China’s Cheap Wind Turbines: Technology and Manufacturing Efficiency Improvement, or a Sign of China’s Debt-Fuelled Bubble?
In looking at declining costs of generating electricity from wind power it is tempting to tell a story of technology efficiency improvement and manufacturing cost marginal improvement over time.
Such a graph can be found in the special report on renewable energy released by the IPCC in May, and is evident for much of the past.
However, in Australia and Europe, there have been dark mutterings about China’s wind turbine manufacturers selling turbines on the market substantially cheaper than others, leaving little scope for market penetration for the rest.
This is a fairly recent phenomenon.
Is this just a sign of China taking a technology and doing it better and cheaper than the rest of the world? Or is it, in fact, a symptom of China’s development pathway: state investment vehicles and corporations investing in capacity in order to make use of almost free loans, in order to maximise funds throughput rather than commercial profit?
Over at the Business Spectator today (a mainstream Australian online rag – free subscription required), Karen Maley warns of an understated Chinese level of indebtedness, and the process and motivations by which cash moves through the economy.
Are China’s turbine manufacturers unfairly subsidised (thereby enabling turbine ‘dumping’)? US Steel Workers union thought so – to the degree that they launched (successfully) a bid at the WTO to force China’s government to cease a particular form of unfair support.
Do the manufacturers receive ‘commercial’ finance on very favourable terms and, if so, does that count as an unfair subsidy? Are the manufacturers even making a profit, or will loans to these corporations turn sour? We’ll have a look at this over time. Views and intel are welcome.