Supportive Government Policies Fuel China's Renewable-Energy Boom

The U.S. ought to be a leader in renewable energy, but is allowing China and European nations to take that role.  Our politicians continue to think about fossil fuels, and debate expanded drilling offshore and in wilderness areas, while other countries are securing their future through sensibly encouraging growth in solar and wind power generation.

From The Wall Street Journal:


Chinese government policies that support renewable-energy product manufacturing have helped Suntech Power Holdings Co. Ltd. (STP, K3ND.SG) grow to become the world's largest solar-panel maker, largely because the policies have driven the growth of companies that produce materials that Suntech uses in its products, Suntech's top executive said.
Policies that provide tax breaks and other benefits have "supported the whole supply-chain development in China," said Zhengrong Shi, speaking late Wednesday at a conference in Santa Barbara, Calif., hosted by The Wall Street Journal.
"It's extremely important. As a company alone...without a supply chain we're not going to be competitive," Shi said.
Shi later noted that several Chinese banks, many of which are majority-owned by the government, have been eager to offer financing to growing companies like Suntech. Such loans are always offered at market rates, he said.
Chinese manufacturers of solar panels, wind turbines and other clean-energy products have overtaken many U.S. and European rivals, due to their ability to quickly expand production and marketing of low-priced, high-quality products. Their growth has been possible due largely to a diverse ecosystem of suppliers that have grown with them, he said.
As China's renewable-energy manufacturing industries have grown, the industry's size has allowed for innovation and cost reductions, which have been crucial to maintaining competitiveness, he said.
"Scale is absolutely critical here," Shi said.
China's supportive government policies and diverse mix of suppliers also have attracted U.S. manufacturers to the country.
Applied Materials Inc. (AMAT), which makes fabrication equipment for manufacturers of solar panels, flat-screen appliances and semiconductors, has been expanding in China to serve a growing customer base there, including Suntech.
Soon, more than 80% of Applied Materials' solar business will be in China, said Mark Pinto, executive vice president and head of the company's energy business.
Pinto noted that China's renewable-energy manufacturing industries have benefited more from high levels of investment and government help with capital costs, rather than cheap labor.
"There are a number of policies that are promoted at the central [government] level and implemented at the local level...to help the manufacturing industry," such as rebates on expanding or upgrading factories, Pinto said, speaking at the Wall Street Journal conference.
The rapid build-out and investment have allowed China's renewable-energy manufacturing industry to grow large enough to make improvements that lower the cost of production, which leads to lower prices, Pinto said.
"Scale and incremental improvements are winning," he said.