Chinese Renewable Energy Markets

Frost & Sullivan, March 2007, Pages: 91

Government's Renewable Energy Law and Economic Incentives Encourage the Development of Renewable Energy Market

The Chinese Government is actively encouraging the deployment of renewable energy having passed its first renewable energy law that requires power grid operators to purchase resources from registered renewable energy. The law offers a national fund to foster renewable energy development and tax preferences for renewable energy projects. "It aims to promote the development and utilization of renewable energy, increase energy supply, improve the energy structure, safeguard energy security, protect the environment, and realize the sustainable development of the economy and society," notes the analyst of this research service.

The series of incentive policies that have been adopted to stimulate various types of investments in renewable energy is urging active participation in the Chinese renewable energy market. Several European, U.S., and Asian manufacturers are already setting up operations in China, while others are seeking opportunities to penetrate the market. In addition to the renewable energy law, the National Development and Reform Commission (NDRC) has proposed the promotion of renewable energy and aims to achieve 16.0 percent of renewable energy consumption through its middle- and long-term program of renewable energy development.

Promising Growth in Most Sectors of the Chinese Renewable Energy Markets

The Chinese renewable energy industry is growing, with the wind power industry at the forefront experiencing the most rapid growth and the best prospect in the near term. The solar photovoltaics (PV) industry is still small but with leading manufacturers already investing heavily in new production technologies such as thin film solar technology, this segment is likely grow rapidly over the coming 15 years. The solar thermal market is also showing promise, with many companies having entered over the past few years and as more are expected to follow suit. The biomass power industry has gained great momentum partly because of sufficient Government funding and also due to the adequate availability of feedstock fuels. Small hydropower market is also undergoing a period of resurgence, but developments are likely to be slower than in other market segments as it is a comparatively mature technology.

"These renewable energy technologies must continue to compete with the relatively low cost of conventional fossil fuel-based generation," says the analyst. "Increasing support by providing incentives and by establishing economic incentives, combined with rapidly declining installation costs, can ensure that renewables gradually become an established part of power generation portfolios."