Government sponsored renewable “green” energy (predicated on climate change) has been imploding, not only in the US (e.g. Solyndra scandal) and Europe but in China as well.
From the New York Times (bold highlights)
China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.But now China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.The outcome has left even the architects of China’s renewable energy strategy feeling frustrated and eager to see many businesses shut down, so the most efficient companies may be salvageable financially.
$18 billion and counting of China’s taxpayers money now in jeopardy.
As always, eventually economic reality expressed through the markets upend governments’ grand delusions, more from the same article:
Chinese companies have struggled even though a dozen solar companies in the United States and another dozen in Europe have gone bankrupt or closed factories since the start of last year. The bankruptcies and closures have done little to ease the global glut and price war because China by itself represents more than two-thirds of the world’s capacity.To reduce capacity, foreign rivals have clamored for China to subsidize the purchase of more solar panels at home, instead of having Chinese companies rely so heavily on exports. But the government here is worried about the cost of doing so, because the price of solar power remains far higher than for coal-generated power.The average cost of electricity from solar panels in China works out to 19 cents per kilowatt-hour, said Mr. Li. That is three times the cost of coal-fired power. But it is a marked improvement from 63 cents per kilowatt-hour for solar power four years ago.China’s official goal is to install 10 gigawatts of solar panels a year by 2015, using 20-year contracts to guarantee payment for electricity purchased from them. If costs stay where they are now, the subsidies would be $50 billion over 20 years for every 10 gigawatts of solar power installed, based on figures supplied by Mr. Li.Even if solar power costs fall by a third, as the government hopes, he said, “it’s big money.”
China’s government’s goal may or may not be attained, but one thing is for sure: costs are not benefits. China’s force feeding of solar energy will come at a great costs to her taxpayers and to the development of other possible alternatives, most prominently shale gas.
Alternatively, the explosive global growth of free market based Shale gas will add to the economic and financial woes of the solar and other government sponsored renewable industry.
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