Chapter 7

Consider the Alternatives

The lunch banquet in the cold, drafty restaurant dining room halted. Guests at the meal put down their utensils to listen intently to the portent. “The offshore wind industry will have terrible accidents because of quality issues and the speed of construction,” Mr. Wang said. Mr. Wang was a young man, portly, good natured and a lively host. However, his voice had become grave with the prognostication. Even his colleague, a young Chinese named Leslie, seemed to pale at the prediction. Wang was a senior business manager in the offshore wind division of the private shipbuilder, Daoda Heavy Industry. The dockyard I visited at the end of 2010 had been under the Yangtze River three years before, all swift, muddy currents bounded by hard clay and tall weeds. Now, the hull of a 30,000 dead-weight ton (DWT) ship lay off to one side of the new dock. Workers were fitting the deck with equipment. Across from the ship, an 80-meter tall wind turbine stood like a sentry at the water’s edge. The turbine maker had shipped the working model to the dockyard to test the stability of its concrete foundations. Daoda, like so many of China’s wind turbine component makers, was learning through trial and error. Daoda’s leap into building wind turbine foundations spoke volumes about the entire alternative power sector in China.

In 2005 the central government articulated a policy to develop alternative energy sources to supplement its use of fossil fuels. The leadership provided subsidies, tax breaks, and protection from international competitors in the domestic market to achieve its goals. The largesse within three years had made wind power and solar power companies formidable in the international markets. By 2020 Beijing would like to see the same market supremacy for their champions invested in electric vehicle technologies, nuclear power industries, and hydropower. The aggressive timetables for cultivating the sector, however, has meant product over-capacity, design flaws, problems with quality, high maintenance costs, and the ire of potential international partners. The tragedy of the Fukushima-Daiichi nuclear power plant in Japan in the spring of 2011 brought a momentary pause and review of the nation’s plans for a green future.

However, by the beginning of 2012, memories of the tragedy blurred while markets and moneymen began stirring for new investment in the sector. It was clear, as well, the country would continue to run a chronic shortage of energy as long as urbanization was a primary component of the country’s efforts to modernize. The negative impact on the environment and pollution-related illnesses also saw Beijing accelerate production and use of alternative energy technologies. China, it seemed, could not afford to wait for a future held ransom by fossil fuels. Its wind power industry was meant to negotiate new terms for powering its new society.

Wind at My Back

In 2010 China surpassed the United States in the total amount of wind power capacity installed for use. With 16 gigawatts erected in 2010 alone, China’s total capacity leaped to more than 42 gigawatts. In 2010, the U.S. had installed about five gigawatts, increasing its portfolio of wind power to 40 gigawatts.1

In early 2011 the central government revised its original target of having installed 100 gigawatts of windpower capacity by 2020. The original goal had been 30 gigawatts, a target it had met in 2010. The new 2020 goal implied that China would need to build one-and-a-half wind turbines every day from 2015 until 2020 to meet government requirements. The most popular wind turbine model built during the first decade of the new century generated 2.5 megawatts of power, one that would be powerful enough to power 2,500 American homes. The towers of the typical triple-blade wind tower stretch upwards from 75 meters to 100 meters, with blades that range in length from 20 to 40 meters.

China’s central government had been promoting the wind power industry aggressively since 2005. At the time, nearly 80 percent of the market went to foreign players like the Danish producer Vestas, Spanish maker Gamesa, and Indian manufacturer Suzlon. During the mid-2000s the central government identified three wind turbine manufacturing champions it would cultivate: Sinovel, Goldwind, and Dongfang Electric. Within three years of the central government initiative the Western wind turbine manufacturers found themselves with only 20 percent of the domestic market. Beijing achieved the goal of cordoning off the China wind power marketplace primarily by controlling auctions for wind farm producers and reserving prime wind zones for country champions. Central government also applied another constraint on foreign wind power turbine makers.

In 2005 the country’s National Development and Reform Commission (NDRC) placed a domestic content restriction on wind turbine makers in China. The NDRC is one of the most powerful ministries in China, controlling the direction of China’s modernization, the speed at which development should occur, and the degree to which the country should be open to foreign direct investment. In the case of domestic wind turbine manufacturing, the NDRC directed that wind turbines had to have 70 percent or more of their content from domestic suppliers. Foreign makers complained about the policy, claiming it was prejudicial against foreign companies and even in contravention of World Trade Organization (WTO) regulations. The WTO’s mandate is to ensure a level playing field in international trade. The NDRC knew that foreign makers by and large relied on supply chains outside of China to maintain the level of quality and technological sophistication their wind turbines required. Central planners wanted more foreign component makers in the wind power industry to relocate to China. Beijing intended for more technology and know-how from Western suppliers to be transferred to China’s manufacturers. The domestic content policy also gave domestic component suppliers time to mature their own wares while foreign companies established operations in China. Many foreign component makers balked at transferring their businesses to an environment in which they knew intellectual property was at risk.

Eventually, at the end of 2009, the NDRC relented in enforcing the policy. The face-saving reason for the U-turn was that China was a modern, international economy that was open to all producers, no matter the country of origin. Poul Kristensen, then President of the Danish Wind Energy Association in China, told me the real reason was that Chinese suppliers did not have the technology, training, or experience to make the components wind turbines really needed to work in a country with a geography as varied as China’s: great deserts in the northwest; flat grasslands in Inner Mongolia; humid sub-tropics in the southeast; and the corrosive sea spray of the coastline. China had to make the business environment for foreign wind power parts suppliers more inviting than in the past.

The technology gap was so large in 2010 between Chinese and Western suppliers that Western suppliers were actually educating potential Chinese buyers on specifications. For instance, the CEO of a Danish wind turbine components maker told me that when his company asked Chinese buyers the dimensions of the blades for the wind turbines the Chinese were building, they would reply they didn’t know. Chinese turbine makers insisted the Danish vendor was the expert, and so should inform the Chinese purchasers how large Chinese products should be.

China’s ambitions in wind power for 2020 seemed way beyond practical reach for the country in 2010. Chinese manufacturers were unfamiliar with the manufacture of the sophisticated internal components for wind turbines, the secret chemistries of outer coatings for blades, and even the proper upkeep of the machines. Ultimately, much of the cost of installation and maintenance came down to the quality of the turbines themselves. Torben Jorgensen explained to me that Chinese makers did not have a concept of Total Cost of Ownership. Total Cost of Ownership not only involves managing the cost to manufacture a product, but to maintain it over its lifetime. Jorgensen was Head of Technology at Fritz Schur Energy, a Danish producer of hydraulic pitch control systems for wind turbines. Steep subsidies, cronyism, and a mercenary approach to the manufacture and sale of turbines meant that makers produced turbines with an aim to manufacture and sell them off as quickly as possible without much—if any—liability for performance and longevity. China’s manufacturing culture of “good enough” also implied that maintenance costs would skyrocket as turbines that were supposed to have lifetimes of 20 years would likely remain viable only seven or eight years. Chinese wind turbines were about half the cost of those built in the West. On average Western companies invested US$3.5 million in constructing the typical 2.5 megawatt wind turbine. At the subsidized rate China’s electric grid operators charged consumers for power drawn from the wind, wind farm management companies would need at least 15 years to breakeven on their investments on wind turbines. Maintenance costs would likely make supporting wind turbine farms a loss-making proposition.

Current technology know-how, quality issues, and increasing maintenance costs saw wind turbines becoming more a liability to achieving renewable energy goals in 2020 than a national asset. In 2011 the NDRC declared a moratorium on building new wind power farms. The Commission called an audit on installed wind turbines—half of which were sitting idle, unconnected to the power grid, while the half that was connected suffered incessant maintenance problems. The leadership’s issues with implementing a coordinated wind power plan gave the government pause in harnessing its solar power products export industry.

A Little Ray of Sunshine

Hebei Zhongming Energy & Technology Co., Ltd. was obligated by its local government masters to produce 60 MW of Photovoltaic (PV) solar cells by the end of 2010. The company registered the business on 40,000 square meters of land in April 2010. In May 2010, Hebei Zhongming was still building its solar panel factory when I met with company representatives. They had yet to hire the company staff. When I asked from where the company would hire the large workforce needed to man the operations, the sales representative answered, “from down here.” “Down here” was the Yangtze River Delta, where hundreds of other companies since 2005 had been manufacturing PV cells for export. Hebei, on the other hand, was in the arid north, near Beijing. Hebei Zhongming was a subsidiary of Tangshan Mingshi Industry Co., Ltd., a State-owned enterprise that also managed a local logistics park, various real estate properties, and oil extraction concessions. The new entrant into the Chinese PV market was representative of domestic PV projects by private and local government investors gambling on handsome payoffs. Investors in Hebei Zhongming, however, were not the only shareholders greedy for quick profits.

Hans Suo, Director of Sales for SunLink PV in Zhangjiagang, Jiangsu province, told me in 2010, “Two hundred fifty more companies are entering the PV market this year.” By the end of 2010, however, it was clear Suo’s projection was wrong: 600 new entrants had actually piled into the PV manufacturing marketplace. SunLink had been in business since 2004. The new facility I visited had the capacity to build 100 megawatts of photovoltaic (PV) panels each year, or enough to power 100,000 American homes annually. It would not complete construction and fit the remaining floors of the operation until it saw if the market could absorb the additional capacity, however. At full capacity, SunLink would be able to double its production in a year. Chinese companies continued to jump on the PV manufacturing bandwagon throughout 2010. A booming export market had driven down the price of production equipment and local governments continued to provide subsidies to start-ups in the industry.

As early as 2007, though, the National Development and Reform Commission (NDRC) warned of over-capacity in PV production. The global economic downturn of 2008–2009 saw the price of PV cells plummet as international buyers were unable to place orders due to supplier over-production and the cash and credit constraints of international buyers. The Spanish market in particular was hard hit as government subsidies evaporated. The country became mired in debt and high unemployment. The country’s battered real estate sector had been a main buyer of Chinese-made PV technologies. National policy in Spain had supported feed-in tariffs to reduce the cost of tying solar panels into power distribution grids, as well as providing tax incentives for the purchase of solar power generation. The German market, too, was hard hit during the global economic downturn; it revived by the end of 2009, though. However, the German government reduced feed-in tariffs subsidizing solar power by as much as 16 percent. Germany had been China’s largest market for solar power equipment for years. The German change of heart struck a severe blow to China’s PV makers.

In October 2010 the NDRC raised the warning that Chinese suppliers were over-producing PV products. Over-capacity was driving prices down at an alarming rate, making it difficult for all but the largest players to profit from the marketplace.2 Over-production of PV products had brought the price of solar panels down by nearly half between 2008 and 2010.3 During the same period PV exports to America quadrupled. The rapid drop in the prices of solar panels for the export market prompted U.S.-based PV makers in 2011 to petition the United States government to place a 100 percent tariff on imported Chinese solar panels. The request cited that Chinese makers benefited from government-provided loans, cheap land, tax breaks, and an undervalued currency. By 2012 Chinese PV makers found they had few places in the world remaining in which to sell their wares. The domestic market for solar power products was nearly non-existent, however.

Professor Cui Rongqiang, a professor at Shanghai Jiao Tong University’s Solar Energy Research Office, believed China’s total domestic PV consumption capacity was 130 megawatts in 2010.4 The figure implied that a single operation like SunLink at full production could satisfy all of China’s PV requirements in just over a year. By the end of the year Chinese companies had a combined capacity to manufacture 4,000 megawatts of photovoltaic cells annually, according to Cui Rongqiang.5 Nevertheless, solar power remained nearly twice as expensive as coal in China when it came to generating power.6 Hence, power generation and coal production operations had little interest in taking on additional electricity generation capacity that would make their contracts uncompetitive. Commitments to take on additional capacity from wind power made integrating solar power into the grid even less appealing. In lieu of a national policy of feed-in tariffs to subsidize the sale of PV products to power suppliers, Chinese PV makers would continue to cannibalize themselves. Local PV producers waited throughout 2011 for a national policy as robust as China’s own for wind power to open the domestic PV market. Without central planning support, China’s domestic PV makers would find it difficult to make a profit in the cut-throat domestic market. Domestic PV suppliers, then, were held hostage by the export markets.

The central government, however, preferred to support very large showcase projects. For instance, wind power, though erratic, delivered the megawatt jolts a hungry modernizing society needed to grow and prosper. The large scale of wind farms also made it easy for officials to highlight the success of their policies. Traditional PV makers, however, based sales on batches of panels for projects that generated mere kilowatts of power. Efficiencies of most PV products that Chinese vendors made, as well, were well below that of oil and coal. State-of-the art polycrystalline cells operated near 25 percent efficiency at best. Solar farms would need huge swathes of precious land to become technologically and politically viable in China. So national and provincial governments proposed technology applications for PV products on a scale never before tried in other countries.

The Hongqiao light rail station became the world’s largest stand-alone Building Integrated Photovoltaic (BIPV) project in May 2010, just in time for the start of the Shanghai World Exposition. It began transmission the same month. When passengers entered or exited a train at the station they were actually in a power plant. The structure could produce 6.3 million kilowatt-hours (kwh) of electricity per year, enough to power 12,000 Shanghai households. Its 20,000 solar panels covered a roof area of 61,000 square meters. The station is colossal, a huge rectangle at the opposite end of which is the Hongqiao International Airport, a major hub for domestic flights. Soon after, other cities and provinces throughout the country unveiled their own plans for BIPV.

China’s Ministry of Finance, Ministry of Science and Technology, and the National Energy Administration—a department in the NDRC—launched the Golden Sun program in July 2009. It provided upfront subsidies for qualified large-scale PV projects from 2009 through 2011. One of the grandest projects under the Golden Sun program involved the company Astronergy.

Astronergy unveiled plans at the end of 2010 for the world’s largest standing BIPV solar power structure. Astronergy was a Hangzhou-based crystalline and thin film solar module manufacturer. The project would involve roof mounted solar panels on Hangzhou east railway station. Hangzhou is a city as rich per capita as Shanghai, though much smaller, It is a two-hour drive to the west of Shanghai. The 10-megawatt project would cost 270 million RMB and was expected to generate 9.8 million kilowatt hours per annum. The Golden Sun program funded roughly 8 megawatts of the project. The National Solar Photovoltaic Building Demonstration Projects program sponsored the remaining 2 megawatts of the project. Other cities, though, insisted on crowding into the solar-powered spotlight.

Not to be outdone by either Shanghai or Hangzhou, the Beijing Economic and Technological Development Area (BDA) launched its own demonstration project at the end of 2010. The plan was to install 20 megawatts of rooftop solar power systems with an expected budget of 460 million RMB (about US$71 million).7 China invited bids on its first solar thermal power plant project in 2010. Beijing also invited solar power projects based on exotic technologies.

The central government sought to launch a 50-megawatt project in Hangjinqi in north China’s Inner Mongolia Autonomous Region. The bidding process would be overseen by China Machinery and Equipment International Tendering Co., Ltd. The $240 million project came under the umbrella of China’s National Energy Administration, the new government arm that was set up in 2008 to oversee the China energy sector. The 50-megawatt project would be the first of its kind in Asia. According to local government statistics it could generate up to 120 million kilowatt-hours of electricity. Solar thermal heating uses mirrors to concentrate solar radiation to turn water into steam, which is then stored in a heat medium. The heat can then be extracted to produce power at night or even on overcast days. Concentrated Solar Power (CSP) was still in the experimental stages in China when officials made the announcement about the 50-megawatt project. The technology for CSP in China was only just getting out of the laboratory. Significant foreign technology would be needed to move the industry out of its infancy. Scientists chose the Hangjinqi in Mongolia as one of the few locations in China’s orbit that had enough solar and water resources to support a project of that size. The site selection process underscored the weakness of the technology: China is running short of water due to drought, water transpiration, industrial use, and agricultural waste. Chinese visionaries intent on a solar future, however, were not daunted by such natural resource constraints.

Chinese scientists built a huge glass enclosure in the Gobi Desert that drew heat from the cooling sands to channel convection currents up a chimney to run a turbine atop the structure. Wind turbines near the chimney supplemented power generation from the plant during the winter, when the sun was not as strong as in the summer months. The turbine also ran at night as the cooling sands provided enough hot currents to continue powering the generator. The first phase of the plant began operation on December 10, 2010, with a capacity of 200 kilowatts. In 2011 the generator would provide 400,000 kilowatts of electricity per year, saving the equivalent of 100 tons of coal and 900 tons of water. Funded by a local company in Inner Mongolia with 1.38 billion yuan (US$208 million), the project has an additional two phases of construction to go before completion in 2012. The final project will cover 277 hectares and have a total capacity of 27.5 megawatts. Power from the plant will feed into the north-central grid that supplied Beijing.

China has 2.6 million square kilometers of desert resources, in the north of the country, as one of the lead scientists describes the Gobi. One imagines, with the sands of the desert encroaching on Beijing, the world may one day see solar chimneys downtown in the capital itself. Though the north might be arid, the south of the country provides great potential for a rich and contentious source of electricity—hydropower.

Damming Neighbors

Burma’s military junta in October 2011 took the unprecedented step of cancelling a US$3.6 billion project to construct a hydroelectric dam in Myitsone, near the country’s northern border with China. The dam would have drawn power from the legendary Irawaddy River. The dam was a joint project between the Burmese and Chinese governments. The Burmese government cited the project would destroy the homes and livelihoods of thousands of local residents. The cancellation enraged the Chinese leadership. The Myitsone dam, however, was not the first of China’s hydropower projects to upset China’s neighbors. Unfortunately for the South Asian neighborhood, China’s plans to dam upstream sources of Asia’s greatest rivers would not be easily foiled. China’s energy needs are insatiable and growing.

In 2010, electricity generated through hydropower made up 20 percent of China’s power portfolio, or nearly 200 gigawatts. The Three Gorges Dam project alone generated nearly 10 percent of all of China’s hydroelectricity, enough to power more than 20 million American-style homes. The country’s leadership made it public in 2011 that it planned to double its hydropower capacity by 2020.8 Relentless urbanization, industrialization, and consumerism accelerated the country’s search for, and construction of, power generating facilities, conventional and alternative. Hydropower is low-hanging fruit, from an engineering point of view: the rivers are open and accessible, and Chinese engineers have a great deal of construction experience in the sector. China’s plan to dam waters that feed into Southeast Asia has not been lost on the region.

Southern states already blame Chinese hydroelectric dams along the Mekong river for reducing the torrent to a trickle downstream. The Mekong (Méignghé, in Chinese) starts in the great glaciers of the Tibetan plateau and reaches into China’s Yunnan Province, Burma, Laos, Thailand, Cambodia, and Vietnam. More than 60 million people rely on the river for their livelihoods, which is the world’s largest inland fishery, according to the Mekong River Commission.9 Some analysts also blame the dam projects in part on the drought that parched southeast China in the spring of 2010 and 2011—waters that would otherwise flow freely were made into reservoirs to conserve water, not irrigate the land. During droughts in China water levels along the Mekong dropped several meters in Southeast Asia, to their lowest levels in recorded history. The drought killed off fish and plant stocks. The dry spell also crippled hydropower stations in Yunnan province and essentially took offline 90 percent of hydropower stations in next-door Guangxi Zhuang autonomous region. During the period intemperate conditions also debilitated Guangdong’s electrical supply. Guangdong received a substantial portion of its power from the hydro-stations based in Guangxi. Despite setbacks in power generation in Yunan province, Beijing leveled its sights beyond the Mekong River.

The Salween River (NùJing, in Chinese), one of the world’s longest free-flowing rivers in the world, was still undammed as of 2011. The river runs through Burma and Thailand. China wanted to change the state of affairs, placing several hydropower projects along its reaches. Numerous political obstacles—cross-border and internal to Burma and Thailand—saw the hydro-projects repeatedly delayed. However, in the summer of 2010 the Chinese central government approved projects on the river that it had formerly mothballed because of concerns voiced by its neighbors. The move indicated that the Salween’s days of remaining untouched were numbered. China, however, was not content with merely altering wetlands.

At the end of 2010 China began work on the highest hydropower project in the world. Engineering teams dammed the Yarlung Zangbo River in the Tibetan Himalayas to build the first in a series of hydropower dams to meet the energy needs of a developing Tibet. The river flows from the glaciers of the Himalayas into India as the sacred Bhramaputra river. Sinohydro Bureau No. 8 began damming the river on November 8.10 The project was the first of its kind in Tibet. The 7.9 billion yuan ($1.2 billion) investment would provide a total installed capacity of 51 megawatts.

Understandably, Indian officials were disturbed by developments on the Yarlung Zangbo River. Chinese authorities barred Indian inspectors from the construction site, which is located in Gyaca county, 325 kilometers southeast of the Tibetan capital Lhasa.11The project was the first of four, which were located very near the border of a territory long-disputed by the two countries, Arunachal Pradesh. Most Chinese citizens are oblivious to the Indian project, in sharp contrast to the Indian population, which was watching the development with some anxiety. The Chinese projects touched a deep vein of Indian devotion to the Brahmaputra.

China’s designs on some of the most vital rivers in the world have all but convinced downstream neighbors like India, Laos, Vietnam, Thailand, and Burma that China has eschewed its policy of “Peaceful Rise” in favor of one of “Energy—Whatever the Cost.” A pause in the development of its nuclear power program, however, showed the leadership was capable of exercising some humility.

Nuclear Deterrents

The nuclear tragedy that unfolded in Japan at the Fukushima-Daiichi nuclear plant during mid-March 2011 forced China to announce a moratorium on approvals and construction projects for nuclear plants. The call was a major face-losing move for a leadership that trumpeted its nuclear power prowess at every turn. The decision represented a huge and considerable turn-about after plans just announced in its 12th 5-year plan for an aggressive push into nuclear power. Original plans for a handful of new power plants along the east coast mushroomed into the development of more than 50 new plants—nearly half in China’s interior—by the year 2020, with a combined output of 40 gigawatts. However, China’s own dramatic history of earthquakes and the increasing dearth of water resources made placing nuclear power plants in China’s hinterlands foolhardy at best, tragic at its most catastrophic. At the root of China’s accelerated nuclear timetable was its Faustian relationship with coal.

Coal shortages during the Spring Festival of 2008 brought the most heavily populated portions of China to a standstill. China experienced its fiercest snow storms in a hundred years in some places. Price caps of coal stunted deliveries of the fuel to power plants; snow and ice on train tracks froze delivery of what precious coal was available to power plants. Months later, the National Reform and Development Commission (NDRC) accelerated development of nuclear power plants dramatically.

China was going to trump Mother Nature and natural resource economics by building nuclear power plants in China’s interior. The inland geography of the country, however, increased risks beyond the standard mantra accompanying any effort that seemed to outpace reason. The most problematic facilities planned for development in China’s interior included the one in the Ningxia Autonomous region, in central China; and those planned for construction along the Yangtze River, in Chongqing, Sichuan, Hunan, and Hubei provinces.

In April 2009 a director of the National Nuclear Safety Administration, Li Ganjie, listed the top safety concerns about the nation’s new nuclear power development policy as:

• a lack of well-trained, experienced professionals in the field;
• immaturity of China’s own research and development capability and track record in nuclear power;
• a dearth of experience building and installing state-of-the-art nuclear power stations;
• a lack of management expertise;
• a lack of safety supervision experience and manpower;
• the still-birth of environmental regulation of nuclear facilities;
• a lack of experience and facilities for waste management;
• a lack of civil discourse to gain public support of nuclear power plants near the homes of citizens.

However, the very fundamentals of the feasibility of the nuclear sites were also being ignored in a country rife with earthquakes and tremors. For instance, just hours before the 9.0 quake off the coast of Japan that damaged the Fukushima nuclear plant, China’s Yunan province suffered a quake that registered 6.0 on the Richter scale. The Yunan quake injured nearly 350 people. Eighteen thousand homes collapsed and another 30,000 had some damage. Just a few hundred kilometers away from ground zero, three years before, was the tragic Sichuan earthquake, which caused nearly 100,000 casualties.

One of the few lines of defense nuclear power housings have in the event of structural damage is the abundance of water. Water can buy time if radioactive emissions breach protective moderators and casings, and keep temperatures at a level that may otherwise rupture containment vessels, resulting in a spread of nuclear contamination. In the case of the Fukushima facility, operators had been bathing the nuclear cores with thousands of tons of sea water in an effort to work out options for safely shutting down the reactors. The irradiated sea water eventually moved far out to sea.

Plans to place reactors along the Yangtze River in China’s interior assumed the river would always have sufficient levels of water to sustain the cooling of the reactor during normal operation. Designs also assumed the river would have the thousands of tons of water reactors would need in case of an emergency. The 2000s, however, had actually seen decreasing levels of water in the river. In 2009 I peered over the edge of the railing of a public square in Chongqing, in China’s interior, at the juncture of the Yangtze and Jialing Rivers to find a mud flat. Flat bottom boats that typically ply the muddy waters lay beached like helpless whales. China’s energy plans included the development of scores of hydropower projects along main river routes that were already highly stressed due to drought, urbanization, and agricultural practices wasteful of water and pollution. Of course, any intentions nuclear operators had in China to flush distressed nuclear cores with water from rivers would also meet with extreme local opposition downstream. The nuclear accident in Japan also threw a spotlight on the technology China planned to use in its stepped-up plan for nuclear plant construction.

In the aftermath of the 2011 tsunami off Japan’s coast Chinese utility firms were quick to defend the technologies they were employing in their roll-out of the country’s nuclear power program. The Fukushima plant, which was hardest hit during the tsunami, became operational in 1971 with technology that today is more than 40 years old. By the time the Japanese tsunami had destroyed the reactors at the Fukushima plant, China was already deeply invested in the third phase of its nuclear power technology, local proponents claimed. Most of the reactor designs for Chinese power generation were based on the Westinghouse AP1000, considered a proven and cost-effective means of producing power. Each reactor produced 1,250 megawatts, or enough to power more than one million homes at American consumption levels. The first new reactors were set to be completed by 2013; however, the moratorium put actual finish dates in doubt. China’s plan with the AP1000 design—as with most foreign imports of technology—was to adopt and adapt the designs to suit domestic requirements, especially involving the use of uranium from local sources. Uranium, like other minerals, comes with a host of impurities that are specific to the regions in which they are mined. Beijing was not going to allow that constraint to interfere with its aggressive plan for expansion of its nuclear power network.

Westinghouse obliged the Chinese penchant for purchasing technology with the full intent of adapting it to its own commercial uses. The American company formed a joint venture with the State Nuclear Power Technology Corporation and Shanghai Nuclear Engineering Research & Design Institute to design the CAP1400, a variation of the AP1000. China Huaneng Group planned to build the reactor in Shandong province. The CAP1400 would have the capacity to produce 1,400 megawatts of power when switched on in 2017. The Huaneng Group was not the only company intent on implementing new nuclear power technology in China.

The China Guangdong Nuclear Power Company started construction in 2009 and 2010 of two reactors using designs from the French firm Areva. The 1,660 megawatt reactors were based on an approach called European Pressurized Reactor (EPR) technology. EPR physical designs emphasize safety during worst-case scenarios based on meltdown of the radioactive core, making the design highly appealing. However, in 2009 nuclear regulatory bodies in France, Finland, and the United Kingdom stated concerns to Areva, pointing to the lack of independence between operational and emergency electronic control systems. Regulators indicated that if one control system went down it should not take down the other system.12 The Areva design likely came up as a concern in safety review discussions during China’s moratorium on nuclear plant development.

During the moratorium, however, individual companies and even local governments trumpeted their continued progress in establishing nuclear power footprints. For instance, Cui Shaozhang, deputy general manager at Huaneng Nuclear Power Development Co., announced the world’s first high-temperature, gas-cooled reactor would be installed in Rongcheng, Shandong province. The Rongcheng plant would use helium in its cooling system. Theoretically, its reactor cores would be able to withstand temperatures exceeding 1,600 degrees Centigrade for several hundred hours without melting down.13 Helium is an inert gas, not subject to exploding, like hydrogen. Nearly a month after the Japanese nuclear disaster, however, it was plain China’s headlong plunge into a nuclear future was in for some detours.

The central government chose to approve only four of the ten projects it had planned before the Fukushima incident. The nuclear stakes, it seemed, were just too high for the country to gamble. The leadership’s aim to modernize its society and to install an engine of high economic growth was laudable. However, even the CCP had to admit it could not command the earthquakes to still and the waters to part. Local residents in Pengze, Anhui province also realized the limitations of the central government’s omniscience when they began protesting the construction of a nuclear power plant in their backyard. Anhui province is about a two-hour drive west of Shanghai. Townsfolk, former government officials, and scientists banded together in late 2011 to protest the location of the plant.

He Zuoxiu, a prominent retired physicist who helped develop China’s nuclear program in the 1960s, told the Financial Times, “China has to stop its ‘Great Leap Forward’ approach to nuclear power.” The Great Leap Forward was Mao Zedong’s attempt to rapidly catch up with Western industry in the 1950s. The effort was a complete disaster. “China has to have nuclear energy—we need the power—but we need to slow down and take a more measured approach, and really learn the lessons of Fukushima.”14 Another ambitious and problematic national program involved what China and many other societies around the world consider an energy- and environmental-silver bullet: the electric vehicle.

Welcome to Electric Avenue

The driver threw the stick shift into high gear and sent the 31-seat electric bus careening full-tilt down the length of the factory parking lot of the new Zonda Bus factory. It was a Saturday morning, late summer 2010. The bus disgorged the group I was traveling with at the far end of the factory. Zonda Bus is one of China’s largest bus companies, with export sales to the Middle East and Europe. The company was also on the leading edge of battery technology research. The company’s focus was on making its buses go faster and further than most battery-driven vehicles in their class in China. The operation I had visited was located in Yancheng, Jiangsu province, about two-hour drive north of Shanghai. Several factory managers and local government officials led the group of delegates with whom I travelled through a series of rooms. A single working machine that had some vital part to play in the manufacture and assembly of huge battery packs for the buses dominated each room. The company spokesperson announced the batteries in their buses could charge and discharge more than 1,000 times, and operate for more than 500,000 kilometers. The battery-equipped buses could approach speeds of 110km/hr. The 50 buses the company had just provided Tianjin for the Davos meeting in September 2010 could run for 500 kilometers off a single charge—300 kilometers with the air conditioner running all day.

The Chinese government made it plain to the world in 2008 it was intent on introducing electric vehicle (EV) technology onto the country’s roads. In October 2010 the Minister of Science and Technology, Wan Gang, announced that China would be producing one million electric vehicles for Chinese roads by the year 2020. The number was still a small portion of the projected 46 million to 71 million cars expected to be sold that year, but still the largest EV market in the world. According to the Energy-Saving and New Energy Vehicle Development Plan (2011–2020), by the year 2015 China would have 1.5 million new energy vehicles on the road. By the year of 2020, the number would be as high as 5 million. To realize this goal, the government planned to invest RMB 100 billion between 2011 and 2020 to get the industry going. During the summer of 2010 the central government also announced it would stimulate the consumer market for EV through a subsidy of 60,000 yuan (nearly US$10,000) for each EV buyer. Mass manufacture of electric vehicles in China that met international standards for quality, safety, and reliability would not be available until 2015 at the earliest. Local governments were also setting the pace for the consumer market by mandating fleets of public transportation run on electricity.

For instance, at the end of 2008 Beijing rolled out 1,000 new energy buses onto the city’s roadways. In the spring of 2011, the city introduced 50 Foton Midi electric taxis to the streets of Yanqing, a suburb of Beijing. In 30 minutes the car could be charged to 80 percent capacity. The plan for the first charging station in Yanqing included 25 charging piles. Future phases of the plan included 36,000 regular charging piles, 100 fast charging piles, one battery replacing station, two battery recycling stations, and ten service stations installed by 2015. The local Beijing government also intended to give each charging station subsidies of no more than 30 percent of its initial investment. The Beijing city government’s long-term plans involved putting 5,000 new energy vehicles into operation, including 500 electric taxis, by 2012. Local government support of the nascent manufacturing industry stimulated investors throughout the country.

A visit to the Jiangsu Aoxin New Energy Automobile Company, Ltd., also in Yancheng, revealed a near-empty hangar in which small teams of workers languidly assembled small, compact electric vehicles. The simple suspension chassis and skin-thin bodies of the seven models on display underscored just how much of a learning curve Chinese industry had to go to match the robustness and sophistication of combustion-engine vehicles. The lady bug–like AV2 and AV3 could seat two uncomfortably in a space that would see most Westerner’s knees pressed firmly against the dashboard. The load of the “Dynamic Free Dream” sanitation truck would need to be dumped after a single swing around any Chinese high-rise apartment complex. Meanwhile, the AXG mini bus with its maximum speed of 40 km/hr and a range of only 100 kilometers, would be easily run off the road by a swarm of China’s ubiquitous electric scooters. Clearly, the factory was only geared to supply made-to-order quantities of vehicles.

Nevertheless, Chinese companies by 2010 were racing ahead in the EV industry in the same way they were in other alternative energy fields. The stage at which the EV industry was in 2010 was very much like the Chinese automotive industry in 2002, when I had visited the newly opened Chery automobile factory in Wuhu, Anhui province. Chery is the maker of one of the most popular cars on Chinese roadways, the QQ. In 2010, though, Chery opened a US$500 million R&D center in Wuhu for research and development of its own EV technologies, mostly developing control systems. Other car makers in China as well were plunging ahead in pursuit of profits in the new age industry.

Concerns abound, however, that the EV market in China still suffers from quality issues. Western analysts believe that more sophisticated battery technology, control systems, and materials technology are a greater leap than Chinese manufacturers are able to make on their own. The slack time between the scrum of car makers entering the EV market and consolidation of the market is a prime opportunity for American, German, and Japanese technology companies, with greater experience in the field, to make their presence felt in China. As is the case with wind and solar power, the foreign companies may find China a more welcoming and lucrative environment in which to do business than their home countries offer. As Marco Gerrits, a former Daimler auto engineer and a consultant with Boston Consulting Group in Beijing told Fortune Magazine, the foreign companies could capture up to half of the EV industry in China.15 If the Zongda bus trip was any indication, though, the window of opportunity for foreign car makers and other alternative energy technologists was closing fast.

A Battery of New Energy Technologies

China’s central planning approach to implementing alternative energy sources has consistently led to over-capacity issues across the sector. The country has a simplistic formula of acquiring technology from abroad, adapting the technology for domestic use, and then exporting revised products. Aggressive production schedules have exacerbated over-capacity realities by introducing problems with quality and maintenance, especially in the wind power industry. Foreign competitors in the wind- and solar-power industries have filed complaints against the Chinese government for supporting unfair trade practices. If not for the Fukushima-Daiichi nuclear accident in Japan, Beijing would have continued constructing dozens of nuclear power plants at a rapid pace without proper quality and safety controls. Nevertheless, within a year of the Japanese disaster Chinese residents were protesting the construction of nuclear plants in their hometowns. They complained authorities had seeded projects without the consent of locals, and without concern for their safety. China’s hydropower program has also strained relations with its neighbors. Hydroelectric dams are a keystone of the country’s plans for energy security. Bordering states have accused the dams of drying rivers that have sustained local societies for millennia, and of contributing to climate change in the region. Electric vehicles have escaped the harsh criticism wind energy, solar power, nuclear plants, and hydroelectric dams have because the industry is still nascent and fraught with technological challenges.

In 2007 China’s central planners were on a national drive to develop battery storage technology for domestic EV makers. State-owned enterprises would also license the technology to companies around the world. Breakthrough energy storage technology would help increase the range electric vehicles could travel. Storage technology would also manage the variances in electricity production from conventional sources, and from the more erratic solar- and wind-power alternatives. During peak electricity production times, when customers were not inclined to consume much energy, storage facilities would place the excess power in inventory. During peak consumption periods, the power grid would be able to tap into the inventories to reduce the cost of electricity to customers.

In 2010 China began its efforts to develop a countrywide “smart” grid. Smart grids monitor electricity production and consumption at the household level to increase efficiency in distribution of electricity. The century-old technology currently involved in moving electricity from production at the power generator to consumption in residential and commercial property is very much like using a fire hose that is always gushing water. Whether a user needs a cupful, a bucketful, or no electricity at all, a fountain of energy is always available on traditional grids. The most efficient means of electricity generation is one in which consumers need power produced “just in time,” to borrow a term from supply chain management. In lean manufacturing, communications technologies enable suppliers to know when to produce a certain amount of a product to meet customer requirements at the moment. Smart grid technology seeks to attain the same awareness, production, and distribution of energy. The hope is also that smart grids would help reduce air pollution through a more measured approach to electricity production that burns dirty coal.

The pollution fossil fuels produce, however, is not the only energy-related environmental hazard with which Beijing has to contend. The manufacture of alternative energy technologies is also creating dangers to health. Much of the pollution created by the manufacture of wind- and solar-power and electric vehicle technologies is toxic to the degree it is making entire communities in China unlivable, poisoning thousands and killing hundreds. Aggressive production quotas and unrealistic delivery schedules have exacerbated the national crisis. Cleantech as China produces it, it seems, is not as clean as its name advertises.

Notes

1. “China Surpassed US on Wind Power Capacity,” Shanghai Business Review, January 17, 2011.

2. “China Showing Signs of Solar Cell Oversupply,” Interfax, September 29, 2010. Available online at www.interfax.cn/news/15299.

3. Keith Bradsher, “On Clean Energy, China Skirts the Rules,” New York Times, September 8, 2010. Available online at www.nytimes.com/2010/09/09/business/global/09trade.html?_r=2&pagewanted=all.

4. Ibid.

5. “The Sun Also Rises,” China Economic Review, July 2010. Available online at www.chinaeconomicreview.com/industry-focus/in-the-magazine/article/2010–07–01/The_sun_also_rises.html.

6. “Solar Energy, New Times Online.” Available online at www.nytimes.com/info/solar-energy/?inline=nyt-classifier.

7. Recharge News, December 28, 2010. Available online at www.rechargenews.com/energy/solar/article239439.ece?WT.mc_id=rechargenews_rss.

8. “China Seen Quickening Hydropower Approvals,” China Daily, July 28, 2010.

9. Ai Yang, “Cambodia: China Not Behind Mekong Floods,” China Daily, November 19, 2010.

10. “Tibet’s Hydropower Station Won’t Affect Water Flows,” Xinhua, November 18, 2010.

11. “‘Tibet Dam is First in Series,” Hindustan Times, November 19, 2011.

12. “European Pressurized Reactor,” Wikipedia. Available online at http://en.wikipedia.org/wiki/European_Pressurized_Reactor.

13. Dinakar Sethuraman and Rakteem Katakey, “Nuclear Plant to be Built in Shandong,” March 24, 2011. Available online at http://europe.chinadaily.com.cn/business/2011–03/24/content_12221281.htm.

14. Leslie Hook, “China Nuclear Protest Builds Steam,” The Financial Times, February 28, 2012.

15. Brian Dumaine, “China Charges into Electric Cars,” October 19, 2010.