Amidst the grandeur of the parade celebrating the 60th anniversary of the founding of the “New China”, hidden amongst the marching soldiers and formidable tanks and colorfully-attired dancers, a symbol of the determination of China to forge ahead with its renewable energy programs rolled past.

A float carrying the sculptures of windmills and oil reserve containers, as well as a banner reading “Striving to develop clean energy,” moved slowly past Tian’anmen Square, surrounded by energy workers who enthusiastically waved and carried large solar panels.

Just a week earlier, President Hu had promised at the United Nations General Assembly to vigorously develop renewable energy, and to increase the share of non-fossil fuels in primary energy use in China to around 15 percent by 2020.

One can only hope China pursues this goal just as effectively and successfully as it masterminded the spectacular parade and evening gala.

According to a new report by China Greentech Initiative, a group of more than 80 leading technology companies, non-governmental organizations and policy advisers, China potentially could be a $500 billion to $1 trillion a year market for environmentally sustainable “green technologies.” This China Greentech Report 2009 outlines over 300 clean energy, construction, transport, water and other businesses that might realistically open in China.

The report does go into its own self-serving moments by trying to highlight “lack of competition” in the market as an obstacle to growth, when what it really translates to is “lack of FOREIGN competition”. Saying that, the problems for foreign firms in this market are definitely ones that must be addressed.

There are barriers involved, such as worries about the transfer of technologies and the prevention of piracy of intellectual property. I’ll also point out that the market in China may be large, but the number of local Chinese players is also huge, with many of the local companies able to field enormous resources, which will pose a problem for foreign companies trying to grab a share of this market, especially if they are not the dominant player in a technology coveted by the Chinese, like First Solar. Add to this the fact that any stimulus package in China will tend to benefit local companies, and the predicament of foreign companies trying to escape their own moribund local market becomes starkly clear.

Finally, the local economic and political conditions in China, as befitting markets in a rapidly expanding region, are very fluid and at times uncertain, so any small or medium-sized foreign company easing its way into the area would be well-advised to gain as much knowledge of a sector as possible, and then tiptoe lightly and test the waters first before committing to it in any force.

I think what foreign companies forget or fail to realize is that China is a socialist market economy, and that the actions of the government may at times result in some capital and resource inefficiencies, but they are always geared (at least on paper) towards the greater good of the nation (as opposed to the greater good of company X, with company X hopefully being a foreign company).

The memorandum of understanding between First Solar and some high-level Chinese officials to construct a 2 GW solar facility in Inner Mongolia may at first make little sense, given the fact there are several very large Chinese firms in China quite capable of creating such a facility. In fact, the last couple of months have seen numerous deals between Chinese provinces and cities and these local Chinese companies.

However, a close analysis of the current world situation with regards to the solar manufacturing industry may point to the real motivation behind the Chinese decision to go with First Solar.

Firstly, there has been a fast growing sentiment in Europe (and in the USA) against the rapidly encroaching Chinese solar PV manufacturers, who have managed in a year or so to threaten the dominance of the European companies and have entered these foreign markets en mass while dropping the per watt cost of panels by alarming amounts. This sentiment has manifested itself in calls for tariff protection against the Chinese, and cries against what foreign companies have termed a closed protected market in the Chinese mainland.

By throwing this bone to First Solar, the Chinese are hoping to deflect such criticisms before they become too large to control.

Secondly, the Chinese have always been interested in thin film solar, and although there are a few Chinese companies that are ramping into this field, the technology is dominated by First Solar. By developing a tight relationship with the technology leader in thin film development, China ensures that it will get access to the technology. Indeed, there are some reports that First Solar will move some of the manufacturing close to the location of the power plant as part of the agreement.

Make no mistake about it though. In the short term, this is a huge plus for First Solar, and its stock rose 10% due to the news.

It should be noted that this news again points to the growing importance and dominance of the Chinese market in this industry. No company with global aspirations can hope to ignore China and prosper in the lean years ahead.

Is it science fiction or science fact? I read today that the Japanese, led by Mitsubishi, plan on setting up a 1 GW power satellite that will beam down its load via microwaves by 2030 and cost about 2 trillion yen.

By my calculations, that would mean energy from this system would cost around USD 21 million per megawatt, by far the most expensive major source of energy today.

At first glance, it would seem rather foolish to spend such large sums of money for a system that seems so economically unviable. In fact, one American study estimates that such a system would actually cost around USD 1 billion per megawatt, given current launch costs and other space related expenditures. Add in environmental questions about the safety of the process used to get the energy back here to earth, and the suspicion that such systems could be used for long-range weapons, and the problems become even more complex.

And yet, you have to admire the Japanese for their very long range thinking. Such systems may not be feasible now, but their plan calls for a process that will last decades. At the least, their initial tests in 2015 of a smaller satellite might give valuable information for other ambitious nations.