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Power Generation

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Industry Overview

In 2007, China’s energy supply and demand both surged ahead at an amazing pace in the shadow of its 11.4% GDP growth. Total energy consumption increased by 7.8% equivalent to 2.65 billion tons of standard coal while the amount of electric power generated grew by 14.1% in 2007, to 326.32 million kWh. Thermal power still accounts for the bulk of the energy generated, 83%, followed by 14% from hydro, 2% from nuclear and less than 0.1% from wind power.

To end the State Power Corporation’s (SPC) monopoly of the power industry, China’s State Council dismantled the corporation in December 2002 and set up 11 smaller companies. SPC had owned 46% of the country's electrical generation assets and 90% of the electrical supply assets. The smaller companies include two electric power grid operators, five electric power generation companies and four relevant business companies. Each of the five electric power generation companies owns less than 20% (32 GW of electricity generation capacity) of China's market share for electric power generation. Ongoing reforms aim to separate power plants from power-supply networks, privatize a significant amount of state-owned property, encourage competition, and revamp pricing mechanisms.

The construction of power generating facilities has also maintained an accelerating pace. Newly installed capacity reached a record level and electricity grid construction also gained a larger footing. The total power generation capacity in China stepped up to 622 GW, up from 517 GW in 2005, with 77% coming from thermal power. Government policies point favorably in the direction of developing more clean energy. In the 11th Five-Year Plan, the goal is to build a sustainable economy and develop clean energy substitutes for coal and oil. In the guidelines, the National Development and Reform Commission (NDRC) also recommends forming price and tax incentives to encourage energy conservation. With $200 billion of investment planned for energy efficient building features by 2020 and international cooperation at the top of its agenda, there are many opportunities for U.S. businesses to take part in this clean energy effort.

Companies wishing to enter the Chinese market should pay attention to new energy laws that are completed or in the drafting process. In 2005, China’s 10th People’s Representative Congress passed the “Renewable Energy Law”. On Jan 24, 2006, the Office of the National Energy Leading Group National Development and Reform Committee and 13 other agencies formed a committee to draft China’s new Energy Law. Even though China has become an important energy producer and consumer in the world, it has yet to come up with a comprehensive legal framework guiding energy policy. With its rapid economic development, inherent energy conflicts are becoming more apparent; there is a dire need for China to create a complete energy law.

By 2010, the Central Chinese Government plans to double its per capita GDP relative to 2000. However, despite its plans to reduce energy consumption per unit GDP by 20% compared with that in the late 10th Five-Year Plan period, statistics show that in the first half of 2006 actual figures were up 30.8% from 2005.

Best Opportunities

While China recognizes the need to import foreign technology, it also wants to localize as much of this technology as possible. China continues to demand full technology transfer and localization whenever possible, despite provisions in the WTO agreement between China and the U.S. that should give U.S. exporters some relief in these areas. Many U.S. power equipment manufacturers and related construction/engineering firms have formed joint ventures in this market. Market potentials for U.S. companies are in advanced power generation systems, control, monitoring and safety equipment, energy-efficient and environmentally friendly equipment, and management support systems for power generation and electric utilities.

As the world’s fastest growing economy and the second largest energy consumer, China is increasingly looking towards nuclear power to establish a balanced mix of energy generating methods. Nuclear power has become the third most important method of electricity generation in China, following thermal and hydropower. The country’s nine completed nuclear power generating units now account for about 2.3% of the total power output of China. The nation plans to increase nuclear generating capacity to 40GW and build 30 to 35 nuclear reactors by 2020, when nuclear power is projected to account for 4% of the nation’s total generating capacity.

According to the RMB four trillion stimulus package, China plans to invest more than RMB1.8 trillion in the infrastructure buildup including the energy. In the fourth quarter of 2008, the Chinese central government allocated an additional RMB 2 billion to improve the rural power grid, and another RMB 2 billion to the construction of the urban power grid, and RMB 800 million to support domestic development and manufacturing of nuclear-power and wind-power terminals.

As an effort of the China’s stimulus package, China Guangdong Nuclear Power Corporation (CGNPC), the only nuclear power generator in China, will inject RMB30 billion into its own projects in the nuclear power sector after RMB580 billion was allotted to the nuclear and wind power projects.

China’s current nuclear power installed capacity stands at 9000 mw, accounting for 1.3% of the country’s total installed power generating capacity. In 2008, nuclear power sector contributed merely 1.99% of the country’s total electricity output.

According to the national electric power investment plan, in 2009, China will kick off construction of new nuclear power projects in Zhejiang (Sanmen Nuclear Power Project), Shangdong (Haiyang Nuclear Power Project), and Guangdong (Taishan Nuclear Power Project), to add another 8400 mw installed capacity to the power generation industry; by 2020, the nuclear power installed capacity will increase to 70000 mw.

Chinese Nuclear Power Plants in Operation, Under Construction, & NDRC Approved (Feb.6, 2009)

I. Nuclear power plants in operation

	Power plants	Capacity	Location of provinces	Completion year	Technology suppliers
1	Qinshan 1st Phase	300 mw	Zhejiang	1991	China
2	Qinshan 2nd Phase	2x650 mw	Zhejiang	2002	Canadian Atomic Energy Co. Ltd.
3	Daya Bay	2x984 mw	Guangdong	1994	Areva, France
4	Ling Ao 1st Phase	2x990 mw	Guangdong	2003	Areva, France
5	Qinshan 3rd phase	2x700 mw	Zhejiang	2003	Canadian Atomic Energy Co. Ltd.
6	Tianwan 1st phase	1060 mw	Jiangsu	2006	Rostam, Russia
7	Tianwan 2nd Phase	1060 mw	Jiangsu	2007	Rostam, Russia
	Total	9068 mw

II. Nuclear power plants under construction

	Power plants	Capacity	Location of provinces	Completion year	Technology suppliers
1	Qinshan 2nd phase	2x650	Zhejiang	2011	Canadian Atomic Energy Co. Ltd.
2	Ling Ao 1st phase	2x1080 mw	Guangdong	2010/11	Areva, France
3	Hongyanhe	4x1000 mw	Liaoning	2012/14	China
4	Ningde	4x1000 mw	Fujian	2012/15	China
5	Fuqing	6x1000 mw	Fujian	2013	China
6	Yangjiang	6x1000 mw	Guangdong	2013/17	China

III. NDRC approved nuclear power plant projects:

	Power plants	Capacity	Location of provinces	Completion year	Technology suppliers
1	Haiyang	2x1000 mw	Shandong	2013	Westinghouse, USA
2	Sanmen	2x1000 mw	Zhejiang	2013	Westinghouse, USA
3	Qinshan	2x1000 mw	Zhejiang	2013/14	China
4	Taishan	2x1600 mw	Guangdong		Avera, France

Source: International Financing Newspaper – People’s Daily Website, March 11, 2009

Chinese Regulator

National Energy Administration (NEA)
National Development and Reform Commission of China (NDRC)
State Electricity Regulatory Commission (SERC)

Key Contacts

National Development & Reform Commission, NEA
38 Yuetan Nanjie, Beijing 100824
Tel: (86-10) 6850-2876
Fax: (86-10) 6850-1458
Website: http://www.ndrc.gov.cn

State Electricity Regulatory Commission, Department of International Cooperation
86 West Chang’an Boulevard, Beijing 100031
Tel: (86-10) 6659-7322
Fax: (86-10) 6659-7305
Website: http://www.serc.gov.cn

China Electricity Council, Department of International Cooperation
No.1, Lane 2, Baiguang Road, Beijing 100761
Tel: (86-10) 6341-5533
Fax: (86-10) 6354-5305
Website: http://www.cec.org.cn

Guangzhou Office
Tel: (86-20)8667-4011
Fax: (86-20)8666-6409
Lena Yang

Chengdu Office
Tel: (86-28)8558-3992
Fax: (86-28)8558-3991
Cui Shiyang

Shenyang Office
Tel: (86-24)2322-1198x8142
Fax: (86-24)2322-2206
Liu Yang

中文

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