China number one cleantech nation; PV growth rising

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In business rivalries as in sports, the same competitors face off repeatedly – each, gauging the others’ strengths and exploiting latent weaknesses. While the rankings remain largely the same, a contender knows that it only takes one misstep for the presumed victor to fall behind.

So it was in 2011, as South Korea moved ahead of France and India in the global cleantech race, placing number eight compared to their standings of ten and nine, respectively. However, the same three global players returned to the podium – as China took the gold, the U.S. the silver, and Germany the bronze, all for the second year running – in the worldwide renewable energy sector.

Those were the results documented in the report, ‘Clean Economy: Living Planet’, released by the World Wildlife Fund–Netherlands (WWF). The conservation organization has commissioned annual industry rankings for the past three years, evaluating each of 25 countries based on its sales numbers for the previous year for cleantech products manufactured domestically, such as solar panels and wind turbines.

The global payoff

The combined 2011 sales receipts for China, the European Union, and the U.S. amounted to €150 billion (US$187.5 billion) – or almost 75 percent of the global cleantech market.

While China eked out just €14 billion ($17.5 billion) in 12-month sales circa 2008, that figure has swelled to €57 billion ($71.3 billion) in the three years since. The majority of this growth (77 percent) took place between 2008 and 2010 – but, even in 2011, the People’s Republic outpaced average global cleantech sector growth by a factor of three.

The cleantech sector in the U.S. grew 17 percent between 2010 and 2011, to €37 billion ($46.3 billion). While expansion slowed from an average of 24 percent annually between 2008 and 2010, it still exceeded average global cleantech sector growth. Growth in the German cleantech industry came to a halt in 2011, after rising 19 percent between 2008 and 2010. With total sales of €23 billion ($28.8 billion) in 2011, the nation still came in third in both the absolute and relative global cleantech rankings.

In 2011, South Korea demonstrated that countries with somewhat smaller economies can quickly become rising stars in the cleantech sector through targeted industry and energy policies. While Denmark attained the highest share of cleantech manufacturing compared to gross domestic product (GDP), its sales only have grown moderately since 2008.

Windfall growth

Wind and solar together comprise over 50 percent of cleantech sales. With its 26 percent share of the total cleantech market, wind energy is still the dominant technology. However, solar photovoltaic (PV) power generation has almost closed the gap with wind energy, holding a market share of 25 percent. Biomass is the third-largest segment, with a market share of roughly 20 percent.

While photovoltaic sales in 2008 reaped just €11 billion (US$13.8 billion), during the two following years, receipts grew by 100 percent per year, to €45 billion ($56.3 billion). Growth slowed to 11 percent in 2011, and sales now total €50 billion ($62.6 billion). According to the WWF report, the rapid decline in costs in the photovoltaics supply chain caused this slowdown.

Although total photovoltaic market volume rose by 65 percent between 2010 and 2011, sales went up by only five percent. Within a year, the average price of solar wafers fell 70 percent. Similarly, the price of modules dropped by 50 percent in a single year.

The photovoltaics market continues to be the fastest-growing of the three largest cleantech segments. Chinese companies, including Suntech Power, LDK Solar and Trina Solar, have fueled the growth in solar cell and module manufacturing. Equipment for photovoltaic manufacturing is delivered by American and European companies, among them, Applied Materials and Centrotherm.

Concentrated solar power is used primarily in Spain and the United States. Solar thermal is a widely applied technology in China, leading to China’s 70 percent market share.

What fuels expansion?

With substantial market growth expectations, WWF stated that its new 2011 ranking "by no means illustrates a settled cleantech manufacturing race," adding, "The race is just beginning. All countries can learn from the best practices of successful countries. Successful countries share a coherent, long-term and comprehensive approach that includes all stakeholders."

The researchers found that the best practices of Denmark, China, Germany, the U.S., and South Korea demonstrate a strong approach on three levels:

  • First, on a foundational level, government, R&D institutes, and financial institutions shape the right conditions for the cleantech industry to develop and grow;
  • Second, cleantech adopters (customers) create market demand for cleantech products; and
  • Third, the cleantech industry develops into an efficient, innovative sector and optimizes its supply chain.

Edited by Becky Stuart.