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China has become a country with an apparently insatiable appetite for energy. Although China’s economy is slowing as the global meltdown crushes demand for Chinese goods, Chinese energy companies are busy importing ever more oil and coal and other commodities. Dependence on oil imports from politically unstable nations not only poses a threat to the U.S. and the Western world, but also to China. A supply interruption would have disastrous consequences for China’s stability and economic growth. This is one of the reasons why China needs to embrace alternative sources of energy. Of course, China is being confronted with criticism from environmental organizations that it is doing too little to limit greenhouse gas emissions. But obviously, the Chinese government cares less about tree huggers than about economic and social stability as well as saving potential and future business opportunities. Solar power is the most promising source of energy we have and the solar industry will grow to a key industry over the next decade.

To ensure that China will have a stake in the future energy tech market and in order to diversify the energy generation process, China will build a giant solar power station in the Qaidam Basin, a very arid basin in Western China. The place is perfectly suitable to host the world’s largest solar power station as it has a high average of daily sunshine hours . In the first stage of the project, a 30 MW  solar power farm costing about $150 million is to be built by the China Technology Development Group and the Qinghai New Energy Group. Construction will begin this year.

The long-term power generating capacity goal is one gigawatt (1,000 megawatts) of solar power. The next largest photovoltaics project is a 0.5 gigawatt power plant in California.  (a modern nuclear power plant has a capacity of about 3,000 megawatts) 1,000 megawatts is really huge for a solar power plant. When and whether the construction of the second phase can start depends on the success of the first.

Environmentalists are unlikely to be satisfied with this step as they highlight that China’s investments in coal-fired power plants are way above those in clean energy, but there can be hope that once the Chinese government recognizes the profitability and opportunities of solar power, the investments into alternative energies will be scaled up. Chinese officials are well aware that a strong alternative energy sector is a necessity, not a waste of money to greenwash China’s image.

The announcement of this mammoth project helped to boost confidence within the solar industry which is suffering from the credit squeeze and recently lower energy prices. Most people seem to believe that the upcoming energy crisis is averted due to the lower energy consumption caused by the economic turmoil. However, the beginning of the supply shortage is just delayed. The more investments are being postponed, the more painful the rebound of energy prices will become.

[originally posted on my old blog: economatters.wordpress.com]

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This entry was posted on Saturday, February 28th, 2009 at 8:55 AM and is filed under Energy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.