Chinese energy firms ride new opportunities across industry segments globally

Chinese companies' ability to meet wide-ranging energy demands of countries, regions and blocs such as the European Union, Africa, Latin America and the Asia-Pacific, which are all at various stages of transition to clean power besides seeking energy security, will spawn an era of high-growth opportunities for them, industry experts said.

From solar and wind to new-age battery business and energy storage solutions, Chinese companies have already built up an enviable prowess and a strong market presence, which will help them to ride a wave of opportunities to grow globally, they said.

For instance, Europe's energy crisis has unexpectedly created growth opportunities for Chinese renewable power companies. Historical opportunities await them as several European countries are set to cut their reliance on Russian energy. Besides, they are stepping up their transition to a low-carbon energy setup.

China's new energy industry, including the segments of household roof photovoltaic systems and wind power generators, has been witnessing rapid growth in overseas sales in recent months. Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute, attributed the surge to the rising demand from European consumers due to the ongoing energy crisis.

Against the backdrop of the global emphasis on low-carbon power, all clean energy industries, especially solar power, are expected to see a golden period of rapid development. Some of China's largest solar companies, such as Shanghai-based Jinko Solar Co Ltd and Xi'an, Shaanxi province-headquartered Longi Green Energy Technology Co Ltd, are expected to benefit from the rising demand for clean energy from Europe, Luo said.

European countries, he said, have been stepping up their energy supply capacity amid the gas shortage last year and the Russia-Ukraine conflict this year. They have resorted to fossil fuels and nuclear energy, besides stepping up new energy development. China, as a major solar and wind power equipment manufacturer and exporter, will play a key role in meeting the demand.

For individual companies, this could translate to big profits. For instance, Longi achieved operating revenue of 87 billion yuan ($12.46 billion) in the first three quarters of this year, up 55 percent year-on-year, while its net profit rose 45 percent to almost 11 billion yuan.

In addition to growing its European business, the company is expanding in South America, central and eastern regions of Africa as well as the Asia-Pacific.

Against the backdrop of carbon peak and carbon neutrality goals, Chinese enterprises are more than ever competing globally, relying on their increasing innovation in green technologies, which, in turn, have been providing momentum to Chinese manufacturing to go global. All this has helped enhance the overall quality of China's foreign trade as well, said Luo.

Chinese companies have long been dominating solar manufacturing, accounting for nearly all global production in some steps of the supply chain. Nearly 40 percent of its solar exports went to Europe in 2021, according to BloombergNEF.

The European market sees more than 90 percent of its solar component supplies coming from China. This means a consistent surge in exports of Chinese solar components to Europe, despite climbing raw material costs, it said.

While surging energy prices are driving large-scale utility installation, Europe needs to rely on China in the short to medium term due to its relatively small scale of manufacturing capacity, said Jiang Yali, a solar analyst at BloombergNEF.

Data from Alibaba.com, the cross-border e-commerce giant, showed the renewable energy category, including the lithium battery, energy storage battery and wind turbine segments, has been one of the fastest-growing sectors this year, with an average 19 percent month-on-month growth in daily global demand between January and April.

As going green and reducing carbon footprints continue to gain popularity, purchases of Chinese goods by European countries, including big markets like Germany and Italy, will see the most obvious growth, Alibaba said.
 

Zhang Kuo, general manager of Alibaba.com, said Chinese sellers of renewable energy products have seen triple-digit sales growth since October 2021, with sales of wind turbines, energy storage systems and light energy converters rising rapidly.

Data from eBay, an e-commerce pioneer, also showed that clean energy products, such as solar panels, inverters, lithium batteries, controllers and portable outdoor energy products, have witnessed rapid growth in the European and American markets in recent years, with the Chinese sellers steadily increasing their market share.

Zhang Qiying, general manager with eBay international cross-border trade division's home and garden department, said sales of clean energy products on the platform, led by solar power, have skyrocketed in recent years.

US investment bank Morgan Stanley, which sees module makers such as Longi as key beneficiaries of the EU's moves, said the EU has become the single largest market for Chinese firms, accounting for 46 percent of related exports in 2021.

The figure is likely to rise this year as the EU has announced a 210 billion euros ($223 billion) plan that centers on cutting red tape for wind and solar farms and paving the way for renewables to make up an increased target of 45 percent of the bloc's energy needs by 2030, Morgan Stanley said.

Figures from the General Administration of Customs showed that China's total exports of PV modules amounted to 88.8 GW last year, up 35 percent year-on-year. The European market is China's biggest overseas market as well as a major source of growth.

China shipped 45.3 GW of PV modules to Europe last year, up 54 percent year-on-year and accounting for 45 percent of the total exports, according to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

In addition to solar power, Chinese companies in the fields of other clean energy sectors like wind, lithium batteries and energy storage are playing a more than ever important role in global energy development.

China's Envision Group, for example, has seen its smart wind turbines and energy storage products available in markets in Europe, Latin America and Asia, with an average growth rate of over 40 percent for many years.

Major Chinese carmakers, including SAIC and BYD, as well as electric car startups such as Nio, Aiways and Xpeng, have all been exploring the European market, while many of the Chinese power battery companies have started to set up factories in Europe. These include Envision AESC, the battery-making arm of Chinese company Envision Group, and Contemporary Amperex Technology Co Ltd.

During the annual tone-setting Central Economic Work Conference, which concluded on Dec 16 in Beijing, China underlined accelerating the planning and development of a new energy system in order to facilitate the construction of a modern industrial system and ensure the steady performance of the real economy. To that end, China will continuously step up the reserves and supply capacity of domestic energy and mineral resources, said government officials.