Chinese Clean Energy
2010: The Year of China's Energy Boom
By Nick Hodge
Tuesday, January 5th, 2010
wealthdaily.com
If last year was any indication of things to come, the cleantech scene will once again be dominated by China this year.
Evidence of this trend is everywhere, from the amount of attention given to Chinese cleantech initiatives by pundits to the stellar returns China-based companies have been offering.
Chinese Solar Companies
Just look how Trina Solar (NYSE: TSL) fared in 2009 compared to the Dow Jones and U.S.-based First Solar (NASDAQ: FSLR):
Chinese solar companies, as we've been saying, have generally been outperforming their peers as they capture a larger share of the global market. They've been able to keep their average selling prices (ASPs) more stable, and lower poly costs may actually lead to higher margins this year, perhaps in the 30% range.
In plain speak: Chinese solar firms will be more profitable than companies based elsewhere.
What's more, several large European solar markets are set for subsidy-reductions this year. Beyond implying that the solar market is maturing, these subsidy reductions are also driving up demand as customers race to complete installations while there are still tax breaks or incentives available.
Most of that business is going to Chinese companies — even European solar producers that used to provide competition are now becoming customers.
And it's not just exports that are exploding; the domestic market is booming as well. Greentech Media reports that China currently has a solar capacity of 140 megawatts but could reach 1,400 megawatts by 2012. That implies 900% growth over the next three years.
Green Chip investors will be poised to reap the benefits. I've already begun preparing thousands of members for this coming windfall.
Chinese Wind Companies
Companies with exposure to the Chinese wind market have done just as well.
American Superconductor (NASDAQ: AMSC) has exclusive contracts with Sinovel, the largest turbine producer in China and fifth-largest in the world. Shenyang-based A-Power Generation Systems (NASDAQ: APWR) enjoyed a 300% year, and even earned a turbine contract for a farm based in Texas.
Both companies crushed the Dow Jones and even Vestas Wind Systems (COP: VWS), the largest turbine producer in the world. Take a peek:
There are about 20,000 MW of installed wind capacity in China right now. That number will double to 40,000 MW by 2011... and it'll grow 875% to 195,000 MW by 2020.
You'll want to get in sooner rather than later.
Chinese Smart Grid
Of course, with such rampant growth in their solar and wind industries, the Chinese will have to build out their smart grid, as well.
They won't be immune to the same problems were having here in the States, namely that the best renewable resources are located in sparsely populated areas.
The Wall Street Journal recently reported that Duke Energy is already in talks with State Grid Corp. — China's largest distributor of electricity — to form a joint venture. State Grid would provide transmission solutions in the States and Duke would provide energy efficiency expertise in China.
Batteries are also a top priority in the Middle Kingdom as a means to store clean energy and use it when needed. Look what Hong Kong Highpower (NASDAQ: HPJ) did in the second half of the year, as lithium batteries caught on as a major investment theme:
China-based electric and hybrid vehicle maker BYD (HK: 1211) did even better. Readers that followed my advice and bought that stock late in 2008 are now up more than 500%.
And here's the best news of all: China recently passed a law requiring electricity distributors to purchase 100% of the renewable energy available. With that kind of law on the books, you can bet there will be a rush on renewable energy installations in the coming year. |
