China locates its investment agency in Canada
The anticipated arrival in Toronto of an office of the China Investment Corporation, described among other places in the January 12 Globe and Mail, is by now a well-known and much-anticipated fact. The CIC is reported to have up to $300 billion to place around the world.
Shanghai Securities News reported in late December that the Chinese government was setting up what’s being called the second CIC, Guoxin Asset Management Corp, another State-owned asset management company wholly owned by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).
The company is expected to speed the consolidation of State-owned firms and turn unprofitable State-owned enterprises (SOEs) into money-making entities to meet the listing requirements of domestic stock exchanges.
According to reports, the company is expected to restructure between 20 and 30 small-sized SOEs, with the aim of reducing the 123 SOEs currently under central government control to 80-100 in 3 to 5 years. China’s central SOEs reported profits of 723.55 billion yuan ($107.83 billion) in the first eight months of this year, up 50 percent year-on-year, according to the SASAC.
“The move to launch Guoxin Asset Management Company is aimed at speeding-up restructuring State-owned assets and cutting the number of central SOEs,” said Liang Xiaomin, an expert on SOEs at Beijing Technology and Business University, reported in China Daily November 17.
Once established, Guoxin Asset Management Company will be the third asset-management company under SASAC. Similar entities to Guoxin Asset Management Company are China Chengtong Group and State Development and Investment Corp.
Ottawa, Shanghai companies build 3rd-gen PV in China
Ottawa-based Cyrium Technologies, Inc., a developer and supplier of concentrating photovoltaic (CPV) cells, announced January 26 the opening of a 200 KW HCPV (high concentrating photovoltaic) power station owned and operated by Qingdao HG Solar Energy Co., Ltd. The plant location is in the city of Quindao, on the coast of the Yellow Sea, opposite South Korea.
The HCPV systems at the facility are powered by Cyrium’s QDEC high efficiency triple junction CPV cells installed in modules manufactured by Shanghai-based Suntrix Co., Ltd. and mounted on tracking systems designed by Suntrix and produced by Qingdao HG Solar Energy Co. Ltd.
“Cyrium has been working for more than a year to establish a presence in the Chinese market. Our relationship with a great company like Suntrix is just the first step in our efforts to bring Cyrium’s patented QDEC concentrator photovoltaic technology to the Chinese market,” said Harry Rozakis, CEO and President of Cyrium.
Collaboration between Suntrix and Cyrium Technologies on this demonstration project began several months earlier and highlights the opportunity that exists in China for HCPV systems. Construction of the power station started in November 2010 and was completed in January.
Cyrium’s portion of the project received support from Environment Canada’s Asia Pacific Partners (APP) program, as part of the Canadian government’s effort to bring Canadian and China based companies together to foster cross-border collaboration on clean technology projects.
HCPV is considered to the 3rd generation of PV technology, Cyrium explains, making use of low cost, light-concentrating optical systems and group III-V semiconductor materials for the solar cell. The photoelectric conversion efficiency is 2 times more than silicon technology and requires significantly less land area than other technologies for deployment. It also has the highest possibility of reducing power generation cost to the level of coal-fired power, which is of considerable importance in China. The completion of this 200KWp project is a signature event in moving China towards greater deployment and application of HCPV systems to meet its rapidly growing energy needs.
Photo: Cyrium-Suntrix PV installation
Caption: The Suntrix Co., Ltd. CPV (Concentrating Photovoltaic) sytems installed at the Qingdao HG Solar Energy, Co., Ltd. site in Qingdao, China.
Photo courtesy Cyrium Technologies, Inc.
China plans to add 500 GW of capacity over 5 years, official says
China’s People’s Daily, January 7: China plans to increase its installed power generation capacity by 500 million kilowatts over the coming five years, a State Grid Corporation of China (SGCC) official said. This is in the same order of magnitude as adding the amount of transmission and generation that presently exists in all of Canada to China every year.
China’s installed electricity capacity had reached 960 million kilowatts at the end of 2010, SGCC general manager Liu Zhenya said at the company’s annual work meeting in Beijing. The company’s revenues increased 22.4 percent year on year to 1.5 trillion yuan (226.59 billion U.S. dollars) in 2010, Liu said.
From 2006 to 2010, SGCC’s investment in its power grid topped 1.2 trillion yuan, exceeding the total investment during the previous 56 years, since the founding of the People’s Republic of China, he said. SGCC is China’s biggest electric power transmission company, distributing power to 88% of the country’s territory.
Graph: china-us power price comparison
Comparison of retail power prices, US-China, 1995-2008. Source: US EIA
Backgrounder on China’s energy sector
In 2002, the Chinese government dismantled the monopoly State Power Corporation (SPC) into separate generation, transmission, and services units. Since the reform, China’s electricity generation sector is dominated by five state-owned holding companies, namely China Huaneng Group, China Datang Group, China Huandian, Guodian Power, and China Power Investment. These five holding companies generate about half of China’s electricity. Much of the remainder is generated by independent power producers (IPPs), often in partnership with the privately-listed arms of the state-owned companies. Deregulation and other reforms have opened the electricity sector to foreign investment, although this has so far been limited.
While the generation sector has some market competition, the transmission and distribution sectors are heavily state-controlled. During the 2002 reforms, SPC divested all of its electricity transmission and distribution assets into two new companies, the Southern Power Company and the State Power Grid Company. The government aims to merge SPC’s 12 regional grids into three large power grid networks, namely a northern and northwestern grid operated by State Power Grid Company and a southern grid operated by the Southern Power Company by 2020. Also in 2002, the State Electricity Regulatory Commission (SERC) was established, which is responsible for the overall regulation of the electricity sector and improving investment and competition in order to alleviate power shortages.
Wholesale and retail electricity prices are determined and capped by the NDRC, which can limit the profit margin of generators. Also, the NDRC determines a plan price that coal companies should sell to power producers for a certain level of supplies. Typically, generators negotiate directly with coal companies for long-term contracts, though in the past few years, rising power demand and higher coal costs led to some power shortages and higher costs for generators. Coal prices then collapsed in 2009. The NDRC made small changes to its pricing system, and in 2009, the agency allowed electricity producers and wholesale end-users such as industrial consumers to negotiate with each other directly. Also, China raised end-user prices for all sectors except the residential sector by $0.04/kwh in late 2009. The latest power tariff changes were from June 2010 when the government raised rates for energy intensive industries by 50–100% to achieve energy efficiency goals for the year.
Conventional thermal generation
Conventional thermal sources currently make up about 81 percent of power generation and over 77 percent of installed capacity and are expected to remain the dominant fuel in the power sector in the coming years, with many projects that will use coal or natural gas. In 2009, China generated about 2,803 BkWh from fossil fuel sources.
Natural gas currently plays a small role in the power generation mix (currently 5 percent of installed capacity and 2 percent in net generation); however, the government plans to invest in more gas-fired power plants as a growing marginal fuel source.
Hydro power
In 2009, China was the world’s largest producer of hydroelectric power. In the same year, China generated 549 Bkwh of electricity from hydroelectric sources, representing 16 percent of its total generation. Also, according to FACTS Global Energy, installed generating capacity was around 197 GW in 2009, accounting for over a fifth of total installed capacity. These figures are likely to increase given the number of large-scale hydroelectric projects planned or under construction in China, and the government’s State Energy Bureau announced plans to increase hydro capacity to 380 GW by 2020.
Nuclear
China is also actively promoting nuclear power as a clean and efficient source of electricity generation. Although nuclear capacity (around 9 GW) makes up only a small fraction of China’s installed generating capacity, many of the major developments taking place in the Chinese electricity sector recently involve nuclear power. China’s government forecasts that over 70 GW will be added by 2020.
— From the US Energy Information Administration, at http://www.eia.doe.gov/emeu/cabs/China/Electricity.html
China expected to surpass US GDP
“[China] has over four times as many people as America, and so its output per capita only needs to be about a fourth of America’s to match it in total size. … So even if China never becomes as productive as western Europe or South Korea, to say nothing of America, it will have the world’s largest economy by a healthy margin (until, that is, India catches up). And that means that China will have enormous influence in the world—will be an agenda setter—and will, in some ways, be able to marshal more real resources than America. Within Asia, China’s influence will dwarf that of America. Power inevitably follows economic might, and China will soon be the mightiest.”
— From The Economist, “How to gracefully step aside,” Jan 10th 2011.
Sidebar:
China about to enter the world market as a major exporter
The following material is excerpted and adapted from China Wind Power Outlook 2010. See full reference below.
In a few years China’s domestic industry has gone from a near-complete reliance on imported equipment to having three manufacturers in the global top 10 (Sinovel, Goldwind and Dongfang Electric) and five in the top 15, supplying more than 80% of the domestic market; and is entering the export market in a serious way. Construction was completed on China’s first offshore wind farm in the first half of 2010.
- Steve Sawyer, Secretary General, Global Wind Energy Council (GWEC)
• In 2009, the Chinese wind power industry doubled its capacity over the previous year – in fact the fourth consecutive year it had done so, reaching 10,129 MW and incidentally overtaking the US for new installations. Installed capacity thus reached 25.8 GW by the end of that year. Newly installed capacity was the largest in the world. Its cumulative installed capacity now ranks second in the world. The country’s equipment manufacturing capability also took first place in the world. In 2009 China produced wind turbines with a total capacity of over 15 GW. Experts from the Chinese Academy of Engineering and the National Development and Reform Commission have projected in 2008 that under low, medium and high growth outcomes Chinese wind power capacity will reach either 100, 150 or 200 GW by 2020. GWEC has higher estimates, possibly 253 GW by 2020 and 509 GW by 2030.
• Sinovel, Goldwind, XEMC, Shanghai Electric Group and Mingyang produce turbines of 2MW capacity or greater, and are all developing 5 MW or larger turbines and can be expected to produce competitive and technically mature machines – though commentators caution that quality remains a concern.
• All the top 10 enterprises have established their own R&D centers. The emphasis originally placed on purchasing a production license has changed to the manufacture of complete turbines. Licensed designs, joint designs and independent designs have become the main methods for Chinese companies to obtain their own independent technology.
• In 2009 China also ranked first in production of photovoltaic panels for the third consecutive year, accounting for approximately 40% of the global market.
• The government of China has committed to seven 10-GW-scale “wind power bases” in various parts of the country, including Inner Mongolia, to contain a total 138 GW by 2020. Planning began in 2008 and is well underway, according to the latest China Wind Power Outlook (see URL below).
• Greenpeace International Executive Director Kumi Naidoo notes that China is also now putting up two wind turbines every hour.
• A total of 20 enterprises had newly installed capacity of more than 100 MW in 2009, including ten central government-owned enterprises, six state-owned local energy enterprises and four private and foreign-funded enterprises.
Sidebar:
China’s remarkable growth as a wind power developer and manufacturer
• In 2009, China started to export complete wind turbines, with a total of 20 sets with a capacity of 28.75 MW going to four countries. The main exporters were Sinovel, Sewind and Goldwind.
• Before 2005, foreign companies dominated the wind power market in China, accounting for more than 70% of the market. By 2009 this had decreased to about 13%. The market share of domestic manufacturers had therefore increased from 25% in 2004 to 87% in 2009. Several major international manufacturers have subsidiaries in China, including Vestas, Gamesa, GE and several others. All have built assembly lines for complete turbines and parts production facilities. The proportion of turbine parts made in China has steadily increased. [This is reflected in the experience of Spanish turbine manufacturer Gamesa, described a pair of articles in the New York Times, December 14-15, 2010. Gamesa set up manufacturing in the country, and found itself required by government policies to turn over more and more of its key processes to the local operation. However, even with the decrease in parts import from Europe, Gamesa found itself making increasing profits.]
There are, of course, also many enterprises specializing in gearboxes, blades, electric motors, hubs, main shafts, bearings, etc. By the end of December 2009, more than 50 enterprises had invested in the development of wind power and established approximately 330 project companies to participate in the development and construction of wind parks in China.
– Excerpted, except where noted, from China Wind Power Outlook 2010, published October 2010 by the Chinese Renewable Energy Industries Association (CREIA) with the support of Greenpeace and the Global Wind Energy Council (GWEC). Available for download at http://www.greenpeace.org/china/en/press/reports/wind-power-report-english-2010
Graph: china wind-power-outlook-52.jpg
Caption: Newly-installed wind capacity market share in China, domestic vs. foreign China Windpower Outlook
Chinese companies’ interest in Canada growing
Robert Hornung, President of the Canadian Wind Energy Association, has found considerable interest among private Chinese companies in Canada. In a recent telephone interview he made the following observations:
“I had the opportunity to visit Shanghai last fall, at a forum organized by the federal Department of Foreign Affairs and International Trade (DFAIT), to introduce Chinese firms to the Canadian market. I was struck by how many of the companies I met with had already been talking to people in Canada. Companies are looking for potential turbine customers. Project developers have been looking for potential partners and a number of Chinese financial institutions are looking for opportunities to support projects through financing. All are seeking to better understand the Canadian marketplace. So Chinese companies are looking seriously at opportunities, though it hasn’t yet produced much in the way of concrete announcements. But, speaking from the wind industry at least, the interest is very real. Only five years ago, there were just two markets globally, North America and Europe. Now there’s also Asia, and each of those markets are looking to expand.
“Last year at the American Wind Energy Association trade show, the single biggest difference with the preceding year was the number of Chinese firms exhibiting – up by 25.”
Graph: china wind-power-outlook-51.jpg
Chinese Renewables Association President offers cautions
While China’s rise as a world wind power, both in installed capacity and in manufacturing, is nothing short of startling, and it is poised to become a, or even the, major force in other countries’ markets, Zhu Junsheng, President of Chinese Renewable Energy Industries Association, had the following caution:
“China has now joined the front ranks of the world in terms of both the industrial and market scale of its wind power industry. However, in some respects China’s international position as a large manufacturing country has not been changed. China remains dependent on Europe and America for the key design technology of wind turbine generator systems; the detection and certification systems for wind turbine generator systems are not sound; the developers of Chinese wind power lack experience in the long-term operation and maintenance of wind power plants; China’s own technology for evaluation of wind resources is still at an early stage; and the cultivation and maintenance of Chinese skills in wind power remains insufficient.”
— Quoted in China Wind Power Outlook 2010.
Box
A China Energy Primer
Excerpt, from Lawrence Berkeley Labs, Berkeley, California
Major polices of the power sector from 2000 are as follows.
• Promote market and electricity pricing reform: Continually promote competition in the generation sector. Introduce Time-of-Use (TOU), Seasonal, and Peak and Off-peak pricing schemes; implement Demand-Side-Management (DSM), and establish preferential pricing policies for renewable and clean energy sources; and implement a bilateral power purchase pilot program. Gradually establish generation, transmission and distribution pricing mechanism.
• Strengthen the construction of the Electric Grid Network: Construct three electricity transmission routes that transport power from the West to the East of the country and construct cross-region transportation and distribution networks.
• Aggressive development of hydropower: Construct hydropower bases on the Jinsha, Yalong, Lancang and upper Yellow rivers, and establish large-scale hydropower stations in Xiluodu and Xiangjiaba, while also developing a number of pumped storage hydropower plants.
• Optimize the development of thermal power generation through the development of high efficiency and environmentally friendly large-scale electric power plants. Install large-scale ultra-super critical power plants as well as air-cooled power plants. Promote clean coal technology, construct 600 MW (per unit) circulating fluidized bed (CFB) power plants, and launch gas-based combined cycle electric generation projects.
• Install 10 GW of nuclear power capacity by 2010 and 40 GW by 2020.
• Greatly develop wind power by constructing thirty 100 MW wind farms and four GW class wind farms in the Inner Mongolia region, Hebei, Jiangsu, and Gansu provinces.
LBL’s China Energy Primer is available at http://china.lbl.gov/, click on China Energy Primer at the left.
Box:
China database available
Lawrence Berkeley Labs offers a China Energy Databook, comprising a fully relational database of national and provincial energy balances, plus detailed sectoral energy end-use tables, containing over 103,000 data points, and second, a set of several hundred tables and figures in Microsoft Excel and PDF formats, organized into ten chapters. The databook is available on CD at no charge at http://china.lbl.gov/databook, scroll down to the request form link.
China puts money into Brazil
Chinese news agency Xinhua reported in late January that Brazilian President Dilma Rousseff inaugurated a thermoelectric power plant built with China’s help. The 350 MW, coal-fired Candiota III, located in southern Rio Grande do Sul state, was built in partnership with China’s Citic Group and China Development Bank and is valued at about US$780 million. It will meet 15 percent of Rio Grande do Sul state’s energy needs. The plant uses desulfurization technology to reduce acid emissions.
The presidential statement said it is the first big joint investment between Brazil and China, which provided training for more than 5,000 Brazilian workers hired for the project.
On December 22 several news agencies reported on how Chinese utility State Grid Corp. had agreed to a deal worth nearly US$1 billion to buy seven Brazilian power transmission companies, itself just the latest in a series of large investments by Chinese corporations in Latin America. The companies involved are owned by Elecnor SA, Abengoa SA, Isolux Ingenieria SA and Cobra Instalaciones y Servicos SA, Bloomberg reported.
Siemens to use Chinese-made PV panels
News agency Reuters reported January 27 that German engineering conglomerate Siemens AG will be using photovoltaic panels made by China’s Suntech Power Holdings Ltd in several solar power projects that Siemens has in Europe. Siemens is building solar power plants with a combined capacity of over 80 megawatts in six European countries, the company has said.
Although Germany is home to several of the world’s top solar panel producers, Chinese manufacturers have been making inroads into German and other European markets due to the cost of their panels.
Investment opportunities in China
China has more than one website listing details of inbound foreign investment.
• Invest in China, www.fdi.gov.cn. Opportunities are cross-referenced under various categories. “Hightec” includes New Energy Resources and Effective Energy Conservation, Environmental Protection, New Materials, Optical-Electromechanical Integration. A couple of examples from this site, under Hightec:
› Power generation project using linyi stalks (a vegetable preparation waste product). Linyi Cangshan Economic Development Zone Investment Promotion Bureau,
› “20MW crystalline silicon solar battery industrialization. Scale of construction 20 MW crystal silicon solar cell, the product scheme is annual output of 10 MW crystal silicon photocell, annual output of 10 MW solar battery module” - joint venture, Jiaozuo Riguang New Energy Co., Ltd. Dated 2010-10-21
• www.trade.gov.cn. Examples:
› Qingdao Hengfeng Wind Power Generator Co.,Ltd. has a number of small (3 kW to 50 kW) wind power generators that it seems to be interested in finding out-of-country sellers for.
› Zibo Luming Heat Temperature Material Science and Technology Co., Ltd. makes a number of high-temperature refractory materials.
Other links:
• Investment in China, http://www.china.org.cn/english/features/investment/36684.htm. Includes the English text of China’s laws on foreign investment in a sidebar on the left, and several FAQs.
E.g., from “[F]avorable policies for further encouraging foreign investment in high technology industries: - 7) The incomes of foreign-invested enterprises and research and development centers and foreign enterprises and individuals obtained from technology transfer and development and related technological consultation and services shall be exempted from business tax.”
• China Investment Corp., http://www.china-inv.cn, also http://chinainvestmentcorp.com/.
Guide to China’s wind industry
China Wind Energy Perspectives 2011 (CWEP 2011), offering an extensive array of data, was recently released. CWEP “aims to provide useful information for foreign organizations that hope to build links with and find business opportunities in China’s wind sector.” Comprising information on policy, technology, and commercial opportunities, the report is available for subscription at USD1600 per hard copy. The buyer will also enjoy free updates about important information in China wind power industry for the year 2011.
Examples of some of the sections in the report include:
• Wind power installation in 2010
• Grid integration of wind power
• Wind resources of the major wind provinces
• National wind policies and regulations
• Provincial and local wind power policies
• Major offshore wind farms
• Wind Energy Standards, Codes, and Specifications
• Sino-foreign cooperation in wind energy
• Key governmental organizations related to wind
• Wind power installation in major Chinese provinces in 2009
• Phase 2 Concession projects of Zhangjiakou Bashang 1000MW Wind Power Base
• Export of large wind turbines
• China benchmark feed-in tariff (BFT) for wind power generation
• Major wind turbine blade manufacturers in China
• China offshore wind power projects
• Wind resources zoning map (at height of 50m)
To purchase the report, interested parties may contact
GE, Shenhua to develop coal gasification
Washington & Beijing: General Electric and coal-based energy company Shenhua announced January 18 that they had agreed to form an industrial coal gasification joint venture to advance the deployment of “cleaner coal” technology solutions in China.
The new company combines GE’s expertise in industrial gasification technologies with Shenhua’s expertise in coal gasification and coal-fired power generation. The announcement was made as part of the Chinese President Hu Jintao’s state visit to the United States.
The agreement was signed at a ceremony at the Strategic Forum on U.S.-China Clean Energy Cooperation in Washington D.C. It establishes a joint venture company in which GE and Shenhua would sell industrial coal gasification technology licenses, jointly advocate for and develop integrated gasification combined cycle (IGCC) facilities and conduct research and development to improve cost and performance of commercial scale gasification and IGCC solutions. This includes industrial coal gasification applications in China as well as jointly pursuing the deployment of commercial scale IGCC plants.
“Shenhua has deep experience in developing and operating coal gasification and coal-fired power generation facilities in China, including the Shenhua Baotou coal to olefins facility, which uses GE’s gasification technology,” said Mr. Zhang Xiwu, Chairman of Shenhua Group Corporation Ltd. “Collaboration between our two companies in this joint venture will create a gasification technology business in China with significant local presence, focus, resources and expertise.”
“Coal plays an important role in the economies of the U.S. and China, and gasification technology allows us to use this abundant and low cost resource in a much cleaner way,” said Keith White, general manager, gasification, GE Power & Water. “This joint venture company is an evolution of the strong gasification business GE has in China today; today’s announcement represents an important investment by GE and Shenhua in the future of gasification in China and the deployment of cleaner coal technologies. Each business intends to contribute existing technology, operational and service expertise to create a comprehensive gasification and cleaner coal technology and service provider in China.”
The joint venture company would be established and commence operation later this year, subject to regulatory approvals.
Graph: EIA china energy consumption pie chart
China to build ultra-high voltage transmission
China’s People’s Daily, January 30: China plans to invest in further development of long-distance, high-capacity power transmission technology, aiming to bring more power from its remote western and northern regions to the energy-hungry east and south coasts.
State Grid Corp of China (SGCC), the country’s leading power distributor, said in a company newspaper on Friday that it planned a pilot project for a 1,100 kilovolt (kV) direct-current power transmission line within five years. It did not provide details of the project, saying only that it aimed to finish key technology research in one and a half years, and key equipment manufacturing in two years.
SGCC put an 800 kV direct-current line with a transmission capacity of 6.4 gigawatts into operation in July last year. That line carries electricity from hydropower-rich Sichuan Province to Shanghai, a distance of 1,907 kilometers.
It also started a 640 km, 1,000 kV alternating-current power line, the world’s first, in early 2009, linking the hydropower-rich Hubei and coal-abundant Shanxi regions, and plans to double its transmission capacity to 5 GW before the end of this year.
China Southern Power Grid Corp kicked off a 1,373 km, 800 kV direct-current power line with a capacity of 5 GW in the middle of 2010 that carries power from the hydropower-rich Guizhou and Yunnan provinces and the Guangxi Zhuang autonomous region to the export hub of Guangdong province.
China is the only country in the world with plans to build large ultra-high voltage (UHV) power-line networks, China Daily says, with SGCC alone earmarking more than 500 billion yuan (US$75.98 billion) to build 40,000 km of lines by 2015.
China winning green economy race, climate official says
China is winning the Green Economy race, according to the head of the UN Framework Convention on Climate Change.
“China is going to leave all of us in the dust,” said Christiana Figueres, speaking at the World Economic Forum January 27 in Davos, Switzerland. “They’re committed to winning the green economy race.”
China last year boosted spending on low-carbon energy by 30 percent to $51.1 billion, ‘‘by far the largest figure for any country,’’ Bloomberg New Energy Finance said January 11.
Global accounting firm Ernst & Young said in September that China for the first time overtook the U.S. in its quarterly index of the most attractive countries for renewable energy projects.