POWER July 2010 - 34

POWER IN CHINA
2. Who consumes China's power?
China's power consumption shot up 6% last
year, compared to 2008, to 3.643 trillion kWh,
spurred by a ¥755.84 billion (US$110.67 billion)
investment (nearly 20% more than the
year before). By the end of 2009, the country's
installed power generation capacity, shown
here, was 874.07 GW, an annual increase of
10%. Already in the first four months of 2010,
increased consumption (on average 25%
per month year-on-year) has been met by increased
oil- and coal-fired generation. Officials
point out that this not only indicates that the
economy is rebounding but also that industrial
activity has rebounded. Boosts are particularly
attributed to a stimulus-incented increase in
public works construction, which requires
much steel and cement. Sources: China National
Energy Administration, National Bureau
of Statistics
Tertiary sector
(services),
392 kWh: 11%
Residential
power use,
457 kWh:
13%
Secondary industry sector
(manufacturing and
construction),2,700 kWh: 73%
Primary industry sector
(agriculture, mining,
quarrying, etc.),95 kWh: 3%
3. Chinese generation vs. consumption. Demand for power has soared in recent
decades, particularly in the past five years, driven by an accelerating economy and tremendous
population growth. Sources: China Electricity Council, State Grid Corp. of China
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
Power generated
Power consumed
2005
2006
2007
Year
the context of wider economic reforms to
promote growth and economic development.
The first set of reforms in the mid-1980s
opened up generation to investment by third
parties outside the central government (mainly
provincial and local governments, but also
some domestic and foreign companies).
Power plants built and purchased by these
investors-sometimes called independent
power producers (a term that is misleading
in the Chinese context because most are government-linked
private companies)-now account
for over half of China's total capacity.
By the end of 2002, China had dismantled its
single, vertically integrated utility-the State
Power Corp. (SPC), which by then had 46%
of the country's generating capacity and 90%
of transmission capacity-into 11 separate
generation, transmission, and service units.
Today, the sector is dominated by five stateowned
holding companies, namely China
Huaneng Group, China Datang Group, China
Huandian, Guodian Power, and China Power
Investment. These companies generate the remaining
half of China's electricity. The transmission
and distribution sectors continue to
be heavily state-controlled, however. During
the 2002 reforms, the SPC divested all of its
34
electricity transmission and distribution assets
into two new companies, the Southern Power
Co. and the State Power Grid Co. The government
plans to merge SPC's 12 regional grids
into three large power grid networks by 2020:
a northern and northwestern grid operated by
State Power Grid Co. and a southern grid operated
by the Southern Power Co. The sector
is regulated by the State Electricity Regulatory
Commission, a body also established in 2002.
China continues to reform the sector, seeking
to separate power plants from power-supply
networks, privatize a significant amount
of state-owned property, encourage competition,
and revamp pricing mechanisms. At
the same time, it is looking to better coordinate
and formulate strategic energy policy.
This May, for example, the government established
the National Energy Commission
(NEC), an overarching " super-ministry " that
will be headed by Premier Wen Jiabao and be
responsible for drafting national energy development
plans, reviewing energy security,
and coordinating international cooperation.
The agency will comprise 21 members, including
ministers from various organizations
such as the National Development and Reform
Commission (NDRC) and the Ministry
of Finance as well as a representative from the
central bank. Among that agency's foremost
priorities is to reach the hefty goal set last year
of reducing the intensity of carbon dioxide
emissions per unit of GDP by 2020 by 40% to
45% from 2005 levels, a feat that officials say
requires coordination with different ministries.
www.powermag.com
A Power Generation
Besides the accelerating economy, a major
factor that drives booming energy consumption
(Figure 3) is China's immense population
growth rate of around 7 million a year.
The country's population of 1.34 billion
could peak at 1.5 billion-an increase of
nearly 200 million-before growth trends
show a decline. At the same time, China is in
a stage of rapid urbanization.
So how does the country plan to provide
power for this growth?
Heightening Hydropower
China, a country traversed by several massive
rivers, especially in the southwest, is the
world's largest producer of hydroelectric power.
The nation currently has 197 GW of hydropower
generating capacity-a jump from
170 GW installed in 2008. In 2009, China inaugurated
several units of the 22.5-GW Three
Gorges project along the Yangtze River. When
fully complete in 2011, that project, comprising
32 separate 700-MW generators, will be
the largest power project in the world (Figure
4). Even larger projects could be in the pipeline:
The UK's Guardian newspaper reported
this May that blueprints were being drawn
up for a gigantic 38-GW dam in the Yarlung
Tsangpo River in Tibet-despite concerns
that the project could pose water conflicts and
environmental issues for nations downstream,
like India and Bangladesh.
According to the NEA's Zhang, new hydropower
will be critical if China is to meet
POWER | July 2010
2008
2009
2010
kWh (billions)

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POWER July 2010

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