Antinuclear

China’s solar industry – the birthpangs of a new capitalist industry

There is still a chance for Australian firms to get involved in the production and export of next-generation solar technology – and capitalise on the fact that the technology was actually invented here (at University of NSW). But it needs strong and determined support for this to happen – on a scale that would match the support that is already being offered in China.

What’s going on with Chinese solar? The Conversation,  John Mathews, 27 March 2013 “…..  The birth pangs of a capitalist industry What we’re seeing is the birth pangs of a new, capitalist industry. We should be rejoicing that some companies are going bankrupt – it shows that the industry really is competitive, and not subject to arbitrary state control.

There have been comparable episodes at the birth of every major industry. Detroit boasted hundreds of auto companies in the 1910s and 1920s before bankruptcies and consolidation led to the creation of the Big Three – Ford, General Motors and Chrysler. Likewise in electronics and computers. Now it is the turn of solar photovoltaics.

China has created an astonishingly successful solar photovoltaic industry, far beyond the imaginings of commentators even ten years ago. A decision was taken at the highest levels that China needed to promote renewable energy industries to complement and offset its rapid escalation of coal-burning and fossil fuel driven industrialisation.

Total reliance on fossil fuels would lead to political dependence on unstable Middle Eastern regimes and severe energy insecurity – which could be balanced only by developing domestic industries that would generate power without imported fuels.

In the 11th Five Year Plan, covering the years 2006 to 2010, solar photovoltaic energy (along with wind power) was singled out for attention, and grew rapidly through local subsidies and low-interest loans from state banks. Targets were rapidly increased, with the industry anticipated to grow by 10 GW this coming year, and reaching 35 GW by 2015 – making it by far the world’s largest producer and ousting Germany this year as largest consumer as well.

The most important decision was to allow open access to the industry for entrepreneurial firms – and in China’s wildly entrepreneurial culture that meant that hundreds of firms flocked in……

But in this fevered atmosphere, the slightest downward trend in demand provokes destabilisation of supply – and the most leveraged of Chinese producers are now starting to feel the pinch, led by Suntech, whose Wuxi subsidiary has now declared bankruptcy. Doubtless the Wuxi municipal holding company will step in to clean up the mess, and some foreign bond holders who invested in expectation of future profits will have to “take a haircut”.

Well, that’s capitalism.

The future of Chinese solar

Meanwhile the Chinese authorities are seeking to bring some order to the new industry by expanding domestic demand, in line with the 12th Five Year Plan. In this spirit they are introducing some feed-in tariffs, modelled on Germany’s extremely successful system. This encourages growth not just in demand for renewables but also in supply, through supporting decentralised independent power producers like farmers and householders to supply to the grid…..

There is still a chance for Australian firms to get involved in the production and export of next-generation solar technology – and capitalise on the fact that the technology was actually invented here (at University of NSW). But it needs strong and determined support for this to happen – on a scale that would match the support that is already being offered in China. http://theconversation.com/whats-going-on-with-chinese-solar-12941?utm_medium=email&utm_campaign=The+Weekend+Conversation&utm_content=The+Weekend+Conversation+CID_98de6b76b0ea111a166373e1d20eccd3&utm_source=campaign_monitor&utm_term=Whats%20going%20on%20with%20Chinese%20solar

March 30, 2013 - Posted by Christina Macpherson | Uncategorized