Private sector to lead US-China renewable growth

OREANDA-NEWS. June 08, 2015. Renewable energy growth in the US and China is set to be driven by private financing rather than government subsidies, industry officials from the two countries said yesterday.

Cooperation between the US Department of Energy (DOE) and China's National Development and Reform Commission (NDRC) has produced a variety of best practices, but future renewable energy development will be guided by what stakeholders consider attractive returns on investment and dual mandates to lower carbon emissions by 2030.

The financial services sector is expanding in China's emerging market for green bond offerings, yieldco structures, which provide tax advantages for projects in the US, and securitization of solar contracts. All are partial offshoots of DOE-NDRC collaborative efforts.

"The history of developing China's economy with government debt is winding down, and the new order is for state-owned enterprises to raise equity capital," Citigroup global head of environmental finance and sustainability Michael Eckhart said at the US-China Renewable Energy Industries Forum in Washington, DC. "This is a major innovation for clean energy and the Chinese economy overall."

For US companies in China's renewables market, competitive advantages go to joint venture projects with a Chinese company. "Joint ventures really are a signal to the financial community that these projects are moving forward," BrightSource Energy senior vice president of marketing and government affairs Joseph Desmond said.

US solar developer BrightSource signed a memorandum of understanding at the forum with the Shanghai Electric Group to build two 135MW concentrated solar facilities in Qinghai province in northwest China.

The collaborations come as China has committed to increase the non-fossil fuel share of its energy consumption to 20pc by 2030 as part of a bilateral commitment with the US announced in November. China said it would peak its CO2 emissions by 2030 as well.

But integrating renewables into China's grid faces a key hurdle in that curtailment of renewable generation without adequate transmission often plagues inland facilities far away from major coastal population centers. The transmission difficulties will help conventional generation maintain a long-term primary role in the country's energy consumption.

"The thinking in China is not just about hitting gigawatt capacity targets, it is getting those gigawatt-hours into the system," senior research analyst at DOE's National Renewable Energy Laboratory Mackay Miller said.