CHINA MOVES UP IN THE NEW ENERGY WORLD

Global finance powerhouse Ernst & Young released a new ranking of the best countries in the world in which to invest in New Energy. The most noticeable change was China’s move up the list and the UK’s move down. Both changes are directly associated with policies set by those nations’ governments.

As if in acknowledgement of China’s new, higher status in the New Energy rankings, Yingli Green Energy Holding Co. Ltd. announced a major new 10-megawatt solar power plant for the Beijing area that could be on line by early 2010.

Jonathan Johns, head of renewable energy, Ernst & Young (E & Y): “Investment in China has been boosted by the government’s energy policy, which secures renewable energy as a vital and important part of the country’s energy mix. China’s stellar growth in renewables can also be attributed to the speed at which it has built up its supply chain capability, to the point where it is likely to have nine gigawatts of manufacturing capacity in a few years…”

It is perhaps not surprising that China’s government would be so important a factor since China’s is a planned economy. The UK is a different case. It’s fall on both the overall New Energies list and the wind energy list is, according to E & Y, due to the government’s failure to get its energy bill through the parliament. Germany, whose government has acted aggressively to institute plans to meet its EU Renewables Directive requirements, moved up both lists.

Johns, E & Y: “To make the UK a world leader in attracting investment in this sector, and to avoid it slipping further down the index, the government needs to consider creating tangible incentives for investors, following the lead of Germany and the ambition of China…”

The rising momentum of China in the New Energy sector, as the result of aggressive central planning, and the dominance of Germany, as the result of its aggressive and so far successful use of incentives, has pushed Spain, the U.S. and the UK to reconsider subsidies such as the feed-in tariff (FiT). The ultimate impact, E & Y believes, will change the world of New Energy investment.

China is on track to surpass its goals. (click to enlarge)

China overtakes UK as a key country for investment in renewable energy
August 19, 2008 (Ernst & Young)
and
Yingli Green Energy plans new solar power plant
August 22, 2008 (AP via CNN Money)

WHO
Ernst & Young (E & Y) (Jonathan Johns, head of renewable energy); Yingli Green Energy Holding Co. Ltd. (Liansheng Miao, Chairman/CEO)

WHAT
In E & Y’s updated indices for New Energy investing, China moved onto the list of the top 5 countries for New Energy investment, displacing the UK and moving into 4th place ahead of Spain. Typifying China’s race forward in New Energy, Yingli announced plans to build a 10-megawatt solar power plant in China.

click to enlarge

WHEN
- The new index covers global investment in the first six months of 2008.
- The UK’s policy planning period is expected to last into 2010, leaving it only a decade to meet its 2020 EU Renewables Directive requirements.
- China’s latest New Energy goals call for the building of 30 gigawatts of new wind, 1.8 gigawatts of new solar, 30 gigawatts of new biomass capacity and 300 gigawatts of new hydroelectric capacity by 2020.
- The Yingli power plant project was announced August 22. Construction is expected to begin in the second half of 2009.

WHERE
- The top 5 on the “all energies” list: U.S., Germany, India, China, Spain
- Germany: 72.7 terawatt-hours of New Energy in 2006
- UK: 18.1 terawatt-hours of New Energy in 2006
- The Yingli solar power plant will be in the Beijing area.
- Yingli is based in Baoding, China.

WHY
- The E & Y index is designed to identify the most attractive countries for investment in New Energy.
- The UK dropped from 4th to 6th on the “all renewables” and from 2nd to 5th on the “long term wind” list.
- Germany moved to 2nd on both lists.
- Cost of New Energy in UK: 3.2p/kW-h vs. cost of New Energy in Germany: 2.6p/kW-h.
- The E & Y report includes updates on New Energy growth in the UK, Germany, the US, India, Spain, Australia, Italy and Ireland.
- Although definitive information is not yet available, the Yinglin solar power plant in Beijing seems to be a photovoltaic (PV) and not a concentrating solar facility.

Germany's policies spawned an industry. (click to enlarge)

QUOTES
- Jonathan Johns, head of renewable energy, Ernst & Young (E & Y): “China is also likely to become a significant exporter of wind turbine equipment in a few years, adding to its already strong presence in the solar industry.”
- Liansheng Miao, Chairman/CEO, Yingli Green Energy: "We are excited about this opportunity to construct an on-grid solar power plant in Beijing, which would be the first solar power plant we construct and operate…We believe our participation in this project is in line with our strategy of expanding into downstream applications of PV technology and will further strengthen our vertical integration business model."