Workshop ‘Chinese Energy Innovation – Going out to Europe’

On September 26 the Working Group Europe and China of the Dahrendorf Forum and  the Yicai Research Institute jointly organised the workshop ‘Chinese energy innovation – going out to Europe’. The workshop focused on the expansion of renewable energy and the core goals of technological innovation towards more energy efficiency in the 21st century in China and the European Union. The workshop brought together representatives from universities, think-tanks, government and business to discuss areas of common interest in the partnership, hoping to influence policy debate and overcoming institutional barriers.

Solar and Wind Power: FDI and Technology Cooperation

During the first panel experts discussed both drivers and hindrances for Chinese renewable energy companies to enter the European market. The discussion found that Europe and China are partners in achieving an energy transition as can be seen in the steady increase in foreign direct investment (FDI) and technology transfers. But there are a variety of hurdles, particularly concerning perceptions, security concerns and regulations. The experts pointed out that Chinese FDI in Europe are conceived a danger to EU competitiveness and security in the energy sector. Yet, China has recently managed to become a net investor in the sector. With its investments, Chinese investors seek resources, markets, technology and assets, not only to develop their technology, but also to develop an international management team to reduce the risks of a miss-match in management styles. Chinese companies have further taken over some of the key sectors in the production of solar equipment. The discussants clarified that in terms of location choices for investors, the main factor is a friendly host environment with renewable energy supporting policy. And there is a lot of flexibility in changing location if subsidies stop or change. While for equipment manufacturers the decision is largely related to the host countries’ industry. In terms of future developments it remains to be seen whether China, after having invested heavily in the solar industry, will now continue its takeover in the wind sector in which European companies are currently the leaders in technology.

Institutional Change Needed to Upscale Renewable Power’

The second panel focused on the necessity for institutional support of renewable energy in China. The German experience may be a case in point from which China could profit. The experts discussed natural gas as a potential complementary power source to answer to the flexibility challenge of integrating renewables. In other words, the challenges in integrating renewable energy sources with fluctuating outputs into a system that is consumer driven with balanced electricity supply and demand. In order to dramatically increase renewable power distribution within China, the government will have to find solutions to these questions. Due to its lower emissions, when compared to conventional fuels such as coal and oil, natural gas could fill this gap. Hence to facilitate the Chinese energy transition, several policy and institutional barriers have to be overcome. In Germany a transition to gas has not been successful, one of the reasons being that coal prices have dropped significantly. Overall a big challenge remains in the area of energy storage, which is still very inefficient for renewable energy.

The event ended with the mutual agreement that debate and research should be continued in the area.