China’s Solar Industry Outshines the U.S.

Just something to keep your eye on as your politicians promise you thatthe US will be the world leader in green tech jobs.  In fact theywill have to layer countless more debt on your children andgrandchildren for temporary "green jobs" jobs, to make this mirage cometrue – for a while.  Most likely this promise will come next spring asthe next massive stimulus is pumped to the masses to create "greenjobs" retrofitting buildings and such.  Meanwhile, ask where theproduction is and what work we will be left with after we borrow moneyfrom China to create temporary jobs.  [Nov 2, 2009: Lack of Green Energy Manufacturing Capability in US Means 84% of Stimulus Goes to Foreign Firms]

Remember, Japan and Germany are a decade ahead of us as we decideddaytrading homes was the real way to prosperity as a nation… andChina is subsidizing every form of green energy.

  1. [Aug 25, 2009: UK Telegraph – China Powers Ahead as it Seizes the Green Energy Crown from Europe

  2. [Aug 28, 2008: China to Subsidize Wind Turbines

  3. [Jun 19, 2009: Reuters – Incentives Add Shine to China’s Solar Drive]  

Just today I saw two separate Chinese firms (both of which we’ve ownedin the past) pledging to build plants in the US as "political" cover…Suntech Power (STP) in solar and A-Power Energy (APWR) in wind.

  • Gov. Jan Brewer on Monday announcedplans for a Chinese-owned solar panel maker to build its U.S.headquarters and a manufacturing plant in the Phoenix area,propelling one of the nation’s sunniest states toward a bigger globalpresence in the renewable energy industry.  Suntech Power Holdings Co.said it expects to start building photovoltaic panels at the facilityby the third quarter of 2010. The company, which has more than 9,000employees, expects to eventually employ 250 or more people at the plant.

By doing so, they can clap their hands that they are creating jobs(hundreds!) in the US – collect money from the federal government(which in reality is their own government’s money, just passing throughthe US government after we borrow it) while 99% of the production isback in the home country.  But hey we get some assembly jobs here, andsome great photo opportunities for some governors.

  • With the capacity to make 30 megawatts of solar panels per year, the Arizona facility would represent about 3 percent of Suntech’s total production, Bachman said.

If you are not familiar with the solar industry in China – thereare literally over 100 firms there.  Suntech is their largest fish, butagain its 3% of ONE company’s production; i.e. equivalent to 1/10th ofone of Suntech’s countless smaller competitors.  But again, a wonderfulphoto opportunity… to be frank it is a genius move by the Chinese;sort of a Trojan Horse strategy.  And they will get tax handouts toboot; brilliant.  Key word below "appear".

  • "They want to appear to be manufacturinghere domestically so when the solar market takes off in the U.S., theyhave room to stand on and say, ‘We are producing jobs here and we wantto be able to sell our panels here as well,’" Bachman said.

As for US solar companies?  Last I checked our best firm (we only have a handful), First Solar (FSLR) was moving as much production as possible to Malaysia.

Now in the wind space, A-Power, which was the source of thecontroversial story I highlighted above in early November, has decidedit would make for good press to build a plant in the US too.  It is nice that Chinese companies are offering some scraps to the Americans…

  • China’s A-Power Energy Generation Systems (APWR) hassigned a cooperation agreement with equity firm U.S. Renewable EnergyGroup (US-REG) to build a plant in the United States to supply windenergy turbines to renewable energy projects in North and South America.

  • The joint announcement in Washington late on Monday came three weeks after A-Power said it planned a $1.5 billion wind farm project in West Texas along with U.S. companies. 

  • It will employ about 1,000 workers and create additional jobs during construction, the companies said.

Convenient timing; I’m sure "central command" back in Beijing did notlike the backlash to the New York Times story and A-Power got some"assistance" from their government in making this decision. ;)  So allin all 1250 jobs and I’m sure grand promises of many more to come(ahem).  If you divide those 1250 jobs times all the tax handouts fromUS federal government I am sure it will be akin to the cost per job"created or saved" from the current stimulus – perhaps $1-$2M a head?

I actually thought about 2 years ago the one thing the US could growdramatically in the manufacturing base is the production of windturbines (for domestic usage) since they are so heavy, transportingthem across oceans would be cost prohibitive, but … I guess thatthesis was wrong.

Meanwhile a lack of any sort of long term industrial policy continuesto make the US look the fool… but it would be "socialist" to plan out10 years in America.  That’s best left to Germans.  Or those"backwards" French who long ago had the majority of their energy usagebased on nuclear.  Dogma baby.

Anyhow back to the Chinese… via USA Today:

  • China leads the world in making solar cells, the key component in solar panels, many of which are exported to the U.S.  But China is setting itself up to do more than just manufacture components for renewable energy, such as wind and solar. It’s also spending heavily to build its own domestic market asit attempts to battle its greenhouse gas emissions, electrify itsnation of 1.3 billion people and curb its massive pollution problem.

  • The buildup of a huge market in China for renewable energy is luring global manufacturers and research teams to China, energy executives say. (hmmm, I thought that was supposed to be happening here instead) 

  • That’s causing concern in some corners that China – not the U.S. – will emerge as the hub of the new industries, leaving the U.S. as dependent on foreign nations for solar panels, wind turbines and other green-energy equipment and technology as it is on the Mideast for oil.  (whynot? dependence on others has been working like a charm the pastquarter century.  Anyhow my politicians promise me that this will not,and can not happen.  I believe "drill baby drill!" is the way forwardto new industries, right?)

  • "TheChinese government has recognized that these industries are the 21stcentury’s industries of importance, and it wants to be the Silicon Valley of renewables,"says Alan Salzman, CEO of U.S.-based VantagePoint Venture Partners,which specializes in clean energy and clean tech investments.  (allgovernment is evil, says right here in my dogma book – this obviouslywill fail as all things in China have the past 15 years… err)  He says the U.S. hasn’t been as clear or as determined as China, a stance echoed by Energy Secretary Steven Chu in testimony before a Senate committee last month.

  • China doesn’t look like a poster child for green energy. More than 70% of its energy comes from coal, which produces more carbon than other fuels. Pollution is rampant. But industries and economies have been transformed before, and new leaders have emerged, says venture capitalist Salzman.

  • While China spends about $9 billion a month on clean energy development, the U.S. "has fallen behind," Chu said. (however,Chu happily noted the U.S. leads the world in financial oligopolysupport as well as "financial innovation" – ok I made that up)  He noted that the world’s largest turbine-making company is headquartered in Denmark, that 99% of batteries for America’s hybrid cars are made in Japan and that the U.S. has lost most of its solar cell manufacturing industry.

  • China’s government has set ambitious targets for renewable energy, which is scheduled to account for 15% of its fuel by 2020.  The U.S. has no national target.   (andthat pretty much sums it up – to have a target would have half thecountry screaming socialism – remember, in our current climate John FKennedy is a socialist for daring to ask the country to put a person ona moon in a decade.  It’s just turned plain silly at this point.)

  • By 2013, China is expected to become the world’s biggest producer of wind energy, the council estimates. Recently, it eclipsed everyone in wind-turbine-making capacity, up from "nothing" five years ago, says Steve Sawyer, the trade group’s secretary general.

  • China is muscling up on solar, too. Within five years, it’s expected to be the No. 1 solar market.

  • Onebig reason China can move so fast? Once its central government decideson a policy, it can execute quickly through the nation’s handful ofstate-owned utilities, Chan says. In the U.S., there are thousands ofelectric utilities and a barrage of regulatory and environmentalhurdles to starting new projects. 

  • "China is pushing harder on solar now than anywhere in the world," says Mark Pinto, chief technology officer for the U.S.-based Applied Materials. "In China, nothing is too fast. They’ve got the land, the need and fast decision-making."

Again,ask yourself where all these jobs will be coming from in the nextdecade… where is the R&D going? This is what people do not get -we are in a global competition.  The blurb below is exactly what shouldstrike the gut to those who believe in fanciful tales from ourpoliticians.  Our green jobs will be to "install" foreign manufacturedgreen products,  with some cursory foreign plants employing a tinyportion of Americans as eye candy.  I suppose our oligarchs can help inthe financing because that’s about the last piece we are going to haveleft.

  • Applied Materials is the biggest maker of equipment to make solar panels. Last month, it opened the world’s largest solar research facility – in China.

  • "If the manufacturers are in China, that’s where we need to go," Pinto says

Feel free to extrapolate from there.  Again, the dogma tellsus in 10-15 years a plethora of new US jobs will be created as theChinese buy American "stuff".  Solar panels? Wind turbines?  Well therehas to be something they will need from us.  Keep the dream alive Isuppose… I’ll just keep talking to the wall while being called nastynames like "European".  Better yet, I’ll cloak myself in the soothingwords of our political class.  Words fix everything…  much betterthan any sort of long term planning or vision, any form of nationalframework to nurture business – especially the small / medium kind whodo not have the lobbyists behind them.  Rather than long term planning,let us expect year after year of shotgun solutions (morestimuli!) printing more and more money (or borrowing) as "solutions". Looking forward to it myself.

  • Pinto and others say China sits on the cusp of an opportunity it may not have had before.  China’scompanies have historically been successful because of their low-costmanufacturing of existing technology rather than from innovation of newtechnologies.  "This time, China has gotten in on the ground floor," Applied Materials’ Pinto says.

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