Solar is great, but according to a Hong Kong consultancy, don't miss big opportunities in water power in China.
China has begun to make a name for itself in solar manufacturing, but a leading research and consulting company hints big renewable energy opportunities in China might yet be found in hydro.
CCID Consulting, based in Hong Kong, says small hydropower systems are becoming popular.
"Due to rich resources, strong market demand and policy incentives, small hydropower is now receiving attention as a new investment hotspot for private enterprises. Developing small hydropower resources and realizing rural electronization is an important way to push forward rural economic development and agricultural modernization," said CCID analyst Qiu Shiming.
China has abundant small hydropower resources, with a developable volume of 87 million kW, the highest in the world, according to CCID. These resources are distributed over 1,600 mountainous counties.
Currently, the average on-grid electricity price in China is between 0.35 and 0.50 Yuan/kwh, while the generation cost of small hydropower is between 0.2 and 0.250 Yuan/kwh.
"Profits are very big. Investment trends in recent years show that small hydropower is also becoming a new economic hotspot after real estate, automobiles and IT," noted Shiming.
Solar manufacturing is alive and well in China, says CCID, although it says the solar thermal hot water heating infrastructure is far more advanced than the photovoltaic one.
CCID Consulting notes China's solar water heater market has been growing at high speed. The company forecasts the country is on track to double its 2005 installed base of 14.5 million m2 and reach 30 million m2 by 2010.
Analyst Qiu Shiming of CCID cites three factors driving solar water heating.
Firstly, China has genuinely developed solar water heater technologies of its own, in particular aluminum and nitrogen film technology used by Chinese vacuum tube solar heaters. He also pointed to a comprehensive supplementary industry ecosystem for solar water heaters, including inspection and certification, installation and marketing services, as well as market mechanisms.
"China is the biggest producer and market for solar water heaters in the world. Our solar water heater industry, after going through a decade of technological perfection and market cultivation, is entering full-fledged and accelerated development," Shiming told Cleantech.com.
Solar thermal water heating in China is viewed as a complete industry, but CCID points to gaps in China's emerging photovoltaic value chain.
For materials manufacturing, China currently relies largely on imported polycrystal silicon to make its solar cells. The production of polycrystal silicon lags behind demand, resulting in a continuous shortage of polycrystal silicon raw materials in China and elsewhere worldwide since 2004.
China has been producing monocrystalline silicon in large quanitities, according to CCID. The proportion of monocrystalline silicon to polycrystalline silicon production in most of the world in 2005 was 1:1.8, while the proportion in China was 6.7:1, CCID says, citing domestic technological sophistication in monocrystalline silicon production, localization of the equipment, and relatively low price compared to imported polycrystal silicon.
While labor is plentiful, Chinese solar companies are apparently constrained by finding the right talent to support their fast growth, the company said.
"Enterprises lack technical talent, properly trained in relevant science and technology innovations," said Shiming.
China is home to many high-profile public solar manufacturers, including Suntech, JA Solar, Canadian Solar, Solarfun, Solar EnerTech, Trina Solar and others, many of whom are trading at stratospheric heights.
"In the solar energy photovoltaic power generation industry chain, China has been developing fast only in the simplest links. It is constrained by developed countries in other aspects. The whole Chinese industry still needs to be improved."
Hasn't China also started making wind turbines in a large way?
I heard that in 2006, about 80 wind farms were built in China.