More Investments in Renewables in China Than in US and Europe Combined

July 24th, 2010 by Susan Kraemer

China attracted more asset financing in clean-energy technology in the second quarter than Europe and the U.S. combined, according to Bloomberg New Energy Finance. A clever piece of legislation created the renewable energy bonanza.

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Six months ago, China made it the law that all utilities have to buy any renewable power put on the grid or they get fined. Since then private investment in renewable sources in the country has surged past US and EU levels. Investors are betting on China.

In the second quarter, outside financing of wind turbines, solar panels and low-carbon technology in China soared 72% to $11.5 billion.

China’s renewable sector accounted for one third of renewable investment for the period for the entire world, which totaled $33.9 billion, including all share sales, venture capital, private equity and asset finance.

Of this amount, private investment in clean energy in the US rose to $4.9 billion for the quarter while in Europe it fell to $4.5 billion for the same time period.

Last year, China installed 14 GW of just wind power alone, far outpacing the power added from wind of any other country, mostly using stimulus funds. Here, the US is more competitive. The stimulus funds in the US, once spent, will have added 16 GW of all forms of renewable energy to the US grid.

Private investment, though, needs regulatory certainties. With the sudden death of the climate bill in the US last week, private investment here will likely slow.

But even in the absence of a big clean energy bill, some policies have real impact. Feed-in Tariffs in Spain and Germany shook the world by offering premium prices for renewable energy production. (Far too generous: you only need to offer two to three times retail to get action.)

The new law in China requiring that utilities have to buy any renewable power added to the grid, is essentially the (always popular) Electranet idea, that consumers can also be producers. It appeals to the universal desire to make money.

Finland passed the same legislation as China decades ago with the result that its paper mills now provide 30% of the electricity on the national grid, by tapping into their produced heat on-site to generate electricity.

Heavy industries like steel mills, paper mills and concrete producers could use Combined Heat & Power systems to use (now wasted) heat produced in the manufacturing process to sell the power to the grid. There is an estimated 7 quadrillion BTU of potential there.

Everyone from frugal homeowners to heavy industry could be earning money by adding power to the grid.

Susan Kraemer @Twitter

Image: China State Power









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