Today’s Green Hops, focusing on energy supply, is a continuation of yesterday’s.
Two important macro-policy documents are in the works. CELB reports that the comprehensive Energy Law may be passed in 2010 (though this Chinese clipping suggests it may be as early as this year), and that the 12th Five-Year Plan for Energy (2011-2015) is in draft mode. Nuclear, wind and hydro seem to bet the alternative energy sources of choice. This alternative energy review by China Daily, in its “Mixed Energy Forecast” seems to similarly suggest the short shrift given to solar. How unimaginative. I’m sure the solar industry would have something to say about that. In fact, it has (see solar section below).
Before turning to the knitty-gritty of the green and brown energy news developments over the past weeks, I would like to highlight a sage piece of advice from CELB, that recognizes that China is still in many ways, but especially economic development, very much a “Rule by Plan” rather than “Rule of Law” society:
A word of advice from CELB to US Climate and Energy negotiators with China: It is absolutely essential that you begin negotiations by requesting that what ever is agreed to will become a part of and be supported by this new Five-Year Energy plan.
Without further ado, let’s get started with the energy roundup!
Fuels from Hell
The State Council is poised to approve a national plan to raise nuclear’s share of power of production to 5% by 2020. This translates to some 60 to 70 GW. Currently, there are 11 nuclear reactors in operation with a combined capacity of about 9 GW, accounting for just over 1% of China’s power.
King KONG (koal, oil and natural gas)
Plans for a strategic coal reserve by 2015 are being drafted by the State Council. In the meantime, Zhejiang and Shandong, the two major coal consuming provinces, have already started building pilot coal reserve bases.
It looks like more brown sectors will benefit from the stimulus package. We previously reported that steel and automobiles hit the jackpot, and soon perhaps, oil refining and petrochemicals as well. These “brown boosters” are hard to square with earlier statements by officials saying industries in 两高 sectors (i.e. high energy consumption and high pollution) will not benefit from the pump priming.
Some numbers on 2008–China’s natural gas output was up 12.3% while LNG imports climbed 15% (this is good news for a coal-diversification strategy, though we’ll have to see how the financial slowdown of 2009 affects this year’s numbers); crude oil output increased by 2.3%. Coal, oil and electricity demand is poised to ebb in 2009.
China started construction of the eastern segment of the country’s second West-East natural gas pipeline in Shenzhen City, Guangdong Province on Saturday. The pipeline, the second after the first West-East natural gas transfer project, will span 9,100 km across 15 regions and carry 30 billion cubic meters of natural gas every year from Turkmenistan and Xinjiang (which boasts China’s largest reserves) to Zhejiang, Shanghai, Guangdong and Hong Kong, among others. It will reportedly be the world’s longest natural gas pipeline.
In the power sectors, the government continues its 上大压小 policy by pledging to shut down 31 GW of inefficient coal power plants over the next three years. The Big 5 power companies may receive as much as RMB 10 billion in subsidies to tide them over their record 2008 losses, which stemmed primarily from thei inability to cover volatile fuel (mostly coal) costs. The State Grid’s profits were cut by 80% in 2008 due to disruption by natural disasters and higher power prices.
China Daily has a good article on China’s efforts to build ultra-high voltage power line infrastructure.
Fuels from Heaven
China Daily has an Conference Communicate Center is a 50,000 sqm facilty boasting a solar collecting area of 6,500 sqm that integrates solar thermal hot water supply, heating, cooling, and PV power generation.
A group of major Chinese solar PV manufacturers, including Suntech, Trina, Canadian Solar and LDK have submitted an industry road map (see also original Chinese report) to the Ministry of Science and Technology that will see PV power prices being to RMB 1/kwh by 2015, or as early as 2012. Although RMB1/kwh which although is still roughly twice the current rate of urban retail electricity in China, would be cost-competitive in European markets. To put the RMB 1/kwh price in context, the NDRC announced preferential feed-in tariff rates of RMB 4/kwh for pilot projects in Chongming Island (near Shanghai) and Ordos in Inner Mongolia. A solar industry analyst suggested to GLF that such a submission by the solar industry was a pre-emptive move to give the government assurance that steady cost reductions were being achieved by the industry and to thereby encourage the government to be more forthcoming in provind subsidies and incentives to jumpstart China’s domestic PV market.
China’s installed wind capacity doubled last year from 5.9 GW to 12.3 GW, but what’s installed isn’t necessarily what generating power. Chinese wind farms, especially those using domestically produced wind turbines, are underperforming, notes Nature (sub’s needed):
[O]n-shore turbines in other leading wind power countries have capacity factors of around 30%. China’s is just 23%… Chinese wind farms using foreign models have a 5% higher overall capacity factor than those using domestic turbines. Domestic turbines are especially unproductive when first set up…Because the technology is newer and less tested, Chinese turbines are also more likely to be shut down for maintenance, according to anecdotal evidence.
China’s largest wind power R&D facility will be established in Shaanxi province’s Xi’an City. State-owned China Northern Locomotive and Rolling Stock Industry (Group) Corporation will provide RMB 6 billion in investments. This seems like an odd initiative for a locomotive company; however, and this may be pure conjecture on GLF’s part, a glance at their product offerings suggest that there may be some synergies between locomotive and wind turbine parts. Part of the wind facility also includes the build out of a rail system, which may suggest (again pure speculation) some sort of manufacturing activities at the site. Danish wind company, Vestas, meanwhile, seeks to continue riding the swelling wind currents by investing a further $350 million into its Tianjin turbine manufacturing subsidiary.
Novozymes and its Chinese partner COFCO have entered a new partnership with major Chinese oil and energy company Sinopec to develop a commercial-scale process for producing cellulosic bioethanol from corn stover. China is the second largest producer of corn after the U.S.
China Hydroelectric, a U.S.-based firm was founded in 2006 in Hong Kong to buy and operate hydropower projects in mainland China, has has filed paperwork for a $200 million IPO on the Hong Kong Exchange. China Hydroelectric seeks to capitalize on what it identifies as a “one-time buyer’s market” in China’s hydropower sector, as local governments throughout the provinces seek to shed their hydropower assets to the private sector. Its two disclosed acquisition deals suggest an emphasis on small hydro–they have planned installed capacities of about 40 MW.
Large hydro, however, is being implicated for negative geological impacts. The bulging weight of 320 million tons of water held at Zipingpu dam may have “hastened the occurrence of” (but probably not solely responsible for) the Sichuan earthquakes of last May, according to this report. A map below, courtesy of AFP, shows Zipingpu’s location relative to the epicentre. See also this post at International River’s Wet, Wild & Wonky.
The Asia Development Bank will provide three grants totaling $2.8 million to support China‘s efforts to reduce sulfur dioxide gas emissions, increase energy savings, and strengthen the existing clean development mechanism fund that supports clean energy projects.
U.S. company SmartHeat, recenltly listed on the NASDAQ small cap market and maker of plate-heat exchangers and compact plate-heat exchanger units to help capture and recycle waste heat, entered into a $1.2 million equipment supply contract with Chinese utility Uda Heat Power for 16 plate-heat exchange units to be delivered by the end of this month.