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Green Energy Sector Weekly Update: Obama Rolls out the Red Carpet to Chinese President

Chinese President Hu Jintao arrived in the U.S. this week for a four-day state visit. The White House rolled out the red carpet, working overtime to make sure that its largest creditor got the respect and pageantry it has come to expect.

Human rights, the under-valued yuan and yes, green energy have all been top items on the China /U.S. agenda.

In a relatively short time, China has emerged as one of the world’s largest green power markets and this has seriously hampered the Obama administration’s stated goal of making the U.S.  the world’s leading green economy.

In remarks  published on the Huffington Post, Energy Secretary Steven Chu bluntly stated that when it comes to green energy, the U.S. has one goal: Beat China. “The United Sates is competing for leadership in energy innovation,” Chu wrote.

The U.S. might have ambitious goals in developing its renewable and cleantech industries, but right now , Beijing is  is well ahead of Washington.

China’s renewable sector enjoys  huge government subsidies, a seemingly endless demand for wind turbines and solar panels, and, most importantly, the  ability to produce these turbines and panels at bargain basement prices.  The numbers back up China’s position;  last year renewable energy and cleantech  investments into China topped  to more than $51.1 billion, up 30 percent from 2009 levels. In fact, China accounted for  21 percent of all  global green investments last year.

The U.S. only managed to attract $18 billion in investments to its own green energy sector in 2009. And largely because of lingering regulatory uncertainty and cheap natural gas, 2010 proved to be little better. According to the American Wind Energy Associations the third quarter  was the slowest for the U.S. wind industry since 2007.

The  investments flowing into China have helped create game-changing companies like solar panel makers (and World Cup sponsor) Yingli Solar  and Suntech, which recently said it expected its panel shipments to jump by 50 percent this year.  With a host of well capitalized Chinese companies looking to grow their market share both at home and abroad, U.S. companies are rightfully worried about potential competition from China.

Some Chinese companies are already moving in on U.S. companies’ turf. For example, GoldWind, a subsidiary of Urumqi, China-based Xinjiang Goldwind Science & Technology Co,recently hired First Wind CFO Tim Rosenzweig to oversee its U.S. expansion, including the development of the 104 megawatts Shady Oaks farm in Illinois.

GoldWind is serious about growing its U.S. revenues and is scouting for major office space in Chicago to house its North American subsidiary. Coincidentally, Chicago was also the only stop President Hu made outside Washington during his American sojourn.

While China  is winning on the cost front, greentech innovation remains Washington’s trump card. The Obama administration is working hard to protect America’s innovation edge and is hoping that this will eventually lead to American companies being market leaders.   “One of the most important steps to promote innovation is to respect and protect intellectual property rights,” Chu wrote in the Huffington Post. “Inventors need to know their hard work will be rewarded. In recent years, China has made strides to improve its intellectual property system, but more must be done,” he added.

According to the respected Clean Energy Patent Growth Index (CEPGI), compiled by IP law firm Heslin Rothenberg Farley & Mesit, during the third quarter of 2010 the United States Patent and Trademark Office granted a total of 490 clean energy-focused patents, of which 223 went to U.S. developers and only seven to Chinese companies.

While creating and protecting innovation are important, innovation fails to reach its true potential unless it is monetized, and  China is expert at reaping the economic benefits of American R&D.   This was blatantly exemplified this week when Massachusetts-based solar panel maker EverGreen Solar — which got tens of millions of dollars in state and federal aid — announced it was laying off  800 workers and decamping to China where production costs  are significantly cheaper, the company said.

VC and PE Watch

A Chicago venture capital fund tells us they’ve reached a first close on an inaugural fund, raising $11 million.

John Rockwell, a founder of cleantech-focused venture capital fund Element Partners has reportedly left the fund.

A leading energy-focused private equity fund is close to securing financing supporting the construction of a $120 million, 20-megawatt solar PV project in Italy, G.E.R. learned.

San Francisco-based Scientific Conservation, a provider of energy efficiency solutions for large buildings, closed a $15.6 million Series B venture funding.

In 2010 U.S. venture capital funds invested $3.7 billion in renewable energy and cleantech companies, says data compiled by Thomson Reuters.


On Tuesday President Obama will head to Capitol Hill to address joint session of Congress for the State of the Union address. With a Republican controlled House and a political establishment fatigued by fights over healthcare and financial services reform, energy policy reform seems unlikely. Back in 2009, shortly after his inauguration, Obama said “The country that harnesses the power of clean, renewable energy will lead the 21st century.” Despite the new, carbon friendly reality in Washington, Obama should reaffirm his commitment to clean energy. In a policy note released this week The Center for American Progress calls on the President to take the following actions (none require congressional approval):

- Protect children, seniors, and other vulnerable people from deadly air pollution by having the Environmental Protection Agency (EPA) enforce the Clean Air Act to require coal-fired power plants to significantly reduce their mercury, soot, sulfur, and other pollutants. Issuing and enforcing these pending safeguards would speed the retirement of some aging, dirty coal plants that are cheaper to close than clean up. This also would provide consumers with improved electricity reliability and clean energy investors with greater demand for cleaner power.
- Reiterate his support for enforcing the law requiring the EPA to set greenhouse gas pollution reductions under the Clean Air Act since Congress failed to act. He should also commit to vetoing legislation that blocks or delays such safeguards.
- Issue an executive order that requires federal agencies to purchase a portion of their electricity from renewable sources.Photo:  White House,  Pete Souza

By. Green Energy Reporter

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