Final ProjectYi ChenMay 10, 2018

Learning from the bottom up

For a long time China has been characterized by its failure to be environmentally sustainable. Smoggy photos of its cities have continually graced global news, combined with reports of environmental degradation, acid rain, and pollution (McKibbin). This is not without due reason; China has repeatedly held its title as the world’s largest emitter of carbon dioxide and is heavily dependent on coal, emitting about 10,357 million metric tons per year (Schultz). However, due to general awareness of such environmental determinants and China’s resource scarcity, the nation is working toward reversing this trend by investing heavily in renewable energy technologies. China invested nearly US$90 billion in renewable energy in 2016, overtaking the US as the largest consumer of renewables in power (532 Urban). Of these renewable energy investments, solar energy is China’s third largest investment after hydroelectric and wind, and is largely in the form of Solar Photovoltaics (PV). While successful in converting solar energy for a wide range of uses, Solar PV is inaccessible to the majority of the population due to high prices and lack of technological knowledge. Nevertheless, the central Chinese government has invested heavily in this industry, relying on its export market. At the same time, the Chinese people have developed “homegrown” technology Solar Water Heaters, which have been much more successfully implemented across the nation, particularly in rural areas. SWH have thrived on its cost-effective and efficient technology, its installation rate rocketing in areas such as Dezhou where it is promoted by the local government and brings in economic opportunities. In order for solar energy to become a more sustainable and utilized energy source, China’s Solar PV industry must make its technology socioeconomically accessible on a local level, while China’s central government must also facilitate the growth bottom-up technologies such as Solar Water Heaters to reach its full potential as global source of energy.

Solar PV was first discovered by Edmond Becquerel in 1839 and involves a semiconductor converting light directly into electric energy. In China and other areas of the world where Solar PV is used, these photovoltaic cells are made from layers of semiconducting material usually silicon and make up larger units that comprise what we know today as solar panels. It has developed and advanced over many decades and by 2013 more than 97% of global solar generation capacity was PV (Schmalensee). Solar PV generates electricity that can be used to heat water, for air conditioning, and to power homes for its electrical needs. Solar PV cells are also becoming more efficient; electricity generated by photovoltaic systems is 15 times less carbon-intensive than electricity generated by a natural gas plant (450 gCO2e/kWh), and at least 30 times less carbon-intensive than electricity generated by a coal plant (+1,000 gCO2e/kWh) (“How Sustainable is PV Solar Power?). Solar PV is the most common form of solar energy utilization and if widely adopted is far less carbon-intensive than fossil fuels.

China has played a large role in the push for solar PV and accounts for 67% of global PV module production (Urban 535). Ever since the world market for Solar PV grew substantially since the early 200s, it has been dominated by mainly industrialized countries such as Germany, Japan, Spain and the United States. However, due to China’s development of purified silicon technology, the market prices and underlying costs of PV systems have fallen dramatically and China has emerged as the largest investor in PV (Urban 535). The Chinese central government is committed to PV production, made evident by it’s 12th Five-Year Plan for Solar Power generation setting initiatives to reduce the price of solar power and continue to increase the production of PV modules (Du, 2012). The central government aims to reach these goals on a local level, giving preferential treatment to solar PV firms compared with other industries, including free or low-cost loans, tax rebates, cheap land and infrastructure and personnel support (Urban 83). The Chinese government is committed to the development of its PV market, the nation emerging as a global leader in solar PV production.

Despite the active role of the Chinese government, one of the major challenges facing China’s solar PV industry is its asymmetrical supply-demand. China exports more than 90 percent of solar PV technology to other parts of the world, but its domestic usage and demand remains low. China currently takes up only 7 percent of the global total installed capacity (Chen 99). This is mainly because, despite slight decreases in price, solar PV remains financially inaccessible to individual households. Furthermore, solar PV requires access to substantial private roof space and technical knowledge about integration with the grid. Connecting with the grid requires more than just new construction, but also training grid operators to manage the “intermittency of the renewable power supply” and distributing the electrical system (The Power of Renewables Opportunities and Challenges for China and the United States, 118). Due to these challenges, there are also bureaucratic obstacles from the lack of public knowledge that individual users face in order install solar PV in China. One example is the story of Ni Nuan, articulated in “Prospects, Politics, and Practices of Solar Energy Innovation in China” published in the Journal of Environment & Development where it took her three months to get the approval of the local committee to approve solar PV modules that only took two weeks to install (Urban 85). Solar PV remains inaccessible to the Chinese public because of high installation complexity and costs. As a result, although installed capacity and usage of solar PV is steadily increasing (see graph), the global solar capacity of PV is still not enough to generate 1% of the global electricity demand (“How Sustainable is PV Solar Power?). Solar PV’s low domestic usage in a nation that prioritizes its production is evidence that it is socioeconomically inaccessible to the public, which has detrimental effects not only on the survival of PV’s economic market but also on its potential as a sustainable and widely implemented energy source.

Installed Solar PV capacity1

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While solar PVs dominate China’s solar energy discourse, the “undiscussed protagonist” of the nation’s low carbon transition is its solar thermal developments in Solar Water Heating (SWH) (Annini). China is among the world’s leading countries using solar thermal power: it is estimated that the national installation rate of SWHs is above 10 percent, with over 75 million solar water heating systems being used in China. They are found in every province, particularly in rural areas (Urban 87). The installed capacity reaching 134 GW-thermal of heating in 2009, ranking China the first in the world in solar thermal capacity (Li).

While there are many reasons why SWH has such a large domestic market, its widespread use is largely attributed to its cost-effective technological design. The majority of SWH in China utilize the evacuated vacuum tube designed at the Beijing Solar Energy Research Institute at Tsinghua University. Solar Water Heaters refers to a system composed of this evacuated tube collector, a storage tank and a fluid system to move to heat and move water to its point of use (see figure below). Although this pressurized solar water heater system generates less power than solar PV, the tubes from isolation chambers retain significant heat. As a result, this zero-emission technology can be operated at a fraction (30%) of the cost of standard electric water heaters (Calderon). Currently SWHs cost a few thousand RMB or a few hundred USD, depending on quality and size (Urban 539). Although the price cannot be compared directly to Solar PV due to their slightly different uses, the initial investment and maintenance costs of SWH is low enough that about one in every 10 families in China owns a solar water heater (Calderon). It is estimated that according to the current domestic electricity rate, the installation

1 Source: “How Sustainable Is PV Solar Power?” LOW-TECH MAGAZINE, www.lowtechmagazine.com/2015/04/how-sustainable-is-pv-solar-power.html.

of SWHs can save a three-person household on average 304 yuan a year, and that a 1m^2 SWH collector area will reduce carbon dioxide emissions by 199.6 g (Li 5911) Furthermore, while Solar PV requires integration with the electrical grid, SWH require lower tech due to its stand-alone system. SWH’s cost-effective technological design is more accessible to individual and public implementation in China.

Sources: Haining Huanxi Energy Science Technology2 and Insteading3

The low cost of SWH alone cannot explain its successful deployment. SWH were developed domestically in China, as opposed to Solar PV which are based on international designs and technology, and as a result, SWHs are more culturally accepted. Although SWHs in particular were designed in the 1970s, according to an interview conducted by Frauke Urban, “SWHs fit with the traditional practices of water heating in China” where dark buckets were filled with water and placed on roofs until they were heated by the sun to be used for baths or showers (Urban 92). Furthermore, solar PV depends to a larger extent on international technology transfer, utilizing knowledge, experience, staff and networks in a globalized market. This is the opposite case for SWH; Chinese firms are estimated to hold about 95% of the patents for core technologies of SWH worldwide (Urban 537). As a result, there are higher levels of public knowledge and subsequent acceptance of SWH compared to Solar PV, enabling easier integration. Whereas it might make several months for building residents to approve the

2http://huan-xi.en.alibaba.com/product/1986301582-209708874/Compact_Pressurized_Heat_Pipe_Solar_Water_Heater_Used_for_Both_Flat_Roof_Sloped_Roof.html3 https://insteading.com/blog/solar-hot-water-revolution/

integration of Solar PV with the electrical grid onto a given roof, installation of SWH is more widely understood therefore requiring fewer bureaucratic hurdles for individual installation.

This grassroots development and implementation of Solar Water Heaters is also the result of institutional support, mainly from local governments. The central Chinese government has played a role through initiatives in developing the evacuated tube design in the 1980s, however, such initiatives and targets for SWH as laid out by China’s Five Year Plans are being phased out in the national policy documents (Urban 539). Whereas Solar PV has central support on various levels, there are few fiscal or taxation incentives and policies that support the growth of the SWH industry. This has means that the growth of the SWH industry in China is propelled by provincial municipal governments. There are two key policy incentives that have been introduced in provinces such as Hainan, Fujian, Jiangsu, Hebei, Henan, Shandong and Ningzia and cities like Shenzhen, Jinan, Zibo, Qingdao, Xingtai, Qinhuangdao, Zhengzhou Sanmenxia, Huhhot, Nanjing and Wuhan. The first is a mandatory requirement since 2007 which requires installing solar water heaters as apart of every new building (see image below). The second is the 2009 “household appliances going to the countryside” subsidy for SWH, equivalent to a reduction 13% of the wholesale price to increase accessibility and use for rural communities (Li 5919). Further initiatives at the local level also include free or low-cost loans, tax rebates, research grants, and cheap land (Urban 539). SWH are not a priority for China’s central government, but the policies, subsidies and incentives from municipal or provincial governments have driven its implementation.

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This has meant that while SWH have become the ‘standard’ way of heating water in rural area in China, it is far less common in urban areas. For example, the SWH installation rate rose to 20 percent in the rural Shandong province, but only 4 percent in the urban Guangdong and Hebei provinces (Li). Urban attributes this to the fact that there is very little available roof space in urban areas, whereas SWH are more prevalent in rural areas where people own their own homes (539). The uneven adoption of SWH can also be contributed in part to the

decentralized structure of Chinese national government. Chinese policy is characterized by ‘outcome-based goals’ set at the national level, evaluating local governments’ performance according to economic output. This approach, augmented by subsidies, has been successful in

4 A new neighborhood in Tieshan, where all the buildings are equipped with solar water heaters, typical for the province of Hubei (Vmenkov)

driving substantial new Chinese manufacturing capacity (Li 5913). As a result, SWHs are often popularized in areas where its manufacturing is viewed by the local government as ringing in more economic benefits, in terms of local revenue, investments and job creation from manufacturing. This can be seen clearly in Dezhou, where SWH manufacturers stood out as one of the fastest growing enterprises, which is supported by the local government by credit assurance and reducing red tape to create a stable environment for both SWH manufacturers and investors. As a result, three out of every ten jobs in Dezhou is solar related now. This has created a public awareness of green energy and a 75.4 percent SWH installation rate for urban households in the city of Dezhou (Li 5916). The commitment to solar energy in Dezhou is apparent beyond SWH, the city also adopting solar street lights and centralized solar bath houses built by the local government. China’s decentralized and output-based government structure means that communities are more likely to adopt SWH if it provides economic opportunities. The downside of such an approach means that regions without SWH industries lack incentives to adopt further green innovations, resulting in the uneven distribution of SWH usage we see in China today.

Source: Solar water heaters in the rural village of Wuzhen

Solar energy has become a large part of China’s transition away from fossil fuels and investment in renewable energies. The central government has placed solar PV on the top of its priorities in terms on solar energy. As a result China has emerged as the largest investor in PV, accounting for 67% of global PV module production (Urban 535). However, the high costs and technology required for solar PV has rendered it inaccessible to the majority of the Chinese population, leading to overcapacity in its economic market and low solar PV energy capacity for the nation. While the central government has been pushing for Polar PV, local actors across the nation have also been developing their own technologies to harvest solar energy, namely for heating water. These Solar Water Heaters are relatively inexpensive and require little or indigenously-based technology knowledge. As a result, SWh have a national installation rate above 10 percent, and are particularly successful in rural areas where local governments and

actors have promoted the use of the technology with subsidies, provincial and municipal policies, and credit insurance. Both Solar PV and SWH have integral roles to play and room for improvement in China’s continuing development of solar energy. In order for Solar PV to be readily adopted by the Chinese market, its technologies has to prioritize accessibility for individuals. It can take cues from SWH be developing mechanisms that are culturally relevant, do not require integration with the grid, and, the biggest hurdle, are cost effective. At the same time, the central government should diversify its roles, not just as an administrator of solar PV manufacturing, but also as a regulator of frameworks for sectors to function properly in the market and promote decentralized bottom-up technologies such as SWH (Urban). There is a large global market to be explored for SWH, and top-down support would mean more people across the globe could utilize this green technology. Furthermore, investment from the central government for SWH would allow for more research and development into expanding the utilization of solar thermal energy beyond heating water for broader and greater capacities. Both Solar PV and SWH can utilize central and local government initiatives to make its solar technology more accessible to the people of China and global markets, respectively.

While this paper only analyzes solar energy in China, it points to the potential of cheaper, localized, and bottom-up approaches. For example, although China’s central government supports innovations such as electric cars for green transportation and genetically modified crops for sustainable agriculture, homegrown approaches to transportation and agriculture in local communities include electric two-wheelers and organic agriculture systems (Urban 540). The ways in which citizen-led alternatives can harness low-carbon technology for individual implementation, challenge the centrally supported initiatives of the Chinese government and other strong-handed countries such as the United States to adopt decentralized, economic, and bottom-up approaches to mitigate energy transitions in China and beyond.

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