Chinese Government Offers Incentive for Solar Mergers 12 comments
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By Ucilia Wang
There are too many silicon wafer makers in China, and the government doesn’t want to wait for natural market forces to trim the flock.
That’s the gist of a Friday post from the Taiwanese news site DigiTimes, which reported that the Chinese government plans to give 2 billion yuan ($291 million) to “each of the leading makers to facilitate such mergers.”
The brief post cited unnamed sources and didn’t explain what qualifies a company to be considered a “leading maker” of silicon wafers. The wafers are used to make solar cells, which are then assembled into panels that you see on rooftops today.
Apparently, the Chinese government isn’t satisfied with providing money only. It wants to offer business strategies as well. If the so-called medium or small silicon wafer makers want to remain independent, then they should still let those “leading makers arrange their production and shipments,” according to the DigiTimes.
By the way, Chinese solar company Yingli Green Energy (NYSE: YGE), which makes silicon wafers and solar cells and panels, just bought a Chinese silicon maker for $77.6 million. This move would allow Yingli to control the raw material supply for making the wafers. Fellow Chinese silicon wafer maker LDK Solar (LDK) is aiming to do the same by building its own silicon factories.
Analysts and companies have been predicting an oversupply of solar components worldwide in 2009. Large solar panel makers such as Suntech Power (STP) in China and SunPower (SPWRA) in the United States are expecting a 10 percent to 30 percent drop in their panels’ prices this year.
So naturally, people are expecting more mergers and acquisitions across all segments of the global solar industry.
The Chinese government might do more for its domestic solar companies. Jenny Chase, the lead solar analyst at New Energy Finance, said the government might launch solar installation initiatives to help absorb the high number of solar panels that are expected to come out of factories.
Those who like to gripe about how government subsidies hamper the natural selection process in the marketplace will not be happy with this move by the Chinese government.
They will say the U.S. companies can’t compete fairly when China and other countries intervene to boost their entrepreneurs’ survival in a tough economy. They made the same point about the semiconductor industry two decades ago, and they are making it again about the car battery business now.
No worries. The U.S. government is here to help out, too. It’s been a generous giver lately having set aside $700 billion to bailout the financial industry and by providing $17.4 billion in loans to General Motors (GM) and Chrysler. Meanwhile, more business groups have lined up to ask for government help.
President-elect Barack Obama has vowed to double the country’s renewable energy generation in three years and create three million jobs (not just the green ones).
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This article has 12 comments:
Disclosure: Own 757.hk, YGE, STP
Is clean coal generation of electricity the answer?
www.prosefights.org/co...
Your take on coal is misleading at best: "Solar simply isn't able to compete (yet) with coal on an even basis,"--your assumption that coal is competing on a level field is absurd...the coal industry has been subsidized for decades as the environmental damage caused by coal's mining and burning have been largely ignored--NOx and SOx emission markets attempt to place adequate cost on coal but have been largely underpriced. The environmental damage beyond emissions is significant--the end the coal industry as we know it is within a decade.
On Jan 11 01:30 PM Ricard wrote:
> Interestingly enough, most solar makers rely on government subsidies
> for the majority of its sales, so this article comes as no surprise.
> Solar simply isn't able to compete (yet) with coal on an even basis,
> even though lots of green folks want it to. I find it even more
> interesting how many solar producers there are in China, yet the
> solar market in China is tiny compared to Europe. Maybe China is
> preparing to enter into solar consumption, finally?
"Interestingly enough, most solar makers rely on government subsidies for the majority of its sales, so this article comes as no surprise. Solar simply isn't able to compete (yet) with coal on an even basis, even though lots of green folks want it to"
widicusf is correct.
The fossil fuel industry in the U.S. gets $49 billion a year in subsidies of various forms. By comparison, we will now give $17 billion to all the renewables put together. What share of that $17 billion is for solar I'm not sure.
Here's what the leading U.S. expert on energy subsidies says.
"Estimating U.S. oil and gas subsidies is very challenging. Subsidies rarely involve cash payments. Instead scores of U.S. government agencies and departments create hundreds of programmes to support the U.S. energy sector. And there is no requirement for the federal government to keep track of all this."
"Subsidy programms from 1918 are still in place. I'm not aware of any oil and gas subsidy that has ever been phased out."
"In a time of skyrocketing oil prices and profits, why did the George W. Bush administration in 2005 authorise an additional $32.9 billion in new subsidies over a five-year period?"
"This massive government intervention distorts energy markets, making it very difficult for alternative energy sources to compete without similarly massive subsidies. 'And it promotes America's addiction to oil,' Larsen added."
www.heatisonline.org/c...
The nuclear industry has received over $100 billion in subsidies over the years. One estimate is about 4cents/kWh for current nuclear subsidies.
billp37
I don't think clean coal is an answer, at least not at present, and it will be very expensive power.
And what is referred to as clean coal only means the CO2 has been removed, not the mercury, arsenic, radionuclides, heavy metals, and other pollutants. To implement carbon capture and sequestration on a global scale would mean pumping CO2 into the earth on a scale like we now pump oil out of the earth. Not a small task, and expensive. At any rate, its at least ten years away, probably more. Many of our coal plants are too old for CCS.
The median coal plant was built in 1964. 40% of plants were built before 1960.
And when you use scrubbers etc to clean up the emissions from coal, they end up in the kind of tailings ponds that recently spilled 1 billion gallons in Tennessee. There are about 1300 of these ponds in 46 states now, most of which are not sealed properly.
They leach into watersheds all the time. There was also a 300 million gallon spill in Kentucky in 2000. By comparison the Exxon Valdez oil spill was 11 million gallons.
climateprogress.org/20.../
"In 2007, an E.P.A. report identified 63 sites in 26 states where the water was contaminated by heavy metals from such dumps, including three other Tennessee Valley Authority dumps. Environmental advocacy groups have submitted at least 17 additional cases that they say should be added to that list."
from article in NY Times
by Shaila Dewan
www.nytimes.com/2009/0...
Recent estimates of the amount of accessable coal reserves do not paint the rosy picture of 250 years of supply that have been published before. More like 60 years.
Your tone's very patronising, by the way.
For example, it is widely known that Exxon Mobil alone paid $30b in taxes in 2007, and it is estimated they will pay $41.5b in 2008. Also, the national average for combined local, state and federal taxes on a gallon of gas is 45.9 cents, which equates to another $65b of tax revenue annually.
I'm not sure the same could be said of the "renewable energy industry", in fact I'd be surprised if this fledgling industry generated much tax revenue at all. Don't get me wrong- I think the $17b we sink into renewables is important, and money well spent. And hopefully someday renewables will be able to replace that tax revenue. But the mature "fossil fuel industry" is a cash cow for governments at all levels, and to compare their subsidies vs renewables' at this stage is not an equal comparison.