Hiccups are developing in China's new energy industry, say experts.
New energy has been a hot topic in China for quite a few years. Some experts, however, suggest that improving conventional energy efficiency carries more weight in developing a low carbon economy.
Li Junfeng, deputy director of the Energy Research Institute of the National Development and Reform Commission, said China's new energy industry had become a high risk industry and there was far too much competition in the sector.
"Considering new energy industry accounts for less than 1 percent of China's gross domestic product, a dozen companies would be enough, but now there are swarms of them," Li said.
China's demand for new energy facilities was still low and nearly half of its output was for export, said Zhu Dajian, director of Research Center of Sustainable Development and Governance, Tongji University. "If too many companies enter the industry and domestic demand fails to increase, bubbles will soon appear."
Since the present global financial downturn began in 2008, the once prosperous solar energy photovoltaic generation industry has been experiencing a difficult time. The industry relies heavily on the international market, with 98 percent of photovoltaic product sold overseas in 2008. Shrinking overseas demand has forced companies to suspend production or even register bankruptcy.
"It is more important to improve the efficiency of conventional energy than to develop new energy at this stage," said Zhu.
Coal accounts for 70 percent of China's energy consumption. Zhu said the state of affairs would continue for some time. The average efficiency rate of coal-fired power stations is only 35 percent but can increase to 50 percent if more advanced technology is applied.