The Sun is shining on China’s energy industry, and it’s getting brighter.

The Chinese solar energy industry has boomed in the last decade as they leave coal behind. Meanwhile, the US appears to be moving in the opposite direction.

By Tyler Book

China’s energy demands have exploded over the last decade. In their rush to meet those demands, China has begun to turn away from coal. In a move that is in the long-term benefit of not only China but the entire world, China has turned its eyes to solar energy.

China’s appetite for energy is massive: the Asian giant used 39,884 TWh of electricity in 2017, nearly 40% greater than the United States. It’s energy use is also growing rapidly, having increased by 62% since 2008. Of that 2017 amount, just 118.2TWh was attributed to solar energy, but their current plan is to reach 1,300TWh of installed solar capacity by 2050.

The Paris Agreement and the Five Year Plan

China remains committed to the 2016 Paris Climate Agreement and is on pace to exceed its goals. Meanwhile, the Trump Administration has withdrawn the United States from the Paris Agreement entirely. In fact, Trump’s position has been to support coal. The percent of energy coal produced in China dropped from 80% to 60% from 2008-2017, but that’s attributed mostly to rapid growth of energy produced, although coal production dropped 9% from 2016-2017.

China’s newest version of their “five-year plan” saw President Xi Jinping push solar more than ever. China is already the leading manufacturer and installer of photo-voltaic panels, including 68% of the world total production in 2017. On top of that, 5 out of 6 of the largest manufacturers are Chinese. All of this production currently puts China 2 years ahead of their goal of 140TWh photo-voltaic capacity installed by 2020.

China recognizes the multiple benefits of scaling back coal and replacing it with renewables such as solar. The people have protested the poor air quality in major cities such as Beijing, and much this smog comes from coal-fired power plants. Reducing coal production and coal use will increase the air quality. But coal reduction can only move at the pace of renewable growth, which is a big reason for China’s strong push into solar.

Subsidies without Investment

One potential roadblock is the current government subsidies in the solar industry. Government subsidies have been propping up solar, keeping the energy price to consumers low and helping the industry grow. It used to be that the subsidies were absolutely necessary, since the single largest barrier to entry for the industry is the massive initial capital investments. But now that the industry is up and running, it seems to be time for the government to cut back.

In fact, Chinese investors are waiting for a step-down in subsidies, so that private investments can replace them. The problem is the communication between the Chinese government and the private markets. Investors feel they need to know ahead of time how much subsidies will be reduced by and when in order to invest wisely. Yet up until now, the government’s decisions seem to be made exclusively behind closed doors. It is widely believed that private investment is the future of the Chinese solar energy industry, but the government has not let the industry out of their grip.

Still, it’s hard to overstate China’s investment into solar energy production. Solar investment by China in 2017 represented 50% of the global total invested and a 58% growth in China, while similar investments fell by 6% in United States. China had 33% of total global solar capacity in 2017, up from 7% in 2008. China has rapidly become the solar leader of the world.

Where does all this energy go?

All this growth is good, but without a way to store the power generated solar energy can never be the majority energy source. The public electricity market has instantaneous demand, with adjustments to energy output from power plants being made every 4 seconds. This requires that the public power grid be supplied with energy in a complex balance of consistency and adaptability. Solar’s obvious problem is that it can only produce during the day. Since electricity is still used at night time, the energy generated during the day must be stored for later use. That’s where batteries come in.

On the other hand, coal does not require a battery. In a sense, the world has managed to completely circumvent this problem for 150 years of industrial progress because fossil fuels are batteries. A brick of coal is already a store of energy from which electricity can be extracted when needed. This will have to be China’s next major investment. Technological breakthroughs are still needed, and while Americans watch their own Tesla Inc. push boundaries in this arena, there are companies in China doing much the same. Commercial sized batteries that can reliably store and discharge solar energy is the goal. When it’s reached is anyone’s guess.

For now, while the United States’ path to energy security seems muddled, China’s path appears to be bathed in sunlight.

(2017 is the latest year for which full records of Chinese energy production and consumption are available)