Friday, March 15, 2013

China as Solar Icon

Lots of  Yewessers have been saying we should pattern our solar industry after that of China.  Of course, we pretty much bought the farm on Solyndra, etc.  What is China doing differently?

The answer, it turns out, is NOTHING.  Their heavily subsidized companies are failing also, on an even larger scale.  The reason is not a difference in policy, but rather a similarity in physics:  Solar power is simply not a viable energy source at this point.  It takes $120 to generate $100 worth of electricity, and at some point the subsidies run out.  The story from the NYT.

The collapse of Suntech is a milestone in the precipitous decline of China’s green energy industry in the last four years. 

More than any other country, China had bet heavily on renewable energy as the answer to its related problems of severe air pollution and heavy dependence on energy imports from politically unstable countries in the Middle East and Africa. 

China is also exposed to global warming on its low-lying, densely populated coastline, which the Energy Department in Washington has estimated to have more people vulnerable to displacement from rising sea levels than anywhere else on earth. 

But China’s approach to renewable energy has proved ruinous, financially and in terms of trade relations with the United States and the European Union. State-owned banks have provided $18 billion in loans on easy terms to Chinese solar panel manufacturers, financing an increase of more than tenfold in production capacity from 2008 to 2012. This set off a 75 percent drop in panel prices during that period, which resulted in losses to Chinese companies of as much as $1 for every $3 in sales last year. 

Now, Max will likely comment and say something about how Germany's decision to end subsidies was somehow different.  It must be fun to live in your own world, Max, free from the restraints of logic and evidence!

2 comments:

Max said...

You are at least partially right. I will comment. Though you might be let down a bit by what I am going to say. Now, you seem to mistake me reporting something with what I believe in. It's the same mistake many make when it comes to Tyler's blog posts at Marginal Revolution.

I have been arguing against subsidies for the solar and wind industries for nearly 10 years now. The first renewable energy law subsidizing and regulating the price of renewables in the German electricity grid was approved in 1991 (EEG: http://en.wikipedia.org/wiki/German_Renewable_Energy_Act - if you can speak German try the German link).
Since then subsidies have been increasing. There is a slight decline as of June 2012, but that is mostly a fix for some time.
Instead of abolishing or severely freezing new renewable funding, the current Zeitgeist wants to impose social security remedies for poor families, meaning they want to continue with the status quo.

But even if they would cap or end the subsidies and they would have to do that against the resistance of a huge lobby of industries and home owners (!), this wouldn't end Germanies problems. Germany would have to add coal power, since it decided to exit nuclear energy earlier last year. This would push up Co2-emissions resulting in violation fees by the EU.

Also, you shouldn't forget that not only net intake is subsidized but also the buying and construction of solar panels. You can get special credits from the KfW (Kreditanstalt für Wiederaufbau - Reconstruction Credit Institute - formed as part of the Marshall Plan after WW II - Thank You US btw).
And then we also have subsidies that are done on the state level. Home owners also don't have to pay any taxes on the solar energy earnings and if you have only losses you can thereby reduce your tax burden.

I also commented on the popularity of renewable energies in Germany, which is on an unbroken high. And its not just idiots and leftists, its the whole political elite from the centrist(CDU) to the far left (Greens/Socialist Party) that is supporting this thinking uncritically. To say that Germany changed their policies is a great overstatement and I think might lead people to believe that there has been more cultural change than there really is.

Anonymous said...

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