Helping Clean-Energy Companies Enter the Emerging Markets of China and India
Demand for energy is growing at a rapid pace in China and India. The Department of Commerce, using a variety of strategies, is helping U.S. firms to successfully compete in both countries.
by Ryan Mulholland
During the past several years, the clean-energy market has expanded rapidly, driven by an increased demand for renewable resources and the need to more efficiently produce and consume energy. In particular, China and India offer numerous opportunities to U.S. firms looking to advance clean-energy development worldwide.
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|Windmills in Jaisalmer, Rajasthan State, India.
(© iStockphoto.com/Roger Van Bulek)
Clean-energy technologies include renewable resources, such as solar, wind, and biofuels; hybrid and cogeneration; and energy-efficiency technologies (see sidebar). They often produce energy using no fuel or less fuel than conventional sources, and unlike fossil fuels, they are not depleted over time. In 2007, according to New Energy Finance, a renewable energy consultancy, more that $100 billion was invested worldwide in those technologies, with billions more expected to be invested during the next several years.
Commerce Department Commitment
The clean-energy sector has become an exciting investment opportunity for firms looking to penetrate new markets, particularly China and India. The Department of Commerce, through its Office of Energy and Environmental Industries, is committed to turning those opportunities into a reality for U.S companies.
The department recently underwrote two comprehensive studies about the clean-energy markets in those two countries, Clean Energy: An Exporter’s Guide to China and Clean Energy: An Exporter’s Guide to India. The reports offer U.S. exporters information regarding the potential for clean-energy development, as well as a detailed look at the regulatory policies and trade barriers.
Chinese Demand Outstrips Supply
The opportunities for U.S. firms entering the Chinese clean-energy market have grown tremendously during the past several years. The reasons include China’s developing market economy, increasing concerns over energy security, and mounting environmental pressures. In 2007, more than $12 billion was invested in clean energy throughout China, including investments in clean-coal technologies, wind and solar power, biomass, and energy-efficiency improvements.
Since the start of its open-door and reform policies in 1978, China has experienced consistent economic growth, averaging 9.5 percent annually. For most of that time, energy demand grew 5 percent per year. But in the past seven years, China has seen a surge in energy-intensive heavy industries. According to China’s National Bureau of Statistics, the country’s current energy demand growth has increased to 9.3 percent per year, with similar annual increases expected to 2020.
Although China’s energy resources are substantial, the intense demand for energy has outstripped the country’s ability to produce it. The government has responded with new policies that mandate renewable energy and energy-efficiency investments. U.S. firms with expertise in those areas will find tremendous market opportunities. In fact, China is predicted to surpass the United States as the largest energy consumer soon after 2010.
Indian Market Growing 25 Percent
Opportunities for U.S. firms in India are numerous, thanks to growing energy demand and the government’s warm response to clean-energy development. The market for clean-energy technologies is estimated at more than $600 million, and it is growing at an annual rate of 25 percent.
India is rich in potential energy resources, which provide opportunities across a wide spectrum of renewable technologies. In particular, wind energy is expected to increase substantially in the coming decades, from more than 7,000 megawatts of installed power in 2007 to 45,000 megawatts by 2030. According to India’s integrated energy policy, the power sector will need to add 150,000 megawatts of additional power by 2030 to sustain the 8 percent gross domestic product growth rate that the country has experienced recently. Ten percent of this new power is expected to come from renewable sources.
September Trade Mission
The Department of Commerce’s strategy to help U.S. industry enter the Chinese and Indian markets also includes a series of clean-energy and environment trade missions. The third mission is scheduled for September 1–12, 2008, and will be led by David Bohigian, assistant secretary of commerce for market access and compliance.
The trade mission will take U.S. companies to Beijing, Jinan, and Shanghai in China and to New Delhi, Hyderabad, and Mumbai in India. Participants will meet with potential partners, agents, distributors, licensees, and retailers who have been prescreened by the U.S. and Foreign Commercial Service. Participants will also engage in high-level discussions with national and subnational government officials and will have the opportunity to attend networking events, country briefings, and site visits.
The previous two clean-energy and environment trade missions were extremely successful in helping U.S. companies make important contacts and gain market access. AzurePower, for example, signed an agreement to establish a 2-megawatt, grid-connected solar plant in India after it participated in the second trade mission in January 2008. (See February 2008 issue of International Trade Update.) Other participating companies have met with similar successes, including Eaton Industrial Products and Capstone Turbines, which have found captive markets for their products.
“As Chinese and Indian economies expand, the need for clean, sustainable energy grows,” noted Bohigian. “U.S. businesses produce the world’s most innovative clean-energy technology, which can help ensure a reliable and secure source of renewable energy in these countries, as well as create jobs and economic opportunity here at home.”
Ryan Mulholland is an international trade specialist with the International Trade Administration’s Office of Energy and Environmental Industries.
A Clean-Energy Lexicon
Biomass: plant and plant-derived materials that can be used directly for energy production or processed into fuels.
Cogeneration: a power plant’s collection of heat that would otherwise be lost and use of it for thermal applications.
Hybrid: renewable-based power system that uses a combination of wind turbines, photovoltaic panels, and small hydropower generators to generate electricity.
Solar: power that is derived from the sun through technologies such as photovoltaic systems that convert sunlight into electricity or solar systems that collect and store heat for air- and water-heating applications.
Waste-to-energy: technology that produces energy from waste, such as energy from municipal waste systems, farms, or other commercial and industrial operations.
Wind: technology that converts energy in the wind into useful power, such as from wind turbines, which convert wind energy into electricity.
—adapted from Clean Energy: An Exporter’s Guide to India