Connect with us

Energy

China attempts a shift to clean energy. Its solar stocks plummet.

Austin Wang

Published

on

China

Last week, China’s National Energy Administration (NEA) announced that all new onshore energy projects after 2021 must be subsidy free. On Thursday, the NEA released its final subsidy plan: $435 million will be distributed to new solar projects. In response, Chinese solar stocks plummeted and solar companies have pleaded for the government to delay subsidy cuts.

The difficult path to green energy

While tariffs and lackluster government support threaten the U.S. solar industry, China has committed to becoming a green energy powerhouse. Over the past few years, China has spent billions of dollars subsidizing its solar and wind industries in an attempt to improve energy sustainability.

China’s energy economy is dominated by coal power and solar energy only accounts for 1.7% of total energy generation. Since China has enormous coal reserves, it has historically been difficult for solar to compete with coal power.

Regional disparities within China

China’s ultimate goal is to reach grid parity, where solar energy is the same price or cheaper than coal power. China plans to cut back on subsidies because it believes the nation is close to reaching grid parity. While solar energy is competitive in some cities, regional differences in energy prices make widespread solar adoption difficult.

Despite tens of billions in subsidies, in some regions, solar power still remains significantly more expensive than coal power. Many areas of China have abundant coal mines and incredibly low coal prices. For example, in many Western regions, solar power is almost three times more expensive than coal power. In areas like these, solar companies will almost inevitably go bankrupt without support from the Chinese government.

Next steps for China

Previously, Chinese solar companies dramatically increased solar output due to generous policies and subsidies. This rapid expansion of solar infrastructure lowered solar production costs and paved the way for the rapid expansion of subsidized solar projects.

Although China is cutting back on subsidies, they are still providing incentives for the solar industry. For example, China offers power-purchase guarantees for companies that voluntarily choose to become subsidy-free. Essentially, China promises to buy energy from subsidy-free solar-producers for a number of years.

While China’s cut-back on subsidies will harm the solar industry, China’s solar capacity will still increase over the coming years. The Chinese government is also clearly unwilling to be completely laissez-faire with the industry. It is safe to assume that as long as pressure for a cleaner environment remains, China will continue to help the solar industry grow.

Continue Reading
2 Comments

Energy

Climate change poses a serious threat to power grids

Austin Wang

Published

on

It’s common knowledge that the oil and natural gas industries are bad for the environment, but the fact that oil and gas threaten electricity supply is much more counterintuitive. Climate change and the resulting extreme weather are a growing cause of blackouts, and as “dirty” energies contribute to climate change, they also indirectly threaten the stability of the power grids they supply.

Blackouts become a rapidly-growing threat

While it may seem far fetched that climate change has caused significant increases in outages, there has been a huge rise in blackouts over the past decade. A report by Climate Central finds that from the mid-1980s to 2012, blackout rates increased tenfold. From 2003 to 2014, an estimated 147 million people were affected by weather-related blackouts.

Storms, tornadoes, and extreme heat all cause blackouts, and climate change only increase the frequency of these events. As global warming continues to raise temperatures, blackouts will become more and more frequent.

Heatwaves make electric grids unusable

Today, heat waves are a serious threat to energy security. Yesterday, one of the largest electric grids in Texas declared an energy conservation emergency as temperatures rose above 100 degrees. As residents scrambled to use air conditioning, electricity demand spiked across Texas. The Energy Reliability Council of Texas suggested that residents reduce energy demand from 3 to 7 pm to prevent blackouts.

Similar energy emergencies could happen all across hot arid regions of the U.S. A study from UCLA’s Institute of Energy and Sustainability found that climate change could cause sweeping blackouts in LA. The combination of a growing population and rising temperatures could easily increase air conditioner use and trigger power grid shutdowns.

Blackouts during extreme heat can be incredibly dangerous as people struggle to cool their homes. In the 1995 Chicago heat wave, an estimated 739 people died due to extreme temperatures and power failures.

Detroit takes a stand to improve power grid security

In Michigan, the state with the most weather-related power outages, citizens are advocating for change. An estimated 800,000 Michigan residents suffer from weather-related blackouts every year and outages are expected to become more frequent.

Detroit has taken steps towards improving power grid security. Utility DTE Energy proposed a $4.2 billion dollar plan to modernize Detroit’s energy grid and make it more resilient to weather-related disasters. However, some argue against fixes that fail to target the root of the problem.

Instead, many activists in Detroit are advocating for the expansion of solar energy. Using solar panels to create community-based micro-grids would allow communities to continue using power during blackouts. Decentralizing the energy supply could also make utility bills cheaper and reduce citizens’ reliance on large utility companies. On a larger scale, solar energy would also slow climate change and the resulting extreme weather effects.

Continue Reading

Energy

Investors lose confidence in renewable energy as China halts subsidies

Austin Wang

Published

on

renewable energy

Over two months ago, the Chinese National Energy Administration (NEA) announced it would stop providing subsidies for onshore renewable energy projects. The announcement seems to have shaken investor confidence. In the first half of 2019, renewable energy investment in China dropped by 39%.

Since China accounts for around 24% of global investments in renewables, it led the charge in a global slowdown of investments in renewables. Overall renewable investment dropped around 14% with U.S. investment dropping 6% and European investment dropping 4%.

Will China Bounce Back?

Still, China’s future looks fairly green. Despite a decrease in investment, China is still providing incentives and power-purchase agreements for solar companies.

Furthermore, China’s goal is grid parity (making solar energy reach the price of coal power). China’s not known for its laissez-faire economics, so the country will probably support the solar industry more in the future.

Chinese renewables will also likely perform much better in the second half of 2019. Twenty-one gigawatts of new renewable energy projects were announced in late May, so investments in them should rise significantly.

Global Renewable Energy Investment Outlook

Even if China bounces back, global renewable investment does seem to be on the downturn. While the U.S. and Europe only experienced small decreases in investments, the world needs to significantly increase renewable capacity to stop climate change.

A combination of factors including detrimental tariffs and shifts in conservatism has caused renewable slowdowns in many developed areas. However, several countries have continued to expand renewable energy development. India increased investments in renewables by 10% and the U.K. increased investment by 35%.

The Big Picture for Renewable Energy

In the grand scheme of things, renewable energy is definitely gaining ground. Despite decreases in investments, renewable-generated-electricity has been growing in volume.

Despite decreases in investments, renewable energy has been growing in volume.
Despite decreases in investments, renewable energy has been growing in volume.

In the United States, renewables comprised 23% of the national energy supply in April. This April marked the first month in U.S. history where renewables contributed more electricity than coal. Although renewable energies always perform better in the Spring, this milestone still signals that renewable energies are becoming more and more cost-competitive.

Conclusions

Short term volatility is inevitable but the overall trend is clear: new technology favors renewables, and we can only expect the capacity of renewables to grow in the long run.

The real question is: will renewable energies scale up fast enough to prevent the worst effects of climate change?

Continue Reading

Energy

Sunnova Energy Becomes Latest Solar Financier To Plan IPO

Steven Li

Published

on

Sunnova

Texas-based Sunnova Energy, one of the solar market’s leaders working on residential solar and energy management, has reportedly made plans to IPO later this year. Though Sunnova declined to comment on the Reuters report that initially broke the news, anonymous sources close to the company appear to be credible.

Financially, Sunnova’s cap table is a lot more crowded than its closest competitors, including Sunrun, the current market leader in residential solar ownership, and Solar City, now part of Tesla.

The company has reportedly raised over $2.5 billion in funding, a mix of debt and equity fundraising. Its competitors, on the other hand, raised at most in the hundreds of millions prior to IPO. Despite publicly announced round-sizes, Sunnova’s valuation is a black box. As such, Sunnova’s IPO price is far from clear.

Either way, Austin Perea, a solar analyst at research firm, Wood Mackenzie, believes that a Sunnova IPO could clarify investor interest in residential solar. Specifically, with respect to Sunnova’s localized distribution model, market interest is largely unclear. An IPO by a unicorn like Sunnova would offer unprecedented clarity into the private company.

Continue Reading

Trending

Share via