Oddly enough, the protectionist policies of the Chinese government are doing more to lower wind and solar power prices for consumers around the world than those of their own respective countries.
China has targeted both wind and solar power as future growth areas. This is due to a variety of factors: China has to import both oil and coal; pollution is a major problem; the country is ideally situated to generate wind power; much of the land is drenched with sunshine; and the increasing value of the national currency makes export markets much cheaper to penetrate.
Five years ago, there was not a single Chinese wind turbine maker among the top 10 in the world. Now, there are four, including:
- Sinovel, the second largest in the world;
- Goldwind, which bought into German turbine designer Vensys in 2008;
- Dongfang, which provides 6.7% of the wind turbines used today; and
- United Power.
According to the Global Wind Energy Council, China is erecting new wind turbines at the rate of one per hour. As a result of China’s entry into the market, the price of wind power components has declined drastically, which is a boon for all customers, governments and private parties looking to buy. It is projected that by 2030, China could satisfy all of its own electricity needs from wind power alone.
It’s the same story for solar power. China, with Taiwan, now accounts for about 75% of global solar-energy panel production. While China produces most of the solar panels in the world, the great bulk of the output is destined for export. As a result, spot market prices for solar wafers and panels declined by about 40% in 2011. Market prices are now below manufacturing costs. Prices will continue to fall, as global demand needs to be at least 23 gigawatts (GW) to maintain present pricing levels. Currently, global demand is at 18.3 GW, meaning the glut in solar power is here to stay.
Customers around the globe can only benefit. Even if some companies such as Evergreen Solar can’t compete and will go bankrupt, everyone will still benefit from the following factors:
- Wind and solar energy power will be available at lower costs;
- Lower costs will expand the use of wind and solar power, decreasing pollution; and
- Governments will not waste money subsidizing companies that cannot compete, saving taxpayer dollars. Examples: Evergreen Solar, which filed for bankruptcy, received $60 million in government aid. At the date of posting, Solyndra, which received an Energy Department loan guarantee worth $535 million, also filed for bankruptcy.
This is exactly what happened with the domestic automobile industry in the United States. Cheap, energy-efficient cars, primarily from Japan, made global inroads for the same reason that Chinese companies are now making inroads in wind and solar power. The cars from Japan were more reliable while being less expensive, polluting less, and using less gasoline — eventually that forced changes in the marketplace. The end result is that the automobiles of today are of a significantly higher quality at a lower relative cost, while being more energy efficient and much more environmentally-friendly. This is what competition from China will do globally for solar energy and wind power.
