NEW YORK (
) -- Renewable energy is like any technology. It starts out expensive and grows cheaper over time. Money is its primary fuel -- money for research, money for start-ups, and money to get early versions into the market.
To fuel the new market, Western countries have created various forms of subsidy, such as "feed-in" tariffs and loan guarantees on risky breakthroughs. It's just what we did with computing, transistors and the Internet, creating market conditions before a market exists, setting the stage for a boom.
So now that the boom is on the horizon, politicians are doing all they can to hand the fruit of this labor to China.
The biggest turnaround likely is in Australia, where a coming conservative government is expected to scrap programs that have the country on track to get more than 22% of its energy from wind, waves and the sun by 2020,
. The local Limbaugh, named Alan Jones, even led a rally claiming wind energy "terrorizes" small towns,
reported the Daily Telegraph
Germany is also going to cut its subsidies in half after the next election,
, and the U.S. House plans to cut our subsidies in half as part of its next budget,
Thankfully, a move by states to protect local markets from out-of-state renewable competition was recently killed by the U.S. Circuit Court.
The question becomes, whom does this benefit? While advocates of coal may think it benefits them, and advocates of nuclear may feel the new trend benefits them, the big winners in all this are more likely to be the Chinese solar companies, such as
Yingli Green Energy
These are the companies that survived the brutal market shakeout of the last few years and, in the process, brought the costs of solar cells using polysilicon down to less than 50 cents/watt, the point at which an efficient channel can create cost parity with other forms of grid energy.
At these prices, all sorts of new buyers are appearing. Latin America and Africa are now emerging as major markets for renewable energy projects,
The business isn't going to go away. The question is who will get the business. In the present environment, it's unlikely to be companies such as
and privately held
, which can't yet compete directly on price but can win contracts using Renewable Energy Certificates, feed-in tariffs and some old-fashioned jingoism.
Schools, factories, and cities are right now planning a host of medium-sized projects, anywhere from 100 Mwatt to 2 Gwatt in size,
, representing 60% of the U.S. deal stream. But U.S. suppliers are unlikely to win much of that business if utilities are forced, by subsidy cuts, to go with the low-cost supplier. Because right now that low-cost supplier is in China.
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Just as the market is ready to take off, with the growth ramp dead ahead, and just as game-changing technologies like graphene, printable solar cells and biological cells are approaching the market, we're taking our foot off the gas and pressing the brake.
But this is how economic power shifts. The aging power cares more for what was than what will be. And if that's the way we're going to play it then I, for one, welcome our new Chinese overlords.
At the time of publication, the author had no investments in companies mentioned here.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.