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Why Feedin Tariffs are the wrong subsidy | 74 comments (74 topical, 0 editorial, 0 hidden)
Re: Further Lunacy (4.00 / 5)
I always take perverse pleasure in pointing out to the people who try to argue Europe is "losing" to China in terms of the wind sector, that many of the hundreds of turbines in Inner Mongolia have to shut off during peak production times in the winter because of a lack of effective planning.  Ironically, despite all the praise heaped on China  by  serious people (for low labor costs) the structure of their support for wind farms really has produced many of the defects that are lodged at European FiT programs.

Much, if not most, of China's wind farms were built with generous government  support in Inner Mongolia.  It's full of great sites, strong winds, etc.  But.......

The problem is that China has  a sort of reverse merit order effect in play because of the infrastructure in the region.  Much of the province is heated by coal fired combined heat and power plants, and there is little ability to shift power south to Guangdong and the rest of the industrial south. So what happens when the best winds come in winter is that these wind farms are idled.  Why?

Because there's no place for the power to go.  If the infrastructure existed to move the power south, no problem.   But the scope of the market is limited to Inner Mongolia by the lack of infrastructure. And in the province idling coal fired production isn't an option because that also means shutting off the heat for much of the province.  China doesn't need to develop any more capacity, there's already a bubble in that regard.  China needs to start building HVDC lines to the south, but that is unlikely to happen, because it's been the provinces and localities running the show on all of this.  

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Jan 8th, 2012 at 09:01:59 PM EST
[ Parent ]
Re: Further Lunacy (none / 1)
That much of the windpower potential generation in Inner Mongolia can't yet be shipped South is true. In fact, Nation-wide, nearly 40% of installed wind capacity wasn't even grid-connected at the beginning of last year. I'm told it's just a bit better now.

But the energy plan acknowledges this, and has strong grid build planned or already underway.

The critical analysis is that while china's wind industry is huge, it is also young. Turbine performance has a real stretch before it reaches European standards. China may have "unlimited" technical and O&M support workers, but few of them have any long term experience.

Still, the infrastructure problem is already being solved, and because it's China, can be solved far quicker than anywhere else.

The prime argument on why Europe is not "losing" to China is simply the technology can't yet cut it, or if it can, there's no evidence, as there's virtually no reliable data.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Mon Jan 9th, 2012 at 03:02:14 AM EST
[ Parent ]
Re: Further Lunacy (4.00 / 3)
Still, the infrastructure problem is already being solved, and because it's China, can be solved far quicker than anywhere else.

Do you have any sources for that actual construction is underway on this?

One of the issues with China is that Beijing is relatively weak compared to the provinces, although the top leadership is cycled much of the actual power remains in the hands of local CCP membership that is less mobile.

So the problem politically is that you have many local and provincial fiefdoms that essentially do their own thing.  Even in the realm of state owned enterprises, many of the most important, including as I understand it important power firms, are not owned by the center. It's own of the developmental deficiencies of the Chinese system. Beijing does big talk, but they have relatively little actual control.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Jan 9th, 2012 at 09:00:14 AM EST
[ Parent ]
Also (4.00 / 4)
China doing more wind is not a bad thing for Europe, it's a good thing for everybody - Chinese gas emissions go everywhere, so these need to be reduced too...

The worry, maybe, is about the supply of turbines - and the reality is that  at least 50% of the jobs in the industry are non-offshore-able O&M jobs, which by definition cannot be sent elsewhere, and a good chunk of the rest are in the manufacture and transport of heavy pieces of equipment, again something that is hard to do from very far away.

The rest is more high-tech stuff where I expect European industry to still have an edge.

And as European wind moves offshore, this is even more true. I don't see Chinese manufacturers having any chunk of the European offshore market for many years to come.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Jan 9th, 2012 at 03:25:43 AM EST
[ Parent ]
Re: Also (4.00 / 3)
a good chunk of the rest are in the manufacture and transport of heavy pieces of equipment, again something that is hard to do from very far away.

I'm inclined to agree, to a point.  The counterpoint that I'd make if trying to argue the opposite is that Gamesa is now exporting tower components from China to other locations globally, including North America. As these are arguably the heaviest single components, it puts a whole in crude version of the transportation cost argument.

But, as you say, there's also a moving division of labor at work here.  European manufacturers have the much higher value added components in the nacelle, but even here there's some indication that the Chinese are trying to use their, albeit temporary, overwhelming monopoly in rare earths to force production of some components into China with export controls.

On the whole, I'm quite optimistic about the European industry, but I also know that there are relatively simple arguments that can be made to the contrary. It's explaining the details that makes combating these a hard tasks. Serious people don't do details.  When facts get in the way of their economic theory, the facts must be wrong.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Jan 9th, 2012 at 09:13:26 AM EST
[ Parent ]
Re: Also (none / 1)
Transportation cost is an advantage, but, for example, even if the transportation cost advantage is sufficient to employ all existing local capacity, if the financial basis for the continued expansion of the windpower installation is not secure enough to justify investment in more capacity, demand in excess of capacity will still spill over into demand for imports.

The transportation cost advantage still has to be leveraged by effective policy that provides long term assurance of the demand for productive capacity over the financed life of the plant.

And the most effective policy for providing that assurance is a well designed feed-in tariff policy, since as installation crosses the hurdle into the range where the merit order effect is reducing the average cost of kWh, that provides added political interests in favor of keeping the policy in place.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jan 10th, 2012 at 01:58:36 PM EST
[ Parent ]

Why Feedin Tariffs are the wrong subsidy | 74 comments (74 topical, 0 editorial, 0 hidden)
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