China’s newest solar energy manufacturers include a dairy farmer and a toy maker.
The new entrants are examples of a green-energy spending binge in China that is fueling the country’s rapid build-out of renewable energy while also creating a glut of solar components that is rippling through the industry and stymying attempts to build such manufacturing elsewhere, particularly in Europe.
Since the start of the year, prices for Chinese polysilicon, the building block of solar panels, are down 50% and panels down 40%, according to data tracker OPIS, which is owned by Dow Jones. [emphasis, links added]
Inside China, some companies fear a green bubble is about to pop.
China’s state-guided economy spent nearly $80 billion on clean energy manufacturing last year, around 90% of all such investment worldwide, BloombergNEF estimates.
The country’s annual spending on green energy overall has increased by more than $180 billion a year since 2019, the International Energy Agency says.
The rush of funding has attracted an unusual array of companies to the bustling business.
Last summer, Chinese dairy giant Royal Group unveiled plans for three new projects. There was a farm with 10,000 milk cows, a dairy processing plant, and a $1.5 billion factory to make solar cells and panels.
“The solar industry is improving over the long term, and the market potential is huge,” Royal Group wrote in a document outlining the project last year.
More recently, Royal Group said it wants to create synergies between its core agricultural business and photovoltaics, “and promote solar technology to empower dairy owners to reduce costs and increase efficiency,” the company said in a response to The Wall Street Journal.
The milk manufacturer wasn’t alone in jumping on China’s solar bandwagon in the past two years. Other newbies include a jewelry chain, a producer of pollution-control equipment, and a pharmaceutical company.
The newcomers are helping an ambitious wind and solar push in China—this year alone the country is set to install roughly as much solar as the U.S. has in total, Rystad Energy estimates.
Meanwhile, Chinese exports of everything from batteries and electric vehicles to solar panels and wind turbines have surged, raising hackles in places such as Europe and the U.S., which are trying to grow their domestic clean energy manufacturing.
In solar, the investment is an important reason for the huge oversupply of components, and falling prices that are pummeling profits at manufacturers around the world.
Many established Chinese solar companies are warning that the fallout could be grim, with losses or bankruptcies looming. …
Market watchers say the oversupply may work itself out faster than expected because some companies are likely to cancel or postpone expansion plans and others are retiring old factories in favor of new ones.
Still, some Chinese industry executives such as Liu Yiyang, deputy secretary-general of the China Photovoltaic Association, are calling for local governments to tap the brakes on green tech investment.
Top image of Solnova Solar Power Station via Wikimedia Commons
Read full post at WSJ
China don’t want a slice of the World Pie they want it all
A dairy farm in China?
Lancet Gastroenterol Hepatol 2017; 2: 738–46
Published Online July 6, 2017
“Different studies have shown wide variation in the prevalence of lactose malabsorption across the world, ranging from 4% in Denmark to almost 100% in China and among native Americans.”
Learn something new every day.