China's Cleantech Prowess

Written By Nick Hodge

Posted January 20, 2011

You could sense President Hu’s quiet confidence this week…

After all, his Communist country is currently beating us at capitalism… and owns a good chunk of our debt.

In conjunction with the visit — and to show its affluence — China offered Monday to inject money into U.S. schools and signed on to $45 billion worth of export deals with U.S. companies: $19 billion for jets from Boeing… $2 billion for coal gasification, aerospace, and locomotive technology from GE… millions more to Honeywell, Caterpillar, and plenty of others.

In total, the deals will benefit 70 companies in 12 states and support 235,000 jobs.

President Hu can make it rain more than our own Congress —  a benevolent gesture from our future economic masters.

But that $45 billion is like a bad night of billiards for China, spare change for a friend in need.

Here’s what I mean…

China deals in trillions

It’s already the world’s largest energy user. And in the next decade, the Middle Kingdom will spend $1.7 trillion on building additional electricity infrastructure to keep up with a booming population, according to its own internal Electricity Council.

Under the plan, the report says:

Power generation capacity may rise 8.5 percent annually to 1.437 million megawatts by 2015 and to 1.885 million megawatts by 2020… Power generation by non-fossil fuels will account for 33 percent of the total by 2015 and 36.3 percent by 2020.

In a measure that will leave the U.S. far behind, China’s spending a trillion dollars to build a sustainable electric infrastructure.

Last year alone, the country spent $51.1 billion on clean energy investment — a $10 billion rise over the previous year and enough to make it the top investor two years running.

China took the top spot away from us.


And they’re not just beating us at investment…

Now that investment is paying dividends, they’re beating us at job creation, wind and solar installations, battery research, stock valuation, and more.

Take LDK Solar (NYSE: LDK) for example. It just raised its 2011 sales forecast to $3.7 billion while projecting margins upward of 28%. And it bought 70% of a California-based installer to help push its products on our soil.

GCL Poly (HK: 3800), another Chinese solar company, just signed two huge deals: 5.2 GW of polysilicon wafers to Canadian Solar (NASDAQ: CSIQ) and 7.5 GW to Trina Solar (NYSE: TSL).

That’s 12.7 GW of solar material from one Chinese company.

The United States only has 2.5 GW installed in the entire country…

In stark contrast, Massachusetts-based Evergreen Solar (NASDAQ: ESLR) just announced it is shuttering its U.S. plant. The reason: it can’t compete with the Chinese.

No kidding.

The competition isn’t even close:


Literally blowing by us

Solar isn’t the only area in which China’s pulling away.

China was also the world’s largest wind market last year, with 41.8 GW installed. It took the top spot away from the U.S., and has plans to install 100 GW by 2015.

China’s domestic turbine producer, Sinovel (SHH: 601558), is now top five in the world and eyeing the top spot. Its IPO was priced at $1.4 billion on January 6th.

But where they’re really about to pull away is batteries.

Because the Chinese can make the sun shine at night and the wind blow when breezes are calm… batteries can be as profitable as both sectors combined.

And that’s without counting the billions of batteries we’ll soon need for electric cars, smart phones, laptops, and other devices.

It’s why Buffett bought into BYD (HK: 1211) — a major Chinese maker of cars and batteries — back in 2008. And it’s why I had my readers follow him into that investment.

We’ve all done well:

BYD (HK: 1211)

But there’s another Chinese battery company that just made a monumental breakthrough…

Some say it could make coal and oil obsolete in the near future.

I’ll be releasing a full report about the company and the technology on Monday, but wanted to give readers of Energy & Capital an early heads-up.

This company could soon make BYD’s 500% look small by comparison.

Call it like you see it,

Nick Hodge

Editor, Energy and Capital

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