Wednesday, April 17, 2013

China: The Epicenter Of Clean Energy Investments

Ucilia Wang


Clean energy investments worldwide dropped 11% in 2012, but more money flowed to China, Japan and upstart countries as the cost of clean energy generation fell, according to a report released by the Pew Charitable Trusts Wednesday.
The investments, which included venture capital and other types of private equity for manufacturing and power generation projects, reached $269 billion last year.
Many cutting-edge clean energy technologies may spring up in the west, in places such as the United States and Germany, but it is Asia where the bulk of manufacturing and power project construction are taking place. Asia attracted $101 billion in investments, which was up 16% from 2011 and accounted for 42% of the total worldwide last year, said the report, which was prepared byBloomberg New Energy Finance.
China, in particular, “advanced its position as the epicenter of clean energy finance,” the report said. The country drew $65.1 billion, which was a 20% jump from 2011 and made up 30% of the total that went into G-20 countries in 2012. China brought in 25% of the worldwide investments in solar, 37% of those in wind and 47% of other types of renewable energy, from small hydropower to geothermal.
China has been plotting its way to the top for a while. The country is home to some of the world’s largest solar panel makers. Its national and local governments have been big boosters for solar and wind generation, electric cars and advanced batteries for running electric cars and storing wind and solar power. The country is hungry for more energy to fuel its economic development. It is a major greenhouse gas emissions producer that is also starting to figure out how to curb with the negative environmental impact of its market policy.
Many U.S. technology developers, from lithium-ion battery startups such as Boston-Power to public companies such as solar panel makers, First Solar and SunPower, have turned to China for investments and customers in the past few years.
Japan also has become a hot market for renewable energy generation, especially solar, after the Fukushima nuclear power plant disaster in 2011. The overall clean energy investments it received last year jumped 75% to $16.3 billion. Solar took up 97% of that amount.
Other markets, including the Middle East, Latin America and parts of Africa also are seeing growth. Clean energy development in these regions are fairly new, so the rates of increase in investments and clean energy generation should go up much faster in these early years than they would in more mature markets such as Europe.
In fact, the declining government incentives that have propelled the growth of clean energy development in Germany, Spain, Italy and other European countries is what sent renewable energy equipment makers and project developers to look for new markets in places such as Asia, Middle East and Latin America.
At the same time, an oversupply of solar panels and other equipment in the past two years has depressed their prices and made this form of renewable energy much more attractive to countries that might previously find it too expensive. The affordability has come at the expense of dozens of manufacturers who have been forced to file for bankruptcy because they couldn’t compete in pricing and keep incurring big losses.
Cheaper equipment helped to boost the amount of new renewable energy generation capacity worldwide in 2012 to a record 88 gigawatts. Over half of the new installations, 48.6 gigawatts, are wind power plants.
Clean energy investments in the United States dived 37% to $35.6 billion in 2012, the report said. This came after the country saw over 30% growth in 2011. For one thing, many venture capital investors have shied away from putting money in developing new materials and manufacturing processes for solar and batteries for electric cars (the electric car market hasn’t taken off as quickly as some have hoped). The amount of investments can go up and down like a yo-yo from year to year when a particularly government incentive program is about to end.