North Coast Solar Stocks

September 30, 2009

China: From Clean-Energy Producer to Clean-Energy Consumer

Filed under: AMAT, FSLR — Tags: , , , , — Jason @ 9:29 am

By Keith Johnson

When it comes to China and clean energy, so much of the hand-wringing in the West, and especially in the U.S., hinges on China’s role as a producer of clean-tech gear. That’s true for everything from batteries for electric cars to wind turbines to solar panels.

Yet the real story might not be so much China’s global arrival as a maker of clean-tech stuff as a clean-energy consumer.

Take Applied Materials (AMAT), which makes computer chips and solar panels. Mark Pinto, the head of the company’s solar unit, told The Wall Street Journal that Beijing’s clean-energy push will drive China past Germany and the U.S. to become the largest consumer of solar power in the world “in the next two years.”

Part of that transformation is already underway. First Solar’s (FSLR) deal to build a 2-gigawatt solar-power installation in China was a coming-of-age moment both for the industry and the country. And as big as First Solar’s planned plant is, Chinese officials expect to add another 2 gigawatts to that same renewable-energy park. That single project has more solar power—on paper—than the entire U.S.

The growth in Chinese consumption of clean energy contrasts with the government’s plans to slow down the production of some clean-energy gear. Today, as expected, Chinese officials laid out new guidelines to throttle back industrial capacity in wind turbines and silicon used for solar panels, as well as traditional sectors such as aluminum, steel, and cement.

So for Western clean-energy companies, China will very much continue to be part of the equation—but not just as low-cost competition. The Chinese market will become the real clean-energy battleground.

That may not happen overnight—even with the industrial slowdown, China has enough domestic production capacity to meet its own clean-energy needs. As Clean Tech Insight notes, China exports 98% of its solar-panel production, leaving it plenty of capacity to feed a growing solar market at home.

Longer term, though, China’s need for state-of-the art clean technology—one of the reasons it tapped First Solar–will open up a potentially huge market. Then, all Western clean-tech firms will have to worry about are simmerings of protectionism and learning how to navigate ever-shifting government rules to promote clean energy.

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