As American and European Governments try to recover from the recent economic downturns, all face increased pressure to protect home industry and jobs. Barack Obama has promised to double American exports in the next five years, to create 2m good, new jobs. In the UK there has been much discussion about developing new technologies to create modern industries, such as those introducing green- or wind-power.

China emerged fairly unscathed from the global recession, possibly by halting a modest rise in their currency in order to stimulate exports. It has now passed Germany as the world’s largest exporter. It has also surpassed Japan as the biggest lender of business finance, and continues to invest in western businesses. Both the EU and the US have reacted to recent trade imbalances with import restrictions, the EU on shoes, the US on tyres. China has responded by restricting imports of poultry and car parts from the US.

America’s trade deficit and dependence on Chinese credit is now recognised in the US as a national security problem, rather than merely an economic problem. Perhaps most important, poorer countries are also finding it difficult to compete with China’s undervalued currency — Chinese exports to India, Brazil, Mexico and Indonesia have grown by between 30% and 50% recently. So the pressure is growing for China to let their currency rise in value, from many quarters, not least from the Middle East and the Gulf states. Protectionist tariffs are threatening the Gulf petrochemical industry, where recent multi-billion dollar investments in chemical plants have been based on target markets in Asia, comments Abdulwahab Al-Sadoun, the secretary general of the Gulf Petrochemicals and Chemicals Association. He explains that Gulf exporters are battling a 21 per cent anti-dumping tariff on Chinese imports from the Gulf of methanol, a basic building block of the chemical industry, in place since last summer, and face new plastics tariffs proposed in India. “The drive behind it is of course the recession and politicians who are trying to safeguard lost job opportunities,” said al Sadoun.

China buys more than 55 per cent of Gulf petrochemical exports, and the market was expected to continue to be the global centre of demand growth. The tariffs imposed by India and China are based on the fact that GCC producers have some of the lowest production costs in the world, because they buy oil or natural gas from their governments at prices set far below international market rates. This was the basis on which the Gulf has built its chemicals industry. “This could lead to trade wars between countries,” he said. “I don’t see a winner in this war, everyone will be losing”, continued Al-Sadoun.

The problem is not just about basic chemicals: look at the so-called emerging high tech products – like wind turbines. China, Germany, Spain, UK and the US vie with others to reap economic and environmental benefits of domestic green-energy sources while positioning themselves as market leaders in providing those technologies to export to the world. Like the UK, China intends to meet 20 percent of its energy needs from renewable energy sources by 2020. In 2009, China accounted for more than a third of the world’s wind-capacity installations, more than doubling its cumulative installed capacity for the fourth year in a row. And the country has passed the US to become the world’s largest wind-turbine market. Like the suggested role for the UK, China hopes to become the global production site for green technology. Current Chinese exports to Europe and the US are less than 1 percent of total production, but their producers are poised to become big exporters. China’s success in wind turbine renewable-energy technology was helped by restricting the sale of rare-earth minerals, critical for manufacturing turbines, by blocking export of those metals: China sits on the world’s largest known deposits of these rare-earth minerals.

A recent result of US public criticism last year succeeded in preventing taxpayer stimulus funds being used to buy 240 Chinese-made turbines for a new wind farm in west Texas. The world’s pursuit of low-carbon sources of energy collided with the national need to create jobs: in the end, the public demanded that turbines be produced in the US, not China.

In India too, the world’s fifth-largest user of wind power, investments in this form of renewable energy are expected to continue to grow in the years ahead. Probably to spread their green investments geographically, ABB has just announced its fourth global wind power generator factory, in Vadodara, India. The factory is intended to supply wind power generators, a crucial component in wind turbines, for the growing Indian and global markets. The new factory, employing 150 people, will produce up to 100 units per month with a rating of up to 2.5 megawatts.

Europe also has high renewable-energy ambitions. Germany already gets 16 percent of its electricity from renewable sources such as solar and wind. A new McKinsey & Co. study concludes that “By 2050, Europe could achieve an economy-wide reduction of [greenhouse gas] emissions of at least 80 percent compared to 1990 levels.” McKinsey expects the cost of energy per unit of GDP in 2050 could actually be reduced by 30 percent in Europe, boosting competitiveness. Production of renewable technology could create tens of thousands of new jobs.


In 2008, China also emerged as the largest producer of solar panels in the world, accounting for roughly one-third of total solar shipments. Beijing hopes to increase domestic generation of electricity from solar panels from 3GW in 2010 to 20GW by 2020. But so far growth in Chinese production of solar panels has outstripped the growth of the installed solar capacity in China. The vast majority of solar panels produced in China are exported. Between 2007 and 2008, for example, the value of Chinese exports of solar panels to Europe more than doubled. Sales to the US in 2009 were two-thirds higher than the previous year.

As nations vie for global leadership in the wind, solar and other renewable energy fields, trade disputes are inevitable. In August 2009, two major German solar-technology firms filed a complaint with both the German government and the European Union about government subsidies allegedly given to Chinese competitors.

IMS Research produced a report this month on the costs and prices of solar photovoltaic (PV) modules. In Germany the incentive schemes for installing solar schemes are tailing off, so suppliers are reducing cost prices to maintain their competitive position. In Q2/10, producers drove costs down 8% to $0.74 per watt, citing improved throughput, increased efficiencies and reduced material costs as helping to achieve this: IMS predicts that costs will fall once again in Q3. While factory gate selling prices fall, due to Renminbi/Euro exchange rate issues this has not translated into any decrease in prices to wholesalers, distributors or end-customers. While 82% of PV installations in Q2 were in the Euro zone, all suppliers reported sales and result in different currencies. Currency fluctuations have made the difference. For example, Chinese crystalline cell and module manufacturer, Solarfun, announced last week that its PV module average selling price (ASP) had declined by 6.8% in the second quarter to RMB 11.19/W. However, converted to Euros, the truth is its prices actually rose by 3.1%! IMS still predict 2010 PV module shipments are forecast to increase by an incredible 60% over 2009 to reach 15.6 GW. Beyond 2010 the situation is less clear and questions remain over how the industry will respond to multiple incentive reductions in the largest European markets heading into 2011. A strong consensus is apparent in the market today that we will see another unhealthy drop in demand, with installations in EMEA declining by 80% in Q1/11, compared to 2010.

IMS Research also advises a degree of optimism from First Solar: the thin film supplier recently announced that it planned to construct 500-700 MW of systems in 2011 and boasted a ‘captive pipeline’ of utility-scale business that would buffer any fluctuations in demand. Following its acquisition of project developer NextLight, First Solar plans to begin the construction of a massive 290 MW power plant before the end of 2010 and install modules there throughout 2011. Possibly they have been in discussions with another supplier recently making announcements of this type…….

Solar plants in Sicily

ABB has won an order worth $50m from Actelios SpA in Italy to supply three photovoltaic (PV) solar power plants in western Sicily. The order was booked in the second quarter, 2010. The plants will have fixed PV modules and a total power capacity of over 13 megawatts (MW). The main plant will be erected in Spinasanta with a capacity of 6 MW. Additional smaller plants will be built at Cardonita and Sugherotorto.

Once connected to the grid, the plants will supply around 19 GWhpa of renewable electric power. This will help avoid the generation of more than 9,400 tons of carbon dioxide annually, equivalent to the annual emissions of about 3,900 fuel efficient cars. The project is expected to be completed by the end of 2010.The short installation time will be facilitated by ABB’s modular eBoP (electrical balance of plant) concept. By pre-assembling individual components of the plant’s electrical systems and testing them prior to delivery, on-site installation and commissioning is fast and simple, reducing costs and project risk.

The turnkey project includes design, engineering, supply and commissioning of the power plants, as well as the medium-voltage distribution link that will connect the plants to the national grid. ABB will supply transformers, medium- and low-voltage switchgear, protection devices and an advanced control system, with remote control and diagnostic capability, to optimize operations and ensure maximum efficiency. “Renewable energies like solar play an increasingly important role in adding power capacity with minimal environmental impact, and ABB has a significant technology portfolio to harness and integrate these energies into the grid,” said Peter Leupp, head of ABB’s Power Systems division.


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