Discover China: The Linchpin of the Energy World



CHINA REALLY IS THE HUB OF THE MODERN ENERGY WORLD

CHINA’S GLOBAL IMPORTANCE IN TERMS OF RENEWABLE ENERGY AND FOSSIL FUEL CONSUMPTION ONLY CONTINUES TO GROW.



1. THE CORE OF THE MODERN ENERGY WORLD


China sits at the epicenter of the modern energy world and shapes its own destiny. The country was destined to play a leading role in the global energy markets and drive its development towards a renewable energy future.

But China has embraced the industrial age and the use of fossil fuels such as coal and has changed itself in the process. On the back of hydrocarbons, China has brought industrialization to a fulminant climax, a phantasm of industrial activity the world has never seen before and which the world will most likely never give in to in our lifetime.

With electrification came the idea that energy is a double-edged sword, and depending on how China wields it, a smoggy, rugged landscape with more and more industry, or alternatively a prosperous, service-oriented world of renewable energy, which shoulders the largest economy on the Eurasian landmass.

After all, it was clear that China would increasingly focus its attention on renewable energies and that industrial growth would move in this one direction. The turn to renewable energies began in the 1990s, but gained momentum in the 2000s and especially in the 2010s. In 2010, China lagged behind the German increase in electricity generation from renewable energies. China was also not able to offer competitive products in photovoltaics and wind energy on the world market at that time.

However, China’s growth in the renewable energy sector paralleled that of other major industrialized nations. However, many industrialized and industrializing countries did not have the commercial influence and momentum that China’s renewable energy revolution had. The existing industrial and technological capabilities of Chinese companies undoubtedly contributed to the rapid catch-up in renewable energy. It was a clear commitment to contribute to a renewable energy future in which China would take a leading role.

Of great importance were the early adopters. The early adopters include businesses and business locations where the renewable energy technology was tested and commercialized, including Japan, Denmark, Germany and South Korea. Japan is an important player in the East Asian market in the field of renewable energy technology. South Korea has also long played a key role in the production of renewable energy technologies. Major technological breakthroughs were achieved in the European energy markets, where EU member states attempted to interlink the various renewable energy sources with the help of smart grid solutions.


2. EARLY ADOPTERS AND LATE MOVERS IN THE FIELD OF RENEWABLE ENERGIES


Germany did attempt to use its own market as a showcase and a playground to advertise renewable energy solutions made in Germany. Germany’s ultimate objective was to eport these renewable energy solutions to the Chinese market, albeit with limited success. In spite of all the arguments for and against, limited familiarity with the East Asian energy market was acontributing factor for the lack of results selling these products abroad. Other technological lighthouses like Japan and South Korea equally attempted to sell renewable energy technology abroad. They have reached considerable success in the American energy markets, particularily in the United States. 

In turn, Chinese firms developed their own renewable energy technologies in the wind and photovoltaics sectors, eventually selling these products for a lesser price in the global energy market. Nowadays, we have sustantive cooperative partnerships between Chinese and German renewable energy businesses, particularily in the wind and solar sector. The partnerships are particularly strong in areas such as wind energy storage systems and batteries

In hindsight we see that China’s rise as a renewable energy powerhouse has lowered prices for solar panelss and led to a continuous upscaling of research and development in the wind and solar industries. This culmnated in wind and solar installations with significantly better energy conversion ratios. This is of great importance to the renewable energy sector, because electricity prices generated by photovoltaics need to fall in order to reach grid parity with conventional electricity sources. The eventual goal is to eliminate subsidies and grow a self-perpetuating renewable energy industry that can survive on its own merit.


3. THE NEW SILK ROAD IS A ROAD OF RENEWABLE ENERGIES


These solutions are being deployed all along the new Silk Road that intercepts the Eurasian landmass and connects disparate towns and villages to the wider world, often providing them with the only source of electricity available. In this decentralized model, renewable energy installations are on the many node points forming the backbone of a comprehensive energy grid system, a power grid that envelops Eurasia and provides interlinkages for new economic growth. The power grid extends far into the Eurasian land mass. Electricity flows from the Chinese heartland via Central Asia to Europe.

Renewable energy forms part of a triad consisting of energy, telecommunication networks and civil engineering. Under civil engineering we understand the physical infrastructure that underpins the more abstract nodes of communication consisting of electricity and telecommunication. 

In effect, China underpins its own domestic energy security by providing Chinese renewable energy producers and renewable energy technology providers with an outlet where they can see their ware to. Without the new Silk Road this would not have been conveivable. 

We understand that the continued growth of the Chinese economy depends on finding new export channels and for this new Silk Road is the vehicle of choice. AS it happens, renewable energy is an essential component of energy security in European, Central Asian and South-East Asian countries that do not fall back on an existing national electricity grid. Given such circumstances, China provides the necessary underpinnings of a decentralized electricity infrastructure that many countries view as a prestep to a fully integrated national electricity network


4. IN-DEPTH ANALYSIS OF CHINA’S FUTURE IN RENEWABLE ENERGY


We should take some time to think about the future prospects of nuclear energy in China. Nuclear energy supplies the Chinese energy system with base-load electricity. This gives China new options: It allows China to exchange energy sources with each other to ensure a consistent energy supply. In view of the fact that the construction of nuclear power plants takes many years, including building permits, long-term planning is necessary. In this context, it is immensely important for China to accurately assess its own needs.

In order to evaluate the long-term potential of the different types of energy, the renewable energy sources and their energy yield are compared with nuclear energy. It is important that China always has a more stable power supply. The volatile, geopolitically fragile energy supply through the Strait of Malacca also plays an important role in this respect. If China makes greater use of nuclear energy, it must, like other countries, find a sensible way to dispose of radioactive waste.

It also makes sense not to rely solely on renewable energies. Their energy efficiency depends on whether the wind blows or not and whether the sun shines, which is not always guaranteed. Moreover, China is on its way to becoming a leading producer of nuclear power. To be honest, we have to measure this by the standards of a country that currently has the world’s largest population. The need to meet its energy needs is so great that China is willing to rely on nuclear power. There are big differences in terms of the energy yield of nuclear power plants and the safety measures required for this. In fact, increased safety measures of nuclear power plants can slightly reduce the energy yield of invested energy (EROI). 

In the second part of this series on China’s energy policy, we will take a closer look at China’s fuel supplies through the Strait of Malacca.


Many thanks for the shared interest in the energy world!



Disclaimer:


This article is just meant to inform the reader of recent developments in the energy industry at large and to share knowledge and insights with a wider audience. The author does not put forth investment recommendations. This article should not be taken as investment advice and the author cannot be held to account for investments made. Further information is provided in the IMPRINT and PRIVACY POLICY, which you can click on or find at the top of this page in the menu bar. For readers from Germany, please refer to the Impressum and Datenschutzerklärung of this website.               


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