sunpower.jpgChina plans to build the world's largest solar power station in the remote northwestern province of Gansu, according to a report from Xinhua, China's state news agency.

Construction of the 100MW facility will take five years and cost 6bn
yuan. The plant will be located in Dunhuang, just 300km from the
Mongolian border, which was chosen for its high insolation levels —
more than 3,300 hours a year.

The project is much bigger than any solar power stations currently
operational, which rarely pass 5MW in capacity. It is thus likely to
throw up considerable challenges, not least in obtaining the silicon
needed to build the solar panels.

There is currently a world shortage of solar-grade silicon that will not ease until 2008 — see this Red Herring story.

But the broader problem facing solar power is that it has still to
enter the mainstream. While solar power remains confined to a handful
of government-backed “showcase” projects, it is not going to achieve
the economies of scale, levels of investment and technology
improvements that are necessary to drive down costs — and which have
so benefited wind power, for example.

While the Dunhuang project is very welcome, it is clear that China
still views solar power as a “strategic” technology and so any
commercial justification for Dunhuang takes second place to its
political importance.

Indeed, the Dunhuang story was dutifully reported by the world's
media as a sign that China's environmental records are not all negative
— which presumably is exactly what Beijing wanted.

The UK's Independent, for instance, published a story
on how China plans to use renewable energy to meet its pledge to make
the 2008 Olympic Games a “green Olympics” and provide a platform for
China to show itself as a modern, progressive country. For example,
wind power will generate 20% of the electricity for the Olympic venues.
However, the Independent also put these developments into context:

It would be naive to think that China is planning to become a green
superpower. Coal will continue to provide the lion's share of its
energy needs. But crucially, renewable energy will form a more
important part of the overall jigsaw of energy provision and that can
only be good news for China, and the planet.”

In the west, solar power is starting to find a more commercial
footing and shake off its traditional heavy dependence on government
backing and showcase projects.

In Spain, a country that EngagingChina knows very
well, one company is enticing private investors to invest in
small-scale solar power installations with the promise of annual
returns of 11.6%.The company, OPDE, plans to have 15 solar power plants running this year, producing a total of 40MW.

OPDE's marketing literature has more in common with that of
real-estate promoter and it works –its existing projects are closed to
new investors. The company argues that the juicy returns are guaranteed
because of Spain's long-standing policy of paying a generous premium
for renewable energy.

If China really wants to stake its the future on renewable energy, perhaps it should pay a visit to Spain.

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