China Blows by the UK on Strength of Wind Sector, Central Planning

Planners for the 2012 Summer Olympics in London must have looked on in horror as 2008 drummers banged their way in synchronicity through the opening minutes of the Beijing games two weeks ago. The ensuing four hours sent them searching for the long knives.

An Ernst & Young report released this week probably had the same effect on the UK’s renewables planners. The consulting group’s periodic Renewable Energy Country Attractiveness Indices had China moving up from sixth place to fourth and into a tie with Spain, though still behind the U.S., Germany, and India. The UK dropped back to sixth place on the strength of China’s growing renewables manufacturing base and its own inability to finalize a workable renewables policy. Though most of the news you read from Greentech Media talks about China in terms of its solar manufacturing capacity, wind is the real breakthrough sector there. The International Energy Agency projected China would reach 5 GW of installed capacity by 2010 - it got there in 2007. It’s expected the CCP’s target of 30 GW by 2020 will be shattered within seven years. Manufacturing capacity in the country is pegged at close to 9 GW, with few producers feeling the same input constraints that have hampered GE and Suzlon. The CCP is likely to increase its target well before that date. With the uncanny ability to direct large sums of money into virtually any project it sees fit, the CCP is on its way to becoming the largest renewables developer in the world.

As an added benefit, if they run out of windy spots, you can bet the Chinese will figure out a way to make the wind blow elsewhere.

The British, meanwhile, have been slow to implement a concerted renewables policy. Having a voting population makes consensus a sticky issue sometimes. The government launched its Renewable Energy Strategy in June with ambitious proposals to put the country on course to meets its 20% by 2020 EU obligations. However, the RES, which calls for 33 GW of installed wind capacity by 2020, also requires a two year consultation period. This means no significant projects will get off the ground before 2010, leaving the country only 10 years to deploy something close to 50 GW of renewables capacity. There have also been complaints that the UK renewables obligation program - its market deployment mechanism - costs too much and provides too little incentive for the British to deploy renewables at the required pace. A reworking of this incentive program may help reverse the UK’s renewables fortunes.

In general, however, the story of the UK renewables has been one of overpromising and underperforming. The UK should have much more going for it given its large wind and marine renewables resources. Building up these resources is even more pressing now since it looks like their grand nuclear plan is in meltdown. Perhaps the British should look to the Chinese for advice on getting it done - what they lack in representative democracy, they more than make up for in sheer will power.