China's power sector: Can supply
meet demand? By Paolo Hooke
China's booming economic growth and rapid
industrialization has seen red-hot demand for
electric power, with consumption in major urban
cities such as Beijing and Shanghai growing at
double-digit rates.
Total electricity
consumption nationally reached 2.173 trillion
kilowatt hours (kWh) in 2004, an on-year jump of
14.9%. Industrial electricity accounted for 74% of
consumption and for 80% of the total growth.
At the same time, 2004 witnessed the most
acute power shortages since 1990, with 24
provincial power grids imposing restrictions on
power use. 24 of 31 province level regions suffered
power shortages last
year, as compared with 19 in 2003. The severest
shortages reached 35 million kW in summer 2004,
with all the peak load power shortages in the four
quarters topping 20 million kW.
In the
first half of 2005 China consumed 1.148 trillion
kWh of electricity representing a year-on-year
rise of 13.91%. In the first quarter of 2005, 26
provincial power grids imposed caps on power use.
To keep pace with higher demand, production has
also risen - China's total electricity generation
in 2004 was 2.187 trillion kWh, up 14.8%
year-on-year.
In the first half of this
year China generated 1.128 trillion kWh of
electricity, a year-on-year rise of 13.2%. Factors
affecting power production include the rise in
coal prices, coal quality and the fact that fewer
new power generating units were put on stream than
predicted. The country's installed power
generating capacity reached 460 million kW by the
end of June, according to statistics from the
China Federation of Power Enterprises.
In
the first half of this year, Chinese manufacturers
delivered power plant equipment totaling 39.215
million kW, 25.25 million kW or 2.8 times more
than the same period of 2004. In the January to
June period, the total profit of power enterprises
stood at 31.187 billion yuan (US$3.8 billion), an
on-year rise of 3.49%.
Outlook to
end-2005 The country's total electricity
consumption is forecast to reach 2.456 trillion
kWh in 2005, which represents 260 billion kWh, or
13% more than in 2004.
Total installed
generating capacity is expected to top 500 million
kW this year, with more than 70 million kW of
newly added power generating capacity to be put
into operation. China's installed generating
capacity is estimated to expand by an average of
6% over the next 20 years, reaching 690 million kW
by 2010 and 950 million kW by 2020.
China
is likely to experience power shortages for the
remainder of the year, with China's power supply
forecast to remain tight. Power plants have been
pushed to the limit in large Chinese cities such
as Beijing, Shanghai and Guangzhou. Wang Yonggan,
secretary-general of the China Electricity
Council, said that at its peak in the third
quarter of this year, the shortfall is expected to
hit 25 million kilowatts.
Power shortages
in East China are estimated at 18 million kW,
North China 5.5 million kW and central China 1.5
million kW. Shortages are expected to persist
until 2007, when a balance of supply and demand
will be achieved, according to the State Power
Grid Corporation Of China.
Electricity
production is projected to reach 430-480 million
kWh by this date, while per capita electricity
consumption is expected to reach 3,000 kWh. The
dominant position of thermal power in China's
power mix is expected to remain unchanged until
2020, when its output is projected to reach 600
million kW.
Government policy on power
generation Securing a stable power supply
is of vital importance for the Chinese government,
as the country strives to balance its electricity
supply and demand, so as to achieve a power
surplus. China will put 65 million kW of
additional generating capacity into operation this
year, which will increase the total installed
generating capacity to over 500 million kW.
Power grid construction is also considered
critical, as China is seeking to develop an
ultra-high voltage power grid by 2020. By that
date, the grid will transmit over 200 million kW
of electricity, which would account for 25% of the
national installed capacity.
Ensuring a
stable coal supply is also of great importance for
the Chinese government, since coal-fired
generation accounts for nearly 70% of the
country's installed generating capacity.
Meanwhile, energy efficiency has become somewhat
of a mantra, as the government seeks to encourage
the public to economize.
In the midst of
soaring summer temperatures, use of
air-conditioning is sky-high, placing further
strain on the country's already stretched power
grid. Energy conservation is at the top of the
government's agenda, with the State Council
recently issuing a directive calling on government
departments to maintain the temperature of air
conditioners at 26 degrees Celsius.
Looking to cut its dependence on coal,
China is also seeking to develop clean energy by
using nuclear, wind and solar sources to generate
power. "The government is vigorously making
efforts to tap clean energies to optimize the
current power generation mix, which relies on coal
for some 80% of its power output and is blamed for
severe environmental pollution and congested
transportation," said Zhang Guobao, vice-minister
of China's State Development and Reform
Commission.
Coal-fired plants comprised
73.9% of China's 440 megawatts total
installed
capacity in 2004, according to Zhang.
Hydroelectric plants accounted for 24.5%, and
nuclear plants 1.6%. China is aiming for a
hydroelectric plant capacity of 246 megawatts by
2020, or 25.9% of the total. The target for
renewable energies such as wind and solar is 40
megawatts by 2020, or 4.3% of the country's total
installed capacity. Reducing China's heavy
reliance on thermal power is crucial, since it
places great pressure on coal mining,
transportation and the environment.
Major
Players
State Grid
Corporation One of the largest state-owned
enterprises in China, the SGC is a major player in
electricity transmission, transformation,
distribution and supply, providing energy and
services to over 116 million customers. The
corporation enjoyed a pre-tax profit of 29.67
billion yuan (US$3.65 billion) in the first half
of this year, a year-on-year surge of 34.5%.
China Power Investment
Corporation This power generation firm has
total assets of 105 billion yuan, with a
controlled capacity of 27.96 million kilowatts.
China Yangtze Three Gorges Project
Corporation Specially established
corporation responsible for financing and repaying
the construction of the Three Gorges Dam, and for
operating the massive Three Gorges Project.
Shenhua Group Corporation
Limited Founded in 1995, its main
businesses include the production and sale of
coal, power generation, heat production and
supply, coal-based oil processing and coal-related
chemical industries.
China Southern
Power Grid Co Ltd The southern grid giant
has total assets of 245.3 billion yuan, with 2004
revenue of 155.7 billion yuan and 4.088 billion in
profits.
China Huaneng Group One
of the largest State-owned enterprises. By the end
of 2004, it owned 54 fully-owned or controlled
plants. Realized a total power generation volume
of 194.78 billion kWh last year.
China
Datang Corporation Its installed capacity
totalled 33,534 MW and its total assets reached
143.3 billion yuan, by the end of last year.
China Huadian Corporation Owned
total assets of 119.7 billion yuan and had an
installed capacity of 30,790 megawatts (MW) by the
end of 2004. Involved in the development,
investment, construction, operation and management
of power, coal and other power-related industries.
China Guodian
Corporation Involved in the development,
investment, construction and management of power
supplies.
Guangdong Nuclear Power
Holding Co Ltd Established in 1994, this
firm owns Dayawan Nuclear Power Station and Lingao
Nuclear Power Station (Phase I). The company's
annual power generation capacity is 30 billion
kWh.
Guangdong Yudean Group With
total assets of 88.54 billion yuan, this group had
20 wholly-owned and controlled power plants by the
end of 2004.
installed
capacity in 2004, according to Zhang.
Hydroelectric plants accounted for 24.5%, and
nuclear plants 1.6%. China is aiming for a
hydroelectric plant capacity of 246 megawatts by
2020, or 25.9% of the total. The target for
renewable energies such as wind and solar is 40
megawatts by 2020, or 4.3% of the country's total
installed capacity. Reducing China's heavy
reliance on thermal power is crucial, since it
places great pressure on coal mining,
transportation and the environment. 
