This story is exactly why I say if we're going to (ahem) bring a new generation of jobs to America via the green energy revolution we better get going. We can only employ so many former construction workers installing solar panels...

We're a decade behind Germany in green and just about the same behind Japan. Our only hope was to jump in line ahead of China.

  1. [Aug 28, 2008: China to Subsidize Wind Turbines]
  2. [Jun 19, 2009: Reuters - Incentives Add Shine to China's Solar Drive]

Not so much... oh well, our destiny with more healthcare and government jobs it will be - until we can reinflate housing. Then I suppose keep rotating about these 3 sectors. In the meantime, go East young man!

One of my favorite newspaper writers is Ambrose Evans-Pritchard who writes for the UK Telegraph

  • China is running away with the green technology prize. It has conquered a third of world market for solar cells and is on a breakneck course to build 100 gigawatts of wind turbines by 2020, doubling again the global capacity for wind power across vast stretches of Inner Mongolia and Xinjiang.
  • The credit crunch has been brutal for solar start-ups in the West, but not for Chinese firms with access to almost free finance from the state banking system. They have taken advantage of the moment to flood the world with solar panels, driving down the retail price from $4.20 per watt last year to nearer $2 in what some say is a cut-throat drive for market share.
  • German pioneers Solarworld and Conergy allege foul play and have called for EU sanctions, accusing Chinese rivals of practices that border on dumping. China's finance ministry says it intends to cover half the investment cost of solar projects.
  • It is a life-and-death moment for the German solar industry, pioneers who provide 75,000 jobs and once led the world. A large number of German solar cell and solar module producers will not survive, said UBS's Patrick Hummel. Q-Cells is cutting four production lines and 500 jobs at its base in Thalheim, switching assembly to Asia.

Which is exactly why I said for a few years - solar the industry will grow, but solar the investment is a very dangerous thing. [Jan 3, 2008: The Long Term in Solar] Many companies along the path will be destroyed.

The following should sound familiar...

  • Roughly speaking, Chinese firms can undercut the Germans by 30pc. At root, it is a currency problem. China has stolen a march against Europe over the last five years by linking an already undervalued yuan to a weak dollar.
  • While Beijing sheds crocodile tears about the falling greenback, it is deliberately riding dollar devaluation to protect its own export share. What is happening to German solar firms is a revealing case study of the slow-burn damage caused by currency misalignment.

Some of our former investments splattered all over this story:

  • Suntech Power (STP) in Wuxi has just broken the world record for capturing photovoltaic solar energy, achieving a 15.6pc conversion rate with a commercial-grade module.
  • Trina Solar (TSL) is neck-and-neck with America's First Solar, the low-cost star that has already broken the cost barrier of $1 (61p) per watt with thin film based on cadmium telluride. (really? that's news to me - fact check someone?)
  • The Chinese trio of Suntech, Trina and Yingling (YGE) all expect to be below 70 cents per watt by 2012, bringing the magical goal of grid parity with fossil fuels into grasp. The concept of grid parity is subject to fierce debate, mostly revolving around which form of fuel – nuclear, oil, coal, or renewables – enjoys the biggest implicit subsidy, and what the future price of crude is likely to be.

The solar industry is currently in a supply glut but the big hope is the massive internal demand for solar via China that we've been waiting... and waiting... and waiting... on. It should be coming finally. Then they can use those panels in house and supply demand can somewhat normalize again in the rest of the world.

  • The solar glut will not last. China is orchestrating a big switch into solar power for its own households with a feed-in tariff that lets people sell electricity to the grid. But that may come too late to save German firms.

There is hope Seattle!

  • Jeremy Leggett, founder of Britain's Solar Century, says that even this cloudy island can achieve grid parity for households by 2013, seven years sooner than expected. South-facing roofs and facades could one day provide a third of UK electricity needs.

As for wind...

  • China has tripled its goal for wind power to 100 gigawatts by 2020. While the West bails out banks, China is spending a big chunk of its $600bn stimulus on clean tech projects and a smarter grid.

When it comes to clean energy or a direct transfer of wealth from the many to our financial oligarchs, I always choose the latter. Support your local oligarch!

  • Yes, you still have to wear a face mask to breathe in the soot-blackened industrial hubs of the interior. By the same token, the solar-and-wind hub of Baoding has become the first carbon-positive city in the world.

I continue to say - as I did in 2007, as I did in 2008, as I surely will in 2010... this very inward looking country has no idea what is coming from the East.

  • Whether China is pushing the green agenda because it believes in global warming is almost irrelevant. The country fears being caught short as the global scramble for diminishing resources starts in earnest.

A view we share... thankfully in a country that cannot plan out 1 election cycle (look in mirror) we'll keep kicking the can until one day we run straight into the wall. [Mar 24, 2008: WSJ - New Limits to Growth Revive Malthusian Fears] Overheard in 2023: So China can you spare a dime so we can bid against you for ABC natural resource commodity? No? Ok then - to the printing presses Batman!

  • We may soon be moving into a phase of history when ill-prepared countries cannot be sure of obtaining energy – whatever the price.

Energy will pale in comparison to fresh water. Food should be interesting too - as hundreds of formerly poverty stricken Asians begin living the American lifestyle. Oh well, it will all work out in the end I am sure - it 'always does'.

[Mar 14, 2009: NYT: Europe's Way of Encouraging Solar Power Arrives in U.S.]

[Feb 6, 2009: NYT - Dark Days for Green Energy]

[May 30, 2008: German Solar Subsidies to be Cut Less than Feared]