Herd mentality threatens China’s renewable energy sector

Herd mentality and behavior, propelled by deficiencies in market information and regulation, may be derailing China’s newly launched renewable energy sector.

According to Bai Yi, vice-president of China’s National Petroleum & Chemical Planning Institute,, the bio-ethanol sector saw an irrational and unjustified swell in attention from investors following the introduction of subsidies.
Besides, the government’s move to make ethanol a compulsory constituent in the traditional petrol and diesel in five provinces had also sent investors clamoring to have their new projects approved, she said.

China’s renewable energy sector is also plagued by other woes. Ren Dongming , deputy director of the Centre for Renewable Energy Development, said in a bio forum that the competition for resources, technology and opportunities have fuelled mounting risks and declining turnovers.

He also noted the low or non-existent entry barriers as one of the causes for the energy sector’s growth stunt.

Various threats encircling mainland’s biomass power generation sector also include volatile supply and steep prices of fuel sources, exorbitant costs of imported equipment and unproductive domestic machinery.

For one, the average price of crops waste used in power production has increased by threefold to RMB 300 a tonne early last year.

The lack of raw materials priced competitively for sustaining growth vigor is also a cause for concern. Mass plantation of non-food materials such as cassava has not begun and local technological development has yet to reach the stage of commercialization.

China Knowledge