Turns out we did have a point last year to focus on STP and TSL in the solar sector after all… They look most likely to survive the shake-out that’s going on right now…
China is running away with the green technology prize. It has conquered a third of the world market for solar cells and is on a breakneck course to build 100 gigawatts of wind turbines by 2020, doubling again the global capacity for wind power across vast stretches of Inner Mongolia and Xinjiang.
Suntech Power in Wuxi has just broken the world record for capturing photovoltaic solar energy, achieving a 15.6pc conversion rate with a commercial-grade module.
Trina Solar is neck-and-neck with America’s First Solar, the low-cost star that has already broken the cost barrier of $1 (61p) per watt with thin film based on cadmium telluride.
The Chinese trio of Suntech, Trina and Yingling all expect to be below 70 cents per watt by 2012, bringing the magical goal of “grid parity” with fossil fuels into grasp.
The concept of grid parity is subject to fierce debate, mostly revolving around which form of fuel – nuclear, oil, coal, or renewables – enjoys the biggest implicit subsidy, and what the future price of crude is likely to be. Parity has already been achieved in hot spots. First Solar’s 10-megawatt plant in Nevada can produce electricity without subsidies for 7.5 cents per kilowatt hour compared to 9 cents for fossil-based power.
Jeremy Leggett, founder of Britain’s Solar Century, says that even this cloudy island can achieve grid parity for households by 2013, seven years sooner than expected. South-facing roofs and facades could one day provide a third of UK electricity needs.
The credit crunch has been brutal for solar start-ups in the West, but not for Chinese firms with access to almost free finance from the state banking system. They have taken advantage of the moment to flood the world with solar panels, driving down the retail price from $4.20 per watt last year to nearer $2 in what some say is a cut-throat drive for market share.
German pioneers Solarworld and Conergy allege foul play and have called for EU sanctions, accusing Chinese rivals of practices that “border on dumping”. China’s finance ministry says it intends to cover half the investment cost of solar projects. It is a life-and-death moment for the German solar industry, pioneers who provide 75,000 jobs and once led the world. “A large number of German solar cell and solar module producers will not survive,” said UBS’s Patrick Hummel.
Q-Cells is cutting four production lines and 500 jobs at its base in Thalheim, switching assembly to Asia. Goldman Sachs has added the company to its “conviction sell” list.
Roughly speaking, Chinese firms can undercut the Germans by 30pc. At root, it is a currency problem. China has stolen a march against Europe over the last five years by linking an already undervalued yuan to a weak dollar. While Beijing sheds crocodile tears about the falling greenback, it is deliberately riding dollar devaluation to protect its own export share. What is happening to German solar firms is a revealing case study of the slow-burn damage caused by currency misalignment.
The solar glut will not last. China is orchestrating a big switch into solar power for its own households with a feed-in tariff that lets people sell electricity to the grid. But that may come too late to save German firms.
China has tripled its goal for wind power to 100 gigawatts by 2020. While the West bails out banks, China is spending a big chunk of its $600bn stimulus on “clean tech” projects and a smarter grid. Yes, you still have to wear a face mask to breathe in the soot-blackened industrial hubs of the interior. By the same token, the solar-and-wind hub of Baoding has become the first carbon-positive city in the world.
Whether China is pushing the green agenda because it believes in global warming is almost irrelevant. The country fears being caught short as the global scramble for diminishing resources starts in earnest.
China’s coal reserves are not as deep as often assumed. Coal imports surged 130pc in the first half of this year. Australia’s Newcastle University expects the world to reach “Peak Coal” in 2026, much earlier than expected.
Unfortunately, feckless Britain will be caught short by the energy crunch. Labour dithered for a decade as North Sea oil began to decline – failing to bite the bullet on nuclear, clean coal, or renewables until far too late. This Government simply failed to understand the impact of Asia’s industrial revolutions.
While it makes much noise about CO2 emissions, Labour has been deaf to warnings of a power crunch. We may soon be moving into a phase of history when ill-prepared countries cannot be sure of obtaining energy – whatever the price.
Ah yes, the Danish wind company Vestas has just closed its turbine plant on the Isle of Wight and shed 425 jobs, citing Britain’s Nimby culture and the red tape of the planning bureaucracy.
Vestas is switching to the US and China. Makes you weep.