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Electric Power Industry in China
Hui RenUniversity of Wisconsin-Madison
North China Electric Power University
PSERC Tele-Seminar, Feb. 6, 2007
2
Contents
Power network in ChinaPower supply and demandCauses of 2002-2005 power shortageFuture power development plan and challengesPower industry reform
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Power network in China
500kV500kV
220kV220kV330kV330kV
Thermal Thermal PlantPlantHydroHydroPlantPlantNuclearNuclearPlantPlant
XinjiangXinjiang
TibetTibet
NortheastNortheast
NorthNorthNorthwestNorthwest
ChuanyuChuanyu CentralCentralEastEast
SouthSouth
Power network coverage 96.4% Hainan
Shandong
Fujian
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Grid interconnection
Northeast
Tibet
North China
Northwest
South China
Central ChinaEast China
Taiwan
500KV AC(2)2001 / 051200 MW
±500KV DC(3)1989 / 2003/22077200 MW
500KV AC(1)2003 / 09800 MW
120KV DC(1)2005 / 06360 MW
±500KV DC(1)2004 / 023000 MW
500KV AC(3)20011900 MW
500KV AC(2)2006 / 061200 MW
State Grid Corporation
5
North corridor
Central Corridor
South Corridor
The capacity of each corridor will reach about 20GW in 2020.
Power transmission from The West to the East: Three transmission corridors
6
Power supply and demand
Growth of GDP, energy and electricity use
7
Power supply and demand
China’s installed capacity and power generation output are second largest in the world’s electricity industry following the United States
Source: China Electricity Council (http://www.cec.org.cn/cec-en/index.htm
8
Power supply and demand
(100%)(24.7%)(10.6%)(% of world total)
2,57813,1201,288Power generation per capita (KWh/person)
15,614.13,858.51,654.2Power generation (TWh)
(100%)(26.4%)(9.6%)(% of world total)
3,372.8979.6356.6Installed capacity (GW)
World totalU.S.China
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
American w orld total china
Electricity intensity per capita is 1/10 that of U.S. and less than half of the world’s average.
2002 Per Capita Generation in
KWh per person
2002 Data
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Power supply and demand
Coal is the major generation supply fuel.2.3% 0.06%
15%
82.64%
Nuclear
ThermalHydro
Others
Power generation in 2004 Installed capacity in 2004
73.72%
24.57%
0.16%1.55%
(1,807 TWh)
(328 TWh)
(50 TWh)
10
Power supply and demand
41%
15%17%
8%5%
5% 5% 4%≥300MW
200-300MW
100-200MW
50-100MW
25-50MW
12-25MW
6-12MW
6MW
Coal-fueled installed capacity mix in 2003 by unit size. The total installed capacity is
289,770MW
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Power supply and demand
69.8
1.07
2.2
3.47
5.04
13.22 5.2
Source: China Statistical Annual and China Energy Resource Statistical Annual, and China Electric Power Information Center. 2002 data.
Industry
Agriculture, forestry,ranching and fishery
Residential
Other
Commercial
Transportation and communication
Construction
Preliminary industry
Secondary industry
Tertiary industry 10.71%
70.87%
5.2%
13.22%
69.8
13.2
17
28
36.5
35.5
47.7
31.3
21
49.3
15.2
35.5
0%10%20%30%40%50%60%70%80%90%
100%
china U.S. Japan Korea
other
Resid
Indus
Industry electricity use dominates other sectors
Share of total 2002 electricity use by sector in 4 countries
China’s 2002 elec. use
12
Power supply and demand
13%18%20%-2%18%‘02-’05 annual growth
11.5%10.65%74.85%3%
11.24%10.7%74.9%3.16%
10.2%13%73.8%3%
24.4%1,900.82,422.213751.255918,6332003
10.4%1,9801,60010,61978014,9792002
2005
2004
Year
2,840
2,444
13.22%
Residential
13.5%2,63018,48074024,690
16.3%2,329.516,301687.521,762
5.2%
Agriculture, forestry,
ranching and fishery
70.87%
Industry and construction
10.71%
Rate of increase
relative to the previous year
Transportation, communication,
commercial and others
Total
Electricity consumption (2002-2005)
Business consumption growth dominates total growth
13
Power supply and demand
Power shortages were being caused by need for more generation capacity (Trillion Yuan = $130B)
14
Power supply and demand
Demand exceeded supply
Balance
Supply exceeded demand
Demand and supply condition by region (2005)
Power shortages occurred in three major regions.
The number of provincial grids with curtailments in the peak period:12 (2002)22 (2003)24 (2004) 26 (2005)
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Causes of power shortages
Climatic variability (droughts and heat waves)Economy, and therefore energy use, is growing faster than electric generation capacity can be built.
6.4%
9.6%
9.2%7.5%
12.8%
6.6%
9.8%
8.0%
5.0%6.0%7.0%8.0%9.0%
10.0%11.0%12.0%13.0%14.0%
1980-1987 1988-1995 1996-2000 2001-2005
Growth rate of power consumption
Growth rate of installed capacity
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Causes of power shortagesCoal supply shortages and transport bottle-necksEscalating coal prices and decreased energy content of coal. Differences in price trends of “regulated power prices” and “unregulated coal prices”.
Blue indicates supply sources and red indicates major load centers
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Addressing power supply shortages
Generation sectorDeveloping coal-fired generation – high boiler pressure, high capacity, and environmentally friendly – is the direction.Accelerating development of hydropower, nuclear power, and gas-fired power generation.Introducing renewable energy (solar, wind,…)
Network sectorStrengthening the grid.
Intensifying energy conservation efforts and improving energy efficiency.
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Environmental challenges
Source: International Energy Association 2004
China’s carbon dioxide emissions from consumption of fossil fuels are expected to increase from 3,000 million tons in 2000 to 5,700 million tons in 2020.
0.001,000.002,000.003,000.004,000.005,000.006,000.007,000.00
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
United States China
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Environmental challenges
97.5%120.8Mt3.13MtSmoke dust
10.8%0.97Mt8.01MtSO2
efficiencyremovalemission
China is experiencing rising SO2 and NOX.
Efficiency of SO2 and smoke dust emission
reduction systems(2003)Emission trends
20
Improving generation and delivery efficiency
3206.25.12020
3747.185.822005
Coal consumption (g/kWh)
Power transmission losses %
Internal use of electricity %
Greater generation and delivery efficiency is reducing rates of internal use of electricity, transmission losses, and coal consumption.
0123456789
10
1980 1990 1995 2000 2001 2002 2003320330340350360370380390400410420
Internal use of electri. (%)power transmission losses (%)coal consumption (g/kWh)
21
Strategies for overcoming coal supply and delivery challenges
Alliances between coal mining companies and power generation companiesMine-mouth power plants substituting electric transmission for coal transportation
Shenhua model: simultaneous stock holding and building of power stations
Shanxi coking coal co. model: building of power station by coal mines
Luneng model: building of coal mines by power enterprises
Huainan model: joint venture to establish the new coal mines and power stations
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Hydro-power development
HydroResources: 500GW
By the year 2005:Installed capacity120GW (including 34.1GW from small hydro plants).395TWH, 15% of the total annual generation.
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Min,zheMin,zhe, , gangan14161416
XiangxiXiangxi791791
NanpanjiangNanpanjiangHongshui riverHongshui river
13121312WujiangWujiang
867867
Northern Main Northern Main Stream of Stream of Yellow riverYellow river
609609
DaduDadu riverriver18051805
YalongYalongriverriver19401940
JinshajiangJinshajiang47894789 Upper reachesUpper reaches
of of ChangjiangChangjiang28312831
LancangjiangLancangjiang21372137
黄 河
黑?
龙
? 江
鸭
绿
江辽
河
第二
? 松花
江
河黄
河
淮
洪泽湖
江
长富春江
闽江
鄱阳湖
赣
江
汉
水
清 江
洞庭湖
资水
沅水
澧水
乌
江
长江
岷
江
大
渡
河雅
砻江
金
沙
江
黄河
大通
河
青海湖洛
河
渭河
南? 江盘
红
水 河
北
江
东
江
澜
沧
江
怒
江
雅 鲁藏
布 江
通
天河
塔里木河
车尔臣河
孔雀
河
葛洲坝271。5
隔河岩120
三峡1768
天生桥120
天生桥132
岩 滩120
漫 湾125
二 滩330
龙羊峡128
李家峡200
刘家峡116
白 山150
滦
河
12 Major12 MajorHydropowerHydropowerLocationsLocations(unit: 10(unit: 1044KW)KW)
NortheastNortheast11311131
Upper reaches Upper reaches of Yellow riverof Yellow river
14151415
24
Nuclear power
KEYNPP in operationNPP under constructionNPP being proposed
25
Potential wind power resource > 3000 GW
green=great, pink=good, blue=ok, yellow=poor(offshore & coastal potential not shown)
26
Wind power
By the year 2005:59 wind power plants, with total installed capacity of 1266MW.200,000 small wind units, located in rural areas, with total installed capacity of 30MW.Mass production of 750KW (and below) units; units at MW level is still in the trial phase.Key technology dependent on imports. However, design expertise growing in China.
By the year 2020 – 40GW
Wind farm under-construction
Dan Nan wind farm in Nan’ao
27
Solar power resource
Theoretically 1.7 trillion ton coal equivalent/year2/3 of the land with daylight hours surpassing 2,200 hours/year, equaling 5,000mega joule/m2
Most abundant in western regions
28
Solar power
PVInstalled capacity: 70 MW, mainly in the rural areas. (including “sending electricity to townships” project: 17MW).On-grid ceiling PV: Shenzhen 1MW project.Industrial capacity: 300MW units/year, but silicon materials depend on import.
Solar water heaters
29
Renewable energy policy
Renewable Energy Law of China -- effective from January 2006.
Establishing national targetsGrid connection prioritiesClassifying tariffs for RE electricitySharing cost at national levelSpecial fund for renewable energyFavorable credit and favorable tax treatment
30
Long-term target generation mix
65%
22%
7% 3% 3%
coal hydro gas nuclear new
325
560
108
246
644040
0.7
0
100
200
300
400
500
600
700
800
900
1000
2004 2020
Target generation mix in 2020
Installed capacity (GW)
31
Power industry reform objectivesTo establish a power market system that will introduce competitive incentives, improve efficiency, lower cost, improve power pricing, optimize resource allocation, promote electric power development, and advance nationwide grid construction. This market system should encompass fair competition, orderly transition, and efficient development using separation of government functions from enterprise functions.
32
Reform goals
Goals of “Article Five” during the “10th Five-year Plan”
A: Separation of generation from grid (completed)B: Corporate separation of non-core functions (such as planning, designing, construction, etc.)C: Direct access to market by large usersD: Formulation of competitive regional power marketE: Bidding for access to gridsF: Make retail tariffs more market-driven
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Power industry reform history
20041997 1998 2002 2002 2002 2004
State Power Corp. (SPC)
established
Dissolved Ministry
of Electricity
East China starts pilot
regional power market
operation.
Power Regime Reform formally approved
by the State
Council
State Elec. Regul.
Commission (SERC) created
(October 2002)
SPC restruc-
tured Separation of gen. assets from
transmis-sion assets
34
Power industry reform
generation assets
gridassets
China Huaneng Group
China Datang Group
China Guodian Group
China Huadian Group
China Power Investment Corporation
State Grid Corporation of China
China Southern Power Grid Corporation
Former SPC
To “ introduce competition and break the market monopoly introduce competition and break the market monopoly ”generation and grid sectors were separated.
Restructuring of the State Power
Corporation of China December 2002
35
Power industry reform
36%
46%
1%
2%
5% 9% 1%
Comparison of the installed capacity of different types of players (2004)
Big 5 Generation GroupsState-owned enterprises other than Big 5 groupsLocal, government-owned enterprisesGeneration owned by Grid GroupState-owned Nuclear GroupPrivate generators from ChinaInternational private generators
36
Power industry reform – grid sector
State Grid CorporationTibet Autonomous RegionChina Southern Power Grid
37
Restructuring pilot program
East China: the most developed area; electricity consumption ranks first; installed capacity ≥100,000MW in 2005.One of two pilot regional power markets in China.May 18, 2004: East China’s first simulated bidding process for the next month.October 2005: simulated operation of China’s first day-ahead power market.April 2006: trial operation of day-ahead power market. East China
Power Grid
North East Power Network
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Restructuring pilot program
Generation units in East China:Category A: coal-fired units with capacity over 100MW (216 units registered by the end of 2005, generation capacity ≥58,818MW = 56.7% of total generation capacity in East China area). Participation Required.
Category B: gas-fuel units, oil-fuel units, hydro units, nuclear power units, etc. Participation Not Required
Market Participants
Grid Companies
Generation Companies
Neighboring buying/selling
entity
East China Grid Company
East China Power Dispatching & Trading
Center
Province (Municipality) Power Company
Province (municipality) Power Dispatching, Trading
& Settlement Center
Trading modes:Bilateral Transactions (between neighboring provinces and municipality)
Yearly Generation ContractMonthly Contract BiddingDay-ahead Market Real-time Balance Market
39
Thanks !