There are signs China’s economic growth is slowing to a more sustainable level, but it remains committed to the ongoing development of its renewable sector.
The collapse in August/September of a number of high-profile US solar manufacturers has renewed demands for the Obama Administration to pursue unfair trade complaints against China for its policy of awarding “anti-competitive” subsidies to support solar growth.
According to the US Energy Department, China provided around US$30b (€22b) credit to its biggest solar manufacturers last year, about 20 times the US effort. A report by S&P acknowledges that Chinese solar companies have been able to use cheap debt, often interest-free, to achieve economies of scale, offer extended credit terms and gain market share. This has produced significant oversupply in the global market, pushing down the price of solar power at an astonishing rate.
Just days after the bankruptcy of Solyndra, Oregon Senator, Ron Wyden accused China of “dumping” solar panels on the US market. He is calling for the Department of Commerce to investigate whether to impose a trade tariff on Chinese modules, and pursue a case against China at the World Trade Organization.
No action has yet been taken by the Obama Administration, and the outcome is not a foregone conclusion.
The Solar Energy Industries Association, a US trade group, says Solyndra's bankruptcy was caused by the realities of a maturing industry in a competitive marketplace, with its less than conventional cylindrical PV panel also to blame.
Fierce competition from Chinese manufacturers has driven costs down, putting pressure on competing companies. The question is whether it has given domestic companies an unfair advantage resulting in the downfall of US manufacturers, or whether US policy-makers and industry players are ignoring other factors.
In a bid to stimulate its domestic manufacturing market, China is turning to Africa, its fifth-biggest export market for PV products. It hopes to take advantage of Africa's growing focus on alternative energy to help overcome power shortages, which could open new markets for solar-power products. China has already started constructing six solar projects in Africa this year.
China remains the global leader for wind power. However, in a bid to prevent growth becoming unmanageable, particularly in light of its struggling grid infrastructure, it has tightened its approvals process. To qualify for government subsidies for power tariffs from the Renewable Energy Development Fund, construction of all new wind farms must now be endorsed by the NEA in Beijing, following which provincial governments can approve projects and allow connection to the local grid.
The change is a response to the build up of excess capacity under previous rules, which allowed provincial governments to approve wind farms up to 50MW. The grid infrastructure has been unable to deal with the flood of new connections, and a large proportion of China’s wind portfolio is as a result not actually generating power.
Wind turbine installations are set to fall up to 20% over the coming year, causing turbine manufactures to leave the domestic market, or look toward export markets. One company that is already planning to leavethe domestic market is Germany’s REpower, which is planning to sell its majority stake in a turbine factory in Inner Mongolia.