9 CHINA’S PROMOTION OF WIND AND SOLAR POWER …
215
Industrial Barriers: Grid Restrictions,
Unused Capacity and Local Politics
Unlike its persistent interest in hydro and nuclear for the sake of energy
security, China’s attention to wind and solar power generation has come
much later largely in response to a new context of climate change and
excess manufacturing capacity of renewable energy equipment. Since
the global financial crisis in 2008, when China’s export-oriented manufacturing was hit hard by sluggish external demand, the government
has deemed renewable energy equipment sectors as emerging industries of strategic importance (zhanlue xinxing chanye) that need strong
policy supports. Owing to massive producer subsidies, research grants,
tax rebate, low-interest loans and cheap land under the model of state
capitalism, China’s manufacturers of wind turbines and solar panels, after
occupying the largest share of the world market, have found themselves
caught in a plight of overcapacity, selling price slump and exacerbated
trade rows.
China’s wind turbine industry, a new growth point immune from
global economic downturn, has witnessed galloping expansion since
2008, bringing down turbine prices as much as 20–25% in western
markets and more than 35% in China between 2008 and 2012 (REN21
2013, p. 54). Among the world’s top 10 turbine manufacturers that
captured 77% of the global market as in 2011, four hailed from China.
The costs of operating and maintaining wind farms dropped significantly
due to increased competition among contractors and improved turbine
performance. The domestic manufacture boom has justified the government’s approach to promote inland wind-generated power, which became
gradually cost-competitive vis-à-vis conventional power and thus needed
fewer subsidies on a per kilowatt-hour basis.
China’s solar panel manufacture has been facing an even worse
problem of overcapacity as a result of excessive government subsidies and
overinvestment. One of the major chronic challenges facing China’s solar
PV industry is the asymmetrical supply-demand problem, in which China
for long time had to export more than 90% of its finished products to
other parts of the world due to an underdeveloped domestic market. This
problem attracted attention from a number of researchers, who attributed
China’s solar overcapacity and over-dependence on foreign markets to
the lack of appropriate interactions between renewable energy policy and
215
Industrial Barriers: Grid Restrictions,
Unused Capacity and Local Politics
Unlike its persistent interest in hydro and nuclear for the sake of energy
security, China’s attention to wind and solar power generation has come
much later largely in response to a new context of climate change and
excess manufacturing capacity of renewable energy equipment. Since
the global financial crisis in 2008, when China’s export-oriented manufacturing was hit hard by sluggish external demand, the government
has deemed renewable energy equipment sectors as emerging industries of strategic importance (zhanlue xinxing chanye) that need strong
policy supports. Owing to massive producer subsidies, research grants,
tax rebate, low-interest loans and cheap land under the model of state
capitalism, China’s manufacturers of wind turbines and solar panels, after
occupying the largest share of the world market, have found themselves
caught in a plight of overcapacity, selling price slump and exacerbated
trade rows.
China’s wind turbine industry, a new growth point immune from
global economic downturn, has witnessed galloping expansion since
2008, bringing down turbine prices as much as 20–25% in western
markets and more than 35% in China between 2008 and 2012 (REN21
2013, p. 54). Among the world’s top 10 turbine manufacturers that
captured 77% of the global market as in 2011, four hailed from China.
The costs of operating and maintaining wind farms dropped significantly
due to increased competition among contractors and improved turbine
performance. The domestic manufacture boom has justified the government’s approach to promote inland wind-generated power, which became
gradually cost-competitive vis-à-vis conventional power and thus needed
fewer subsidies on a per kilowatt-hour basis.
China’s solar panel manufacture has been facing an even worse
problem of overcapacity as a result of excessive government subsidies and
overinvestment. One of the major chronic challenges facing China’s solar
PV industry is the asymmetrical supply-demand problem, in which China
for long time had to export more than 90% of its finished products to
other parts of the world due to an underdeveloped domestic market. This
problem attracted attention from a number of researchers, who attributed
China’s solar overcapacity and over-dependence on foreign markets to
the lack of appropriate interactions between renewable energy policy and