China Cleantech: 2008 in Review

2008 was a rocky year for energy markets. Oil soared to $140/barrel, and then crashed to $40. Natural gas spot prices likewise jumped high to $13 MMBtu, then ended low around $6 (EIA). Investors, lulled by impending $200/barrel oil, poured record cash into renewable energy.

Below are some numbers from 2008′s first three quarters of China’s cleantech energy investment and development. The fourth quarter will probably post much smaller investment gains.

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Venture capital investment in Chinese renewable energy quintupled in the first three quarters of 2008, rising from US$29.1 million in the same period in 2007 to US$165 million this year (MarketWatch).

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Solar electricity generation-related venture capital investments raised US$85.2 million in China, up from under $4.6 million in 2007 (MarketWatch). The top energy capture efficiency of China’s photovoltaic cells is around 21% (PV Report, p41), which is competitive in the industry. Solar energy industry growth will likely be much slower in 2009. Businessweek cited concerns that worldwide solar growth may slow to just 15% in 2009, off from the 50% growth the industry has enjoyed every year since 2004.

China accounts for 11% of the market demand for solar power equipment. The US represents 9% and Germany dominates the industry with a 38% demand (Businessweek).

China produces significant solar photovoltaic capacity, but as of 2007 more than 90% of China’s local solar power manufacturing is likely exported (PV Report 2008, p11).

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China’s Wind industry likely added an expected 7 GW of capacity in 2008,* which allowed China to leap-frog India into fourth place among countries with installed wind power. Comparatively, the United States added 7.5 GW (ABS Energy Research). Global wind energy installed capacity was 94 GW at the end of 2007 and may reach 120 GW by the end of 2008 (ABS and p 15 of the Global Wind Energy Outlook). 20 GW of capacity was added worldwide in 2007- 3.3 GW of that in China (Cleantech).

* NOTE: 1/10/2009 Caijing recently reported the actual added capacity was 4.66 GW.

China’s domestic manufacturing capacity of wind turbines and equipment consisted of 40 manufacturers at the end of 2007. Chinese manufacturing accounted for 56 percent of global wind equipment installed that year. As of 2008, “Domestic manufacturing capacity is about 8 GW and is expected to reach 12 GW by 2010.” (Cleantech).

The Chinese wind power market has changed significantly in the past four years. In 2004, 75% of the market demand was filled by foreign suppliers, in 2006 only 55% was, and in 2007 foreign suppliers’ share fell to 42.2%. Only 1.7% of capacity is constructed by joint ventures, the rest of capacity is produced and installed by Chinese companies. (p20). In that same time period, the China market has seen total installed wind capacity rise from under 1GW to 8GW.

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Nuclear Power. China’s nuclear industry remained steady at 9GW of installed capacity as of December 2008. Nuclear energy accounts for about 1.3% of China’s total energy generation mix.