In September, a joint venture by National Development and Reform Commission (NDRC) and State Electricity Regulatory Commission, reported that surcharges paid low-emissions generators harnessing the wind, sun and biomass totaled 397m euro in the second half of 2009, almost double 214m euro paid in the first half of the year, indicating a significant rise in RE installations. It has also emerged that the cost of producing RE equipment, such as solar panels or wind turbines in China is on average 30% lower than more developed economies.

  Solar Power

Solar energy includes both solar thermal power (which heats water) and photovoltaic (PV, which provides electricity). Due to China’s fast-growing rural market and the low technical threshold of solar thermal products, the solar thermal power industry achieved astonishing development during the past decade. On the other hand, China’s photovoltaic industry, being much more reliant on high-end technology development, faces more hurdles.

In 2006, domestic global solar power production totaled 2.5 million KW, about 370,000 KW of which came from China. By the end of 2006, China’s total installed capacity of solar power was 80,000 KW. Renewable Energy target: 2 GW installed solar energy capacity and 300 million square meters of solar water heat by 2020.

Opportunities:

Despite immense growth in recent years, China’s solar power industry may be approaching a tipping point. The market for solar thermal power has already matured well past its growth stage, and the combination of solar module oversupply and polysilicon shortages may soon result in a shrinking of the solar PV market. Instead, investors with interest in the solar industry should look to the future, advances that will occur over the next five years, and consider the development of alternative solar technologies, such as Concentration PV (CPV) and thin film solar panels, which may provide more efficient power generation.

  Wind Power

China has a 3.22 million MW potential, over 1 million MW of which can be developed. By the end of 2007, China had already surpassed its 2010 midterm goal of 5 GW installed capacity by adding 3.4 GW of new wind power capacity to bring total installed capacity to over 6 GW. This represents an increase of 156% compared with the wind capacity installed during 2006 and a 134% increase of the total installations. Wind power now provides approximately 1% of China’s energy production.

Opportunities:

Over the past decade China has seen a massive influx of foreign investment in its wind power industry. For investors who are interested in manufacturing wind turbines parts, now may not be the right time. Domestic production has increased dramatically in recent years, and if growth continues at these rates, manufacturers may soon be faced with overcapacity. Investors interested in the future of China’s wind power market may consider identifying and investing in new offshore wind projects. Until last year all of China’s installed wind power capacity came from onshore wind farms. However China has recently begun to explore the benefits of building offshore wind farms, and has said that in the future offshore wind farms will be a key part of its renewable energy program. Offshore wind speeds are higher and more stable than onshore wind, and offshore wind farm sites are typically closer to the major electricity load centers in eastern China. With wind turbines located 30 miles off the coasts, it is estimated that Chinese sea winds could generate up to 750 GW.

  Water Power

Over 70% of the country’s fresh water is polluted, and only 46.3% of that polluted water is treated, leaving China’s per capita water resources at a mere fifth of the world average. In an effort to correct this growing problem, Beijing encourages private companies, including foreign investors, to participate in water supply and treatment projects, and plans to invest $130 billion in water and waste water treatment from 2006 to 2010. The primary technologies for water treatment used in Five-Year Plan promotes more efficient use of water, greater rates of water recycling industrial settings, more aggressive treatment of waste water, and provision of safe water to a larger number of citizens via municipal water supply facilities.

Opportunities:

For investors looking to operate a water treatment facility in China, there are a number of barriers that may make it is easy to generate large returns. China’s water treatment industry is a very promising market for foreign water companies looking to sell their equipment, technology and expertise abroad. By applying new technologies to Chinas water treatment projects investors can help to increase efficiency and cost-effectiveness, while also taking advantage of other benefits.