"It's the Mojave Desert," said Bill Smith, the vice director of economic planning. "There's not much other use for it."

That's a near-quote from a recent New York Times article on the growth of large-scale renewable energy projects out West. Of course, the "West" in question is western China, the desert is really the Gobi, and the bureaucrat's actual name is Wang Yu.

Clearly, Chinese regulatory permissiveness is a far cry from what we see here in the United States, with our untold number of solar-project applications held up by red tape and an ill-prepared Bureau of Land Management. Actually, I just checked -- the official number is 199.

Anyway, given that Western China is shaping up to be a desert playground for alternative energy projects, it's no wonder that dozens of Chinese companies, plus a few international outfits, all clamored for a piece of a government-backed 10-megawatt (MW) project out in the small northwestern city of Dunhuang.

More than 60 firms, including both state-owned enterprises and more familiar names like Suntech Power (NYSE:STP) and Trina Solar (NYSE:TSL), reportedly submitted bids on the project. This may seem like an unlikely battle royale, given the much larger scope of projects such as the ones Suntech is said to be pursuing elsewhere in China. But this plant marks the first 10MW of a planned 500MW in the Dunhuang area. Hence the hubbub.

While a concerted amount of cost-competition could have been expected, Yingli Green Energy (NYSE:YGE) really took things to the extreme with a bid of 0.69RMB ($0.10) per kilowatt-hour. That's less than half what Canadian Solar (NASDAQ:CSIQ) sought, and well below the breakeven cost of solar power generation.

Yingli was initially rumored to have won with this lowball bid, but by late May, it appeared that the government had rejected the submission and was favoring a less cut-rate bid by China Guangdong Nuclear. Sure enough, CGN and its partners Enfinity and Best Solar were confirmed as the winners in late June.

I haven't seen Yingli catch much flak for this move among analysts or investors, but I find it pretty off-putting.

Maybe as long as the company feels it can plumb the public market for hundreds of millions of dollars via secondary offerings, as it did last month, it's not concerned about taking the occasional bath on a solar project. After all, winning will show how bankable its modules are, and help it establish more credit lines, raise more money, outgrow competitors, and win more contracts in a virtuous feedback cycle.

Then again, maybe this is a destructively unsustainable practice. I personally find the logic about as elusive as a Mojave ground squirrel.

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Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.