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China Brings Renewable Energy Growth Back

Renewable energy certainly has been in the headlines lately, thanks to Apple (AAPL).

The tech giant recently signed an $850-million deal to buy power from a new California solar farm owned by First Solar (FSLR) for the next 25 years.

This is just one example of a bigger trend, as the market starts to turn back to renewable energy. For the first time in three years, the industry saw an increase in investing.

According to Bloomberg New Energy Finance, new funds invested into clean energy gained 16% in 2014 to reach $310 billion. The record is still $318 billion, set in 2011, but there was a significant upward trend last year. Overall, the world added about 100 gigawatts of solar- and wind-power capacity in 2014.

The reason for the jump is due mainly to China’s serious attempts to address its pollution problem. The government’s goal is to have 15% of China’s power mix coming from renewable energy sources by 2020.

Accordingly, the country led the way last year with investments of $89.5 billion (29% of all global renewable energy investment) into renewable energy. That is a rise of 32% from 2013 to a record amount.

Chinese Means Business

China is clearly serious about its energy goals. Last year was the first time this century that domestic coal production fell and output was down by 2.1% to 3.5 billion metric tons.

The China National Coal Association forecast that in 2015 coal production will drop another 2.5%.

The Xinhua news agency confirmed assumptions, saying in a report that much of the falloff can be directly linked to two factors: new environmental regulations on the industry by the government and increased investment in clean energy.

Xinhua went on to report that emissions per unit of GDP fell 4.8%, thanks to China’s soaring investments into renewable energy in 2014, particularly solar and wind.

It’s Always Sunny and Windy in China?

It’s not always sunny in China, but that hasn’t stopped the country from becoming the top market for energy created by solar power and one of the largest for wind-power energy. Three-fourths of the $90 billion that was spent last year went into solar and wind power.

China is also the top producer of solar panels, accounting for about 75% of the world’s solar manufacturing.

So it isn’t surprising that 2014’s top solar panel producers were all Chinese. The leader was Trina Solar (TSL), followed by Yingli Green Energy (YGE), and JinkoSolar (JKS). Rounding out the top five are Canadian Solar (CSIQ) and Sharp Corporation (SHCAF) from Japan.

On the wind side, China installed more than 50 gigawatts of wind capacity in 2014. This, of course, gave the makers of wind turbines around the world a bump.

Denmark’s Vestas Wind Systems (VWDRY) beat its competitors for the second year in a row for the No. 1 manufacturing spot. It was followed by Siemens (SIEGY), GoldWind (XJNGF), and General Electric (GE).

Future Still Iffy

Despite the good news from 2014, two questions still hang over much of the renewable energy industry.

One question is whether the industry can survive on its own when government subsidies are removed. The second is overcapacity…

You see, there is still an estimated 15% more solar panels manufactured than demand would dictate.

The great hope for the renewable energy industry will continue to lie in the Chinese government, which will likely continue to subsidize movement into renewable energy.

After all, as Angus McCrone of Bloomberg New Energy Finance pointed out, “China has got the greatest power demand needs, and it also has the imperative of reducing urban pollution.”

And the chase continues,

Tim Maverick

Tim Maverick

, Senior Correspondent

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