POWER September 2014 - 10

2. Banking on gas. Reserve margins for Hong Kong's two largest vertically integrated companies,
CLP Power Hong Kong and HK Electric, were about 30% and 50%, respectively, but are
expected to decline in the coming five years as demand grows and some generating units are
retired. About 68% of HK Electric's power comes from coal-fired units, though it also owns the
massive 3.7-GW natural gas-fired Lamma Power Station, shown here. Courtesy: HK Electric
ity exceeds 99.99%. The region's last major
blackout was in the mid-1980s.
Since the mid-1990s, Hong Kong has
drawn nearly 25% of its power needs
from China's Daya Bay nuclear power
plant in Shenzhen. Both options would
keep the level of imported nuclear power
at about 20%.
But to get more power from the mainland,
as called for in the " grid option, "
government authorities conceded that
Hong Kong would need to create a new
cross-border link, one capable of transmitting
about 30% of the region's projected
power demand by 2023 from the shortagestricken
China Southern Power Grid. And
it would still require 50% to be generated
locally, with 40% from gas and 10% from
coal and renewables.
Meanwhile, increasing gas generation
as several power generating units are slated
to be retired. The government's consultation
document also notes that the territory
lacks its own indigenous resources for power
generation, but that local companies,
which have a total generating capacity of
about 12 GW and produce about 77% of
the region's power, have ensured reliabilunder
the " local generation " option would
mean Hong Kong's two largest power
providers, CLP Power Hong Kong and HK
Electric (Figure 2), would need to triple
investment in new generation. While natural
gas would make up the lion's share
of the region's generation at 60%, the remaining
20% would still come from coal
and possibly renewables.
Officials seem to lean toward the grid
When safety really matters
option, pointing out that the region already
buys all of its gas from the mainland,
and that more imports will allow
Hong Kong to access a greater diversity of
clean energy sources.
In a recent submission to the government's
public consultation on the region's
future fuel mix, CLP Power said a phased
and flexible approach combining both
planning for initial gas units and intensive
study for a new cross-border interconnector
would deliver the best long-term
value for Hong Kong.
HK Electric, meanwhile, backed the local
generation option, pointing out that
the grid option is untested and highly
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POWER | September 2014
uncertain. And while it would involve
" engineering complexity and huge land
demand, " the grid option would also " endanger
Hong Kong's supply of safe and reliable
electricity, increase emissions, with
a tariff impact much more significant "
than that under the local generation option,
noted HK Electric's Managing Director
Wan Chi-tin.
The local option, on the other hand, is
" flexible and workable, " said Wan. Responding
to concerns about the regional volatility
of natural gas prices now and in the future,
Wan said rapid gas infrastructure development
along the Guangdong Coast is expected,
along with new offshore gas field production
in the South China Sea.

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POWER September 2014

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