What if China stops buying Aussie coal? - Aussie Stock Forums

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  1. #1

    Default What if China stops buying Aussie coal?

    Found this quite interesting.
    China used stimulus money from other countries and supplied cheap solar panels, to those countries.
    Now the market is drying up (loss if FIT's) They have lots of spare solar panels.
    If they install them in China they will reduce their dependence on cheap Aussie coal!


    Giles Parkinson

    Hidden away in a government gazette this week was an announcement that China would introduce a national feed-in tariff for solar energy. It took a day or two for the significance to dawn on the market, but it is now being viewed by analysts in an industry full of landmark developments as possibly the biggest of them all.

    China has, in recent years, come to dominate the global market for solar panels, but it has so far installed little in its country – just 0.8 gigawatts in a grid that has grown to nearly 1,000GW. It has preferred to use the world market – which has grown to more than 40GW of installed solar capacity – as its test tube, and to refine its products.

    And, it has also been conscious of the problems of its wind industry, which grew so quickly that many turbines were either of sub-standard quality or could not be connected to the grid, and it has learned carefully from those failures. Now, it seems, it is prepared to hit the “Go” button.

    The cost of solar has dropped so rapidly in the past two years that solar is now thought to be already competitive with wind in many regions in China, some of which have excellent solar radiation, particularly in the western desert regions. These regions can produce solar energy at double the efficiency of other regions. China also needs a smaller tariff than other countries because of lower labour costs and supply chain advantages (they make the stuff there).

    And it is also close to parity with coal-fired power for local industrial users who, unlike other countries, pay a significantly higher tariff than individual consumers. According to one report, LDK Solar, China’s most integrated solar energy company, expects the levelised cost of energy of its solar modules to fall below average grid levels in China to around $US0.07/kwh in 2012. It’s a massive irony, and an amazing opportunity for the solar industry that the (coal-fired) electricity used by companies such as LDK and Jinko Solar to make their modules is already more expensive than the energy produced from those modules.

    Analysts believe the surge in domestic demand in China also means that costs will continue to fall. Module prices are coming down rapidly – falling by 20 per cent for each doubling in demand, and GCL, a Hong Kong listed Chinese company that has suddenly emerged as the world’s biggest supplier of poly-silicon, and is expected to deliver it at a price of $40 a kilo in 2012, around half of the price in 2010 and one tenth of the price in 2008.

    Buckley believes that the economics of solar projects in China will become irresistible in the next three to five years. Analysts estimate that at the current tariff, project developers can bank on an internal rate of return of up to 10 per cent over 15-25 years. With long-term power purchase agreements, that’s enough to attract 80 per cent debt funding for projects. “And once you get to grid parity, solar technology development does not just stop,” Buckley said. “Solar plants with an operating margin of 80 per cent. Parity dramatically changes the dynamics of energy pricing and it will drive average energy prices down over time. It potentially pushes coal from being the lowest cost baseload supplier of energy to being the marginal supply because of its high raw material costs.”

    Having started small, the scale of some of the projects being contemplated in China is enormous. The US firm First Solar, which makes thin-film solar panels rather than silicon-based panels, is planning one project of 2GW in inner Mongolia. It will likely be the size of Manhattan.

    Still, even at a rate of 15GW a year, solar would remain a fraction of the 100GW that China plans to add each year to its national grid to meet soaring demand. But, if solar’s costs continue to fall, energy efficiency measures take hold, and economic growth slows, then solar – along with hydro, offshore wind and onshore wind – could be accounting for nearly all of the new-build energy plants by the end of the decade. The most obvious victim is coal. That, in turn, could have significant implications for major coal exporters such as Australia.


  2. #2

    Default Re: What if China stops buying Aussie coal?

    They may find it hard to melt oar and alumina with solar panels.
    They are also well into going ahead with about 30(I think) nuclear power stations.
    They recently bid on BMN after Japans disaster. No slowing down there it seems.
    I just had vision of Mao. He said "One house 20 panel policy. People must pay." Wow the visionary. He looked hot.
    Last edited by notting; 8th-August-2011 at 03:14 PM.

  3. #3

    Default Re: What if China stops buying Aussie coal?

    China is also building heaps of Coal fired power stations. I can't seem them slowing down yet...and it will make out attempts for a Carbon Tax to reduce CO2 a total waste of time.

  4. #4

    Default Re: What if China stops buying Aussie coal?

    What if China stops buying Aussie coal?
    Highly unlikely but if they did then it would mean reduced demand.

  5. #5

    Default Re: What if China stops buying Aussie coal?

    The price of solar panels from China has certainly come down a lot that is true.

    But something to bear in mind is that China's coal mining is very much a case of "strength through exhaustion". They have trule massive extraction rates based on a limited resource. By most estimates, there's not a lot of growth in coal left in China before they reach a production peak driven by geological limits (same as happened in the UK 1913). Hence spending so heavily on hydro, nuclear, wind and anything else that works whilst also ramping up coal and gas imports as well.

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