China invests nearly $40 billion in international renewable energy projects

China is known to rank first in the world in attracting clean energy investment, receiving US$ 65.1 billion in 2012.

But new analysis shows that China is increasingly becoming a global force in international clean energy investment, too. Between 2002 and 2012, the country has provided nearly $40 billion (RM126.4 billion) to other countries’ solar and wind industries.

A new update in the findings should include Malaysia in the destination countries list. We have China's investment in West Malaysia and the recent launching of Solar wafer manufacturing plant in Kuching Sarawak.

Figure 1: China's top 10 destination countries for the 2002-2012 period. Source

This investment is consistent with a broader trend of major emerging economies like China, India, and Brazil becoming important sources of global overseas investments.

China’s overseas Wind and Solar investments

Research shows that Chinese companies have made at least 124 investments in solar and wind industries in 33 countries over the past decade (2002 – 2011), more than half of which were made in 2010 and 2011 (see Figure 1). The wind/solar investment by the numbers:-

1. Of the 54 investments for which financial data were available, the cumulative amount invested came to nearly US$40 billion.
2. China invested roughly US$10 billion in 16 wind projects and US$27.5 billion in 38 solar investments.
3. Of 53 investments with capacity data available, the cumulative installed capacity added was nearly 6,000 MW.
4. The majority of investments were in electricity generation. Several investments were made in manufacturing facilities and to establish sales and marketing offices.
5. Most of the investments were in developed countries. A huge amount went to the United States, as well as Germany, Italy, and Australia.
6. A handful of developing countries—including South Africa, Pakistan, and Ethiopia—also attracted multiple investments.

Drivers and challenges to China's overseas investments

Both wind turbine and solar photovoltaic (PV) manufacturing industries have grown substantially – in 2010, four Chinese companies from each industry ranked among world’s top 10 manufacturers for wind turbine and solar PV respectively.

However, their market bases are quite different – China’s wind industry relies on its vast yet oversupplied domestic market, whereas the solar industry relies on the international market for 95% of its sales.

Both industries need to boost sales in international markets, which has not always been easy. Chinese wind companies are relatively new entrants to the international markets.

Declining subsidies in the European solar market have decreased demand for Chinese solar products. As a result, direct investments overseas are seen as a way of retaining and expanding market share, typically through creating demand for the export of products.


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Australian Wind Energy now cheaper than Coal and Gas

This is very encouraging for the Renewable Energy industry.

Bloomberg says that wind is now cheaper than fossil fuels in producing electricity in Australia, the world's biggest coal exporter.

Wind farm on a beautiful landscape. Image credit: DP Energy

Renewable energy, mainly driven by hydro- and wind-power projects, contributed 9.6% of Australia's electricity production in 2011, up from 8.7% in 2010, according to the Clean Energy Council.

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Bloomberg: Australian Wind Energy Cheaper Than Coal, Gas

Electricity can be supplied from a new wind farm in Australia at a cost of A$80 (approx. RM236) per megawatt hour, compared with A$143 (RM421) a megawatt hour from a new coal-fired power plant or A$116 (RM342) from a new station powered by natural gas when the cost of carbon emissions is included, according to a Bloomberg New Energy Finance report.

Coal-fired power stations built in the 1970s and 1980s can still produce power at a lower cost than that of wind, the research shows.

Relying on fossil fuels to produce electricity is getting more expensive because of the government's price on carbon emissions imposed last year, higher financing costs and rising natural gas prices, BNEF said.

The cost of wind generation has fallen by 10% since 2011 on lower equipment expenses, while the cost of solar power has dropped by 29%.

"The fact that wind power is now cheaper than coal and gas in a country with some of the world's best fossil fuel resources shows that clean energy is a game changer which promises to turn the economics of power systems on its head," Michael Liebreich, chief executive officer of Bloomberg New Energy Finance, said in a statement today.

Renewables Target

While wind energy has become more competitive, Australia's plan to get at least 20% of its power from renewables by the end of the decade is still required to drive investment because of weak energy demand, the report said.

Australia last year started charging its biggest polluters a price of A$23 a metric ton for their carbon emissions to discourage the use of fossil fuels and fight climate change.

"The low and falling costs of renewable energy and high and rising costs of coal- and gas-fired plants suggest that much of Australia's new generating capacity is likely to be renewable," Sydney-based Bloomberg New Energy Finance analyst Kobad Bhavnagri wrote in the report.


Source: Bloomberg