China pushes renewable energy – in the U.S.

Michael Fitzgerald By Michael Fitzgerald

The U.S. is a pretty good place to invest in renewable energy. China is better.

As the Boston Globe noted, the Chinese are aggressively pursuing alternative energy. On Monday, a major Chinese company, Wanxiang Holdings, took a $420 million investment in GreatPoint Energy, a 30-person Boston-area startup whose technology converts coal into synthetic natural gas, a cleaner-burning energy source.

A coal factory in Xinjiang. (Reuters)

The plant that will be built isn’t expected to open until 2017. It’s GreatPoint’s first big deal, after building a demonstration plant in Somerset, Massachusetts.

China wasn’t where GreatPoint expected to find demand, the Globe reported. It thought the U.S. market was a natural fit – coal, our largest domestic energy source, generates about half of U.S. electricity. But that was before the natural gas development boom, which has driven natural gas prices sharply down in the U.S.

The U.S. remains the 2nd best place for renewable energy investments. But China has a couple of advantages in the renewable energy market. It is still building out its energy grid and can invest in renewable energy sources as it expands. In mature markets like the U.S., utilities often need to decide whether to take existing plants offline and replace them. China’s government is also expected to invest $473 billion into renewable energy sources in the next five years – an attempt to reduce its dependence on foreign oil and on coal, its biggest source of energy.

That dual set of advantages, domestic demand and large amounts of capital to invest, may give China some long-term market advantages, as well.

In 2010, the New York Times noted that China’s push into renewable energy sources raises “the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.”

China has become the largest producer of solar panels and wind turbines. The U.S. last week slapped a 31 percent tariff on solar cell imports from China, claiming Chinese manufacturers are dumping products below cost. China Radio International, a state-funded overseas broadcaster, reported that this could harm U.S. companies that supply components to Chinese solar cell makers.

Chinese newspapers did not appear to cover the GreatPoint investment, perhaps because the facility will be built in Xinjiang, China’s westernmost province, far from the coasts. Wanxiang officials had told a Chinese-language website, Xinjiang Investment Network, of the investment last week. The officials said GreatPoint’s technology was very adaptable and efficient and would save water over competing approaches.

Xinjiang already uses a number of types of renewable energy, including solar cell farms, thermal energy and wind turbines. The region is a significant source of oil and natural gas, in addition to coal.

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