Solar hot water in China

China is way behind the rest of the world on solar installation, right? After all, according to Julia Wu of New Energy Finance, China currently only has 100 megawatts of solar PV installed, far short of the almost 4 gigawatts of solar already installed in Germany. But this narrow focus on solar PV ignores the huge progress being made in China’s solar hot water industry, which leads the world. This post will describe the growing solar hot water industry and also touch on the leadership of Yunnan province.

Hot water needs
Heating hot water uses significant amounts of energy globally. According to a LBNL report (PDF), water heating accounted for 26% of building end use energy in China in 2005. That’s more than lighting, which only accounted for 17%, and a lot more than cooling, which only accounted for 9%. (The majority of end use energy was consumed by heating, accounting for 49% of end use energy consumption).


Fortunately, cheap and proven technology already exists to significantly reduce these water heating needs: solar hot water heaters.

How solar hot water heaters works
Solar hot water heaters use the sun to passively heat water in a tank. Most solar hot water heaters in China consist of a water tank sitting on top of a series of glass tubes that take in sunlight. This type of system is referred to as an evacuated tube collector, since the tubes have a vacuum inside.

As the US Dept of Energy describes it:

The collectors are usually made of parallel rows of transparent glass tubes. Each tube contains a glass outer tube and metal absorber tube attached to a fin. The fin is covered with a coating that absorbs solar energy well, but which inhibits radiative heat loss. Air is removed, or evacuated, from the space between the two glass tubes to form a vacuum, which eliminates conductive and convective heat loss.

The result is a renewable, carbon-free source of hot water.

Success in China
China is leading the world in installation of solar hot water heaters. According to the WorldWatch Institute, China accounts for roughly 60% of total installed solar hot water capacity worldwide, with nearly 1 in 10 households in Chinese households owning one. Buying solar hot waters in China is often a financial no-brainer. The average heater costs only about 1,600 yuan ($235), and can cover 100% of heating needs during the summer and usually at least half during the winter, drastically reducing energy bills.

Solar hot water heater growth has been running at a 15-20% clip and doesn’t seem likely to abate soon, thanks to growing government interest in the technology. Shenzhen, for example, recently mandated that all buildings under 12 stories must have solar hot water technology. Solar hot water is also big business in China: the industry consists of over 1,000 manufacturers with revenues of over 20 billion yuan ($3 billion). The industry employs 600,000 people.

Following on the success in the local market, Chinese manufacturers are now looking to take their products and know-how to the global market. The largest solar hot water manufacturer in the world is Shandong-based Himin Group. Himin produces over 1 million solar systems annually and claims a 14% market share in China. Himin recently received a $100 million investment from Goldman Sachs and CDH, which values the firm at more than $660 million dollars. Himin will use the money for further R&D and global expansion. Look out for more global expansion from Chinese solar hot water firms.

Yunnan
Yunnan province in southwestern China is leading this national move to solar hot water. I was lucky enough to visit this beautiful province earlier this month with two of my best friends, Ben Cooper of KEMA and Philippe Bouchard of eSource, and see the solar hot water heater industry’s progress first hand.

I was shocked and impressed by the way solar hot water heaters dot the roofs of buildings in Yunnan. In Kunming for example, the capital of Yunnan province, more than half of the city’s nearly 5 million residents have solar hot water heaters. It’s not just the cities either: even small villages throughout the province have solar hot water heaters on almost every roof. The off-grid, distributed nature of solar hot water heaters also makes them ideal for developing countries, since they don't require much infrastructure investment.

This is very big progress for historically poor Yunnan. Yunnan is the third poorest province in China with a GDP per capita of 9000 yuan per year, about 1/6 that of Shanghai.
Hopefully as the world market for renewable energy and solar hot water heaters continue to grow, Yunnan can parlay it’s early successes with solar hot water into a model of sustainable economic development.

Coal to Liquids in China

China has recently started exploring the possibility of using their vast coal reserves to power their auto fleets. This is about the worst possible move China could make from an environmental perspective, and not very good from an economic perspective either.

CTL in China
Coal-to-liquids (CTL) is another name for coal liquefaction, the process of converting solid coal into liquid fuels as a petroleum substitute that can then be used to power automobiles. China Daily recently reported that the Shenhua Group, China’s largest coal producer, opened it’s first coal to liquids processing plant in Inner Mongolia. The facility reportedly cost 10 billion yuan ($1.46 billion) and produces 1 million tons of fuel annually.

What about the environmental footprint?
CTL is a nightmare from an environmental perspective. Coal to liquids has the worst carbon footprint of any fuel. This graph below from the EPA sums up how shockingly bad CTL fuel is: more than twice as bad as regular gasoline. The line in the middle of the graph represents the CO2 emissions of regular gasoline. Even CTL with carbon capture and sequestration (CCS), a technology that is not proven, is 4% worse than regular gasoline.


The Natural Resources Defense Council echoes this analysis: “The total well-to-wheels emission rate for conventional petroleum-derived fuel is about 27 pounds of CO2 per gallon of fuel. If the CO2 from the liquid coal plant is released into the atmosphere, based on available information about liquid coal plants being proposed, the total wellto-wheels CO2 emissions from coal-derived fuel would be about 50 pounds of CO2 per gallon—nearly twice as high.”

And just to drive home the fact that CTL are massive emitters of carbon, the Sasol CTL plant in South Africa is the single largest point source of CO2 in the world.

Good economics?
According to an analysis by professors at Carnegie Mellon, CTL would need to sell for $63 per barrel to break even without CCS, and $78 to make an acceptable profit if it is produced using CCS (making CCS all the less likely). This translates into approximately $1.50 and $1.85 per gallon, assuming coal prices don’t rise.

Shenhua also reports that they can produce CTL at $45 per barrel, possibly thanks to lower cost production or better technology. Adding a 15% profit margin to this results in a price per barrel in the low $50’s. In a world of high oil prices, this simple economic analysis seems to imply that it makes sense for coal-rich countries to start producing CTL fuel.

Why not go electric?
But this is a bad deal when we start comparing this to the economics of an electric car. According to Deutsche Bank, a typical monthly contract that includes car, battery, and charging infrastructure with Better Place would cost $550 and include 18,000 miles per year.

Let's compare this to the conventional car running on CTL: Morgan Stanley estimates that a new car from Detroit costs $500 per month and doesn’t include fuel, which at 18,000 miles per year would cost about $2,250 per month, even assuming that we paid the low price of $1.50 for CTL fuel produced without CCS. This is an all in cost of about $2,750. That’s a big cost advantage for electric cars.

Why can electric cars actually be cheaper to run? Well, that’s due to their efficiency. The internal combustion engine is not an efficient source of power. In fact, according to Amory Lovins of RMI, only about 20% of the energy used in a gasoline powered car is used to turn the wheels- the rest is lost to heat or exhaust. By contrast, electric propulsion converts nearly 90% of energy into traction that turns the wheels. The economics for electric cars are looking better and better everyday. When you include the environmental benefits of electric cars, it’s becoming clear that electric is the future and alternative liquid fuels like CTL are just a distraction.

I do think that the next big transportation revolution will come from China. Let’s just hope it comes from BYD, not Shenhua.

Welcome back- random thoughts v4

Welcome back to my blog! It's been quite a while, so I have a good bit of random thoughts to catch up on. I'll have a few blog posts later this week covering a bit of what I've been up to on my recent travels, including learning about solar hot water heaters in Yunnan and a tour of the new Nokia Campus in Beijing.

China's energy use slows in 2008..
Energy generation in China fell in 2008 thanks to slowing economic growth. This resulted in less CO2 (about 2 billion tons less over 2 years), but as China Greenspace writes, this is a double-edged sword, since China will now be less likely to take on carbon reduction targets.
Image from NYTimes.


Energy intensity comparisons
A NYTimes editorial blasted the US for it's energy inefficiency, noting that "for each dollar of economic product, the United States spews more carbon dioxide into the atmosphere than 75 of 107 countries tracked in the indicators of the International Energy Agency." But the US still performs better than China and India according to this graph from the US DoE. Although, the NYT article did note that China does ok on production of some goods, saying "the United States spends more energy to produce a ton of cement clinker than Canada, Mexico and even China." Let's hope China can meet their goal of 20% reduction in energy intensity by 2010.

Chinese people not happy with environment
The annual environmental satisfaction survey results are in, and the Chinese people are not happy. 76% ranked environmental problems in the country as "serious" or "very serious", up from 57% in 1998. China Environmental Law reports and comments.

New LEED system approved
The US Green Building Council's new LEED 2009 rating system was recently approved and will enter into force in March. All projects currently registered can continue to use the old rating system, but all new projects will use the new system. The new system weighs points according to their contribution to carbon emissions, which should align the ratings more closely with actual environmental performance.

LEED project statistics
A quick update on LEED building statistics in China (source USGBC):
Certified projects:
There are currently 14 certified building projects in mainland China, the majority of which are commercial interiors and new construction. Core and shell developments and neighborhood developments are also represented.
Registered projects:
There are 103 registered projects in China. This is fantastic growth, considering that the first LEED building in China was certified in 2006. Of the 103 buildings registered to pursue LEED certification, the numbers are split pretty evenly between core and shell developments, new construction, and commercial interiors.
One interesting note is the total lack of buildings pursuing certification under the LEED existing building program. This surprises me, but I guess it makes sense given how much new construction is happening in China.


Green paint
GreenBiz describes why China's paint industry is becoming greener and making money in the process. Green is the only part of the real estate and construction industry that continues to grow, thanks in part to regulation, like the EU's REACH protocol which regulates chemicals such as paints.