Shandong Province, the local mayor recently opened a new production site for wind turbine rotor blades. The factory is set to churn out over 200 of the giant blades per year. The investor, the German company Nordex from Hamburg, has come to China because they believe that the Chinese wind market will soon be the biggest in the world.

China is developing renewable energies on a big scale. By 2020, the country wants to generate 16 percent of its energy from renewable sources, including wind, water, solar and biomass.

Wind farms alone are expected to contribute 30 Gigawatts -- that’s ten times more than they generate now.

Eric Martinot is a senior fellow with the American Worldwatch Institute and a professor at Beijing’s Tsinghua University. He thinks China’s ambitious targets are realistic.

“China is very committed to reducing its dependency on foreign imports of energy, especially oil,” said Martinot.

According to Martinot, the potential for renewables in China is almost unlimited. Wind power alone has an estimated potential of 1000 Gigawatts. Erecting solar panels in the Gobi desert could solve China’s energy problem for years to come.

“It’s a question really of how fast things can develop here,” Martinot said.

China’s wind industry booming

Since China introduced its Renewable Energy Law last year, the wind industry has been growing exponentially. Nordex and other manufacturers are struggling to keep up with orders for their wind turbines and rotor blades. In the wind-rich plains in northern and northwestern China, investors are already fighting over the best sites for new wind farms.

The biggest investors of late are China’s so-called Big Five -- the five largest utility companies and their subsidiaries. That’s because the new law stipulates that they have to generate five percent of their capacity from renewable sources. And so far, it’s only the wind industry that can compete with fossil fuels.

But the market is not necessarily an easy one to conquer because electricity prices vary across the country. When the government invites bids for a new wind farm project, it goes to the bidder who can offer the lowest electricity price to the grid.

“We have seen half a dozen of these so-called concession projects so far; the bidding process has driven down the price,” said Hans von Schaper, who represents Nordex in China. “Smaller projects and smaller companies can no longer compete and complete their projects with such low returns.”

Harnessing the sun’s energy

Solar water heaters cannot provide electricity but they do provide hot water -- for showers, washing the dishes and cooking. This no-frills, low-cost technology is fuelling a boom in solar power in China's countryside, as well as in its swiftly modernizing urban centers.

China has become the world’s leader in roof top solar water heaters, claiming an estimated 30 million solar households.

According to Eric Martinot, China accounted for 80 percent of the global solar water heater sales.

But more sophisticated solar technology has yet to make inroads in the Chinese market. “In China, the solar power market hasn’t yet started, ” said Shi Zhengrong. The 43-year-old is one of the richest people in China, having made his fortune with solar panels.

Six years ago, Shi Zhengrong founded Sun Tech Power. The company, based in Wuxi, near Shanghai, is now worth some 3.8 billion euros ($5 billion) on the New York Stock Exchange.

But most of Sun Tech’s turnover comes from outside China. Within the country, photovoltaic power generation cannot yet compete with other sources because its electricity is still ten times more expensive than coal.

Inefficient technology costs millions

But instead of racing against time to develop new energy sources, some experts believe China has yet to tap into its biggest resources of all --energy saving and energy efficiency. The country is losing billions of kilowatt-hours every year because many power plants, with out-dated technology, operate at only 30 percent efficiency. The rest is simply lost.

In many buildings, it’s impossible to regulate the heating other than by opening the windows. And industry wastes energy too. Per GDP unit, China uses more energy than most other countries.

At his only press conference last year, Premier Wen Jiabao said the government planned to “reduce the energy use per unit of GDP by 20 percent at the end of the five-year period.”

That is a truly ambitious target. And so far, results aren’t promising. Just a few weeks ago, officials had to concede that energy consumption per GDP unit had actually risen in the first half of last year.