US cedes green energy future to China

Renewable-energy subsidies are slashed just as China has jumped to the leading position in the market. The cuts may make China's advantage insurmountable.

By TheStreet Staff Jun 19, 2013 7:14PM

thestreet logoSolar paneslBy Dana Blankenhorn


Renewable energy is like any technology -- it starts out expensive and grows cheaper over time. 

Money is its primary fuel; money for research, money for start-ups and money to get early versions into the market.


To fuel the new market, Western countries have created various subsidies, such as "feed-in" tariffs and loan guarantees on risky breakthroughs. It's just what we did with computing, transistors and the Internet, creating market conditions before a market exists, setting the stage for a boom.


So now that the boom is on the horizon, politicians are doing all they can to hand the fruit of this labor to China.


The biggest turnaround likely is in Australia, where a coming conservative government is expected to scrap programs that have the country on track to get more than 22% of its energy from wind, waves and the sun by 2020, The Guardian has reported. The local Limbaugh, named Alan Jones, even led a rally claiming wind energy "terrorizes" small towns, reported the Daily Telegraph.


Germany is going to cut its subsidies in half after the next election, according to CleanTechnica, and the U.S. House of Representatives plans to cut our subsidies in half as part of its next budget, according to The Hill.


Thankfully, a move by states to protect local markets from out-of-state renewable competition was recently killed by the U.S. Circuit Court. The decision was posted to EENews.Net.


Big win for Chinese solar panel makers

The question becomes, whom does this benefit? While advocates of coal may think it benefits them, and advocates of nuclear may feel the new trend benefits them, the big winners in all this are more likely to be the Chinese solar companies, such as Yingli Green Energy (YGE), LDK Solar (LDK) and Canadian Solar (CSIQ).


These are the companies that survived the brutal market shakeout of the last few years and, in the process, brought the costs of solar cells using polysilicon down to less than 50 cents/watt, the point at which an efficient channel can create cost parity with other forms of grid energy.


At these prices, all sorts of new buyers are appearing. Latin America and Africa are now emerging as major markets for renewable energy projects, writes


The business isn't going to go away. The question is who will get the business. In the present environment, it's unlikely to be companies such as Sunpower (SPWR), First Solar (FSLR) and privately held Stion, which can't yet compete directly on price but can win contracts using Renewable Energy Certificates, feed-in tariffs and some old-fashioned jingoism.


Schools, factories, and cities are right now planning a host of medium-sized projects, anywhere from 100 Mwatt to 2 Gwatt in size, writes RenewableEnergyWorld, representing 60% of the U.S. deal stream. But U.S. suppliers are unlikely to win much of that business if utilities are forced, by subsidy cuts, to go with the low-cost supplier. Because right now that low-cost supplier is in China.

Foot off the gas pedal 

Just as the market is ready to take off, with the growth ramp dead ahead, and just as game-changing technologies like graphene, printable solar cells and biological cells are approaching the market, we're taking our foot off the gas and pressing the brake.


But this is how economic power shifts. The aging power cares more for what was than what will be. And if that's the way we're going to play it then I, for one, welcome our new Chinese overlords.


At the time of publication, the author had no investments in companies mentioned here.


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Jun 20, 2013 2:39AM
I have been stating for Years that in spite of the Fact that China is currently the World's biggest Polluter, sooner than later, it will become the World's biggest User of Green Energy. Meanwhile, the United States and other Countries will be left behind. Guess what that means for the current US oil boom. Exactly.
Jun 21, 2013 10:12AM
I met some health care workers from China about 2 years ago. They encouraged me to come and visit, but warned me their air was terribly polluted and I wouldn't like that. I am encouraged that China is (hopefully) seeing their future is dependent on "manufacturing" a cleaner environment for their people, and, ultimately, the world.
Makes me cringe to see  ultra right-wingers (and anyone who wishes to ignore the dangers of pollution) screw up our country in any way they can. And they do so by costing Americans good, long-lasting jobs. Do you think the coal and oil industries have their say in this?  Just check out the contributors to your representatives campaign committees. How embarrassing.
Jun 24, 2013 6:26PM
The problem with this country is that "long term" means the next election cycle.  While we focus our attention on our fracking oil wealth, the Chinese and Koreans will end up dominating the solar industry. 
Jun 20, 2013 7:31AM
Well well what do you know ? The useless US Congress of the USA gives another industry away . They don't believe in renewable energy because they are all bought off by big wall street banks and business . Only in the USA can this happen over and over. <<< As the decline of unions because the republicans and wall street said they were bad and you idiots believed them for over 30 plus yrs ... Here we are now in a country that's 7% union and 93% non union . Are you all living the standard of living as your parents ? I KNOW you all are not . BTW the biggest employer in the USA is wal-mart . What's that tell you idiot American people . LMFAO .. Keep believing FOX news and republicans about unions ! I get better representation from my union than any politician in the USA..
Jun 24, 2013 5:46PM
The Chinese use virtual slave labor to build EVERYTHING.  it makes no difference what we do over here, they were going to corner the market on it eventually. at least this way we save ourselves the trouble of not wasting billions on subsidies BEFORE we lost the production to the Chinese.
Jul 2, 2013 1:24PM
Green energy will be the next big boom... and we're giving it away. Another great job by the good ol' USA
Jun 27, 2013 6:09AM
I am long on sune, spdr, and cisq. The industry is exploding and the tariffs will be around in some context so I wouldn't bet against anyone in green energy right now. Other top performers for me have been, (GNE) energy they have common stock and unusual preferred share available for a dollar less than the common. Formerly, MEMC now known as SUNE has potential to triple in my opinion but only time will tell. 
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