Electricity sector in China
The People's Republic of China's electric power industry is the world's largest electricity consumer, passing the United States in 2011 after rapid growth since the early 1990s.
Most of the electricity comes from coal which accounted for an estimated 73% of domestic electricity production in 2014. Coal-fired electricity production has declined since 2013 coinciding with a major boom in renewable energy.
China has abundant energy with the world's third-largest coal reserves and massive hydroelectric resources. But there is a geographical mismatch between the location of the coal fields in the north-east (Heilongjiang, Jilin, and Liaoning) and north (Shanxi, Shaanxi, and Henan), hydropower in the south-west (Sichuan, Yunnan, and Tibet), and the fast-growing industrial load centers of the east (Shanghai-Zhejiang) and south (Guangdong, Fujian).
|Electricity production in China (TWh)|
|excluding Hong Kong|
In April 1996, an Electric Power Law was implemented, a major event in China's electric power industry. The law set out to promote the development of the electric power industry, to protect legal rights of investors, managers and consumers, and to regulate generation, distribution and consumption.
In recent history, China's power industry is characterized by fast growth and an enormous installed base. In 2014, it had the largest installed electricity generation capacity in the world with 1505 GW and generated 5583TWh China also has the largest thermal power capacity, the largest hydropower capacity, the largest wind power capacity and the largest solar capacity in the world. Despite an expected rapid increase in installed capacity scheduled in 2014 for both wind and solar, and expected increase to 60 GW in nuclear by 2020, coal will still account between 65% and 75% of capacity in 2020.
|Generating Capacity 2014 [1505 GW] and Production by Source 2013 [5322 TWh]|
|Generation Source||Generating Capacity
|thermal, natural gas, bio-mass||135||201|
|excluding Hong Kong|
Before 1994 electricity supply was managed by electric power bureaus of the provincial governments. Now utilities are managed by corporations outside of the government administration structure.
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.
It is expected that the municipal electric power companies will be divided into electric power generating and electric power supply companies. A policy of competition between the different generators will be implemented in the next years.
In Spring, 2011, it was reported by The New York Times that due to increased demand and price controls shortages of electricity existed and power outages should be anticipated. The government-regulated price electricity could be sold for had not matched rising prices for coal.
This article is in a list format that may be better presented using prose. (July 2010)
- Price caps encourage wasteful use of cheap electricity and therefore producers are struggling to generate enough power overall
- China is unable to mine enough coal or transport it in sufficient quantities to meet demand
- The enormous volume of coal burning generates massive pollution
- Regional power shortages occur frequently when generation drops in one province or region and the lack of long-distance power transmission capacity means that power cannot be routed in from other regions where there is surplus capacity
It seems likely the cost of power will need to rise substantially over the medium term (2–5 years) to curb wasteful energy consumption and slow the rate of growth in electricity demand. In theory, the government could raise power costs by a similar amount across the whole of China in the interests of inter-regional equity.
- China's power transmission system remains under-developed. There is no national grid. Instead there are six regional grids—five managed by the giant State Grid Corporation (north, north-east, east, central and north-west) and an independent grid (south) managed by the South China State Grid Corp (covering the light manufacturing hub around Guangzhou-Shenzhen and the inland areas of Guangdong, Guangxi and Guizhou).
- Northern areas experience shortages in winter due to increased heating demand and problems with coal deliveries.
- Eastern and southern areas are prone to shortages in late spring/early summer as temperatures and airconditioning demand rise, while reservoir levels and hydro output fall until the arrival of the summer rains in July and August. Guangdong and other southern provinces import substantial quantities of expensive fuel oil and diesel to run additional generation capacity to cope with the resulting power gap.
- The lack of a unified national grid system hampers the efficiency of power generation nationwide and heightens the risk of localised shortages.
- Even within these grids transmission capacity is limited. Many towns and enterprises rely on local off-grid generating plants. More importantly, inter-connections between the grids are weak and long distance transmission capacity is small.
- The country's limited internal transport capacity risks being overwhelmed by the need to move record quantities of coal from the coal fields of the north and north-east to power generators in the central, eastern and southern areas.
- The rail system has struggled to deliver adequate quantities of coal to the generators. Ice storms, flooding or droughts which disrupt rail and river deliveries quickly lead to shortages and power outages.
The central government has made creation of a unified national grid system a top economic priority to improve the efficiency of the whole power system and reduce the risk of localised energy shortages. It will also enable the country to tap the enormous hydro potential from western China to meet booming demand from the eastern coastal provinces. China is planning for smart grid and related Advanced Metering Infrastructure.
The main problem in China is the voltage drop when power is sent over very long distances from one region of the country to another.
Long distance inter-regional transmission have been implemented by using ultra-high voltages (UHV) of 800kV, based on an extension of technology already in use in other parts of the world.
The government plans as many as eight long-distance UHV lines by 2015 and 15 by 2020.
Shanghai already receives hydro-electric power from the massive Three Gorges Dam on the Changjiang (Yangtze) at Sandouping in Hubei province. But the new DC 800kV UHV line would enable it to receive power from twice as far west from the Xiangjiaba dam on the Jinsha river (a tributary of the Changjiang much further upstream).
Xiangjiaba will have total generating capacity of 6,400 MW. When completed, the nearby Xiluodu Dam will add a further 12,600 MW (about 55 percent of the size of the planned Three Gorges output), making it the world's third-largest hydro-electric dam, ranking after the Three Gorges and Brazil's Itaipu.
Xiluodu and Xiangjiaba are two of a series of massive new hydro projects that the government plans in south-western and western China to take advantage of the massive run off from the Himalayas and the Tibet plateau.
SGCC plans to bring a single pole of the Xiangjiaba-Shanghai line into commercial operation within two years (2010) and the second pole a year later (2011). SGCC plans to complete a total of 10 UHV projects by 2015 and 15 by 2020.  In most cases, these will bring power from massive new hydro facilities in south-western China to the industrial and residential centers of the east.
China's installed hydro capacity in 2014 was 282GW up from 172GW in 2009 and constituted about 17.3% of total power generation capacity. In 2014, hydropower generated 1000TWh, which was equivalent to 17.6% of China's total and 85% of primary electricity generation. As China's potential hydropower capacity (estimates range up to 600GW, but currently the technically exploitable and economically feasible capacity is around 500GW) is only about 50-60% utilized, there remains much space for further hydro development. In comparison, hydro utilization in the U.S. currently is 80% and in Norway, Iceland, and other countries it is at over 90%. The country has set a 350GW target for 2020. Due to China's scarcity of fossil fuels and the government's preference for energy independence, hydropower is an attractive option.
Most of China's hydropower stations are located Central and Southwestern China, in particular in Sichuan and Yunnan provinces, where two thirds of China's untapped hydro capacity is located. The West-to-East Transmission program (xidian dongsong), which is a key component of China’s long-term energy strategy, plans to have a grid of UHVDC transmission lines carry bulk loads from 13 designated hydropower bases in Southwest and Western China over several thousand kilometers to the electricity-hungry coastal provinces. These hydropower bases hold 69% of China’s total exploitable capacity and as of 2008, about 180 middle and large-scale dams are currently under construction there.
Hydropower in China has been touted as a renewable and clean energy source, but this masks the fact that large dams, such as the Three Gorges Dam or the Xiluodu dam on the lower Jinsha River, have had environmental impacts on the areas surrounding dam reservoirs. Erosion, flooding of valuable farmland, and destruction of fish breeding habitats have been typical problems. Moreover, about 15 million people have been relocated due to dam construction since 1949 and often these uprooted local people, in particular in Sichuan and Yunnan, tend to be poor and uneducated farmers, who are strongly attached to their ancestral land and have found it difficult to adapt to the more urban areas they have been resettled to. Growing media and NGO attention on the ecological and social impacts of hydropower and efforts in the central government in recent years to improve the regulatory framework of hydropower development and protect the interests of minority stakeholders, such as displaced locals, indicate that hydropower may eventually become more environmentally and socially sustainable.
Major hydropower corporations
In terms of nuclear power generation, China will advance from the moderate development strategy to accelerating development strategy. Nuclear power will play an even more important role in China's future power development. Especially in the developed coastal areas with heavy power load, nuclear power will become the backbone of the power structure there. China has planned to build up another 30 sets of nuclear power generator within 15 years with total installed capacity of 80 GWs by 2020, accounting for about 4% of China's total installed capacity of the electric power industry. This percentage is expected to double every 10 years for several decades out. Plans are for 200 GWs installed by 2030 which will include a large shift to Fast Breeder reactor and 1500 GWs by the end of this century.
With its large land mass and long coastline, China has exceptional wind resources: it is estimated China has about 2,380 GW of exploitable capacity on land and 200 GW on the sea. At the end of 2014, there were 114GW of electricity generating capacity installed in China, more than the total nameplate capacity of China's nuclear power stations, (although capacity of wind power is not on par with capacity of nuclear power) and over the year 115,000 gigawatt-hours of wind electricity had been provided to the grid. In 2011, China's plan was “to have 100 gigawatts (GW) of on-grid wind power generating capacity by the end of 2015 and to generate 190 billion kilowatt hours (kWh) of wind power annually”.
China has identified wind power as a key growth component of the country's economy; researchers from Harvard and Tsinghua University have found that China could meet all of their electricity demands from wind power through 2030.
South China from the Changjiang valley down to the South China Sea was the first part of the economy to liberalize in the 1980s and 1990s and is home to much of the country's most modern and often foreign-invested manufacturing industries. Northern and north-eastern China's older industrial base has fallen behind, remains focused on the domestic economy and has suffered relative decline.
Northern and north-eastern China relies heavily on thermal generation from the local coalfields. Northern China will remain reliant on increasingly expensive and polluting thermal generation.
In terms of the investment amount of China's listed power companies, the top three regions are Guangdong province, Inner Mongolia Autonomous Region and Shanghai, whose investment ratios are 15.33%, 13.84% and 10.53% respectively, followed by Sichuan and Beijing.
China's listed power companies invest mostly in thermal power, hydropower and thermoelectricity, with their investments reaching CNY216.38 billion, CNY97.73 billion and CNY48.58 billion respectively in 2007. Investment in gas exploration and coal mining follow as the next prevalent investment occurrences.
Major players in China's electric power industry include:
The five majors, and their listed subsidiaries: The five majors are all SOEs directly administered by SASAC. Their listed subsidiaries are substantially independent, hence counted as IPPs, and are major power providers in their own right. Typically each of the big 5 has about 10% of national installed capacity, and their listed subsidiary an extra 4 or 5% on top of that.
- parent of Datang International Power Generation Company (SEHK: 991; SSE: 601991)
- China Guodian Corporation ("Guodian")
- parent of GD Power Development Company (SSE: 600795),
- parent of Huadian Power International Co., Ltd.
- parent of Huaneng Power International (NYSE:HNP)
- parent of China Power International Development Limited ("CPID", 2380.HK)
Additionally two other SOEs also have listed IPP subsidiaries:
- the coalmine owning Shenhua Group
- parent of China Shenhua Energy Company (SEHK: 1088, SSE: 601088)
- China Resources Group ("Huarun")
- parent of China Resources Power Holdings Company Limited ("CRP", SEHK: 836)
- Shenzhen Energy Co., Ltd.
- Guangdong Yuedian Group Co., Ltd.
- Anhui Province Energy Group Co., Ltd.
- Hebei Jiantou Energy Investment Co., Ltd.
- Guangdong Baolihua New Energy Stock Co., Ltd.
- Shandong Luneng Taishan Cable Co., Ltd.
- Guangzhou Development Industry (Holdings) Co., Ltd.
- Chongqing Jiulong Electric Power Co., Ltd.
- Chongqing Fuling Electric Power Industrial Co., Ltd.
- Shenergy Company (SSE: 600642), Shanghai.
- Shenergy Group, Shanghai.
- Sichuan Chuantou Energy Stock Co., Ltd.
- Naitou Securities Co., Ltd.
- Panjiang Coal and Electric Power Group
- Hunan Huayin Electric Power Co., Ltd.
- Shanxi Top Energy Co., Ltd.
- Inner Mongolia Mengdian Huaneng Thermal Power Co., Ltd.
- SDIC Huajing Power Holdings Co., Ltd.
- Sichuan MinJiang Hydropower Co., Ltd.
- Yunnan Wenshan Electric Power Co., Ltd.
- Guangxi Guidong Electric Power Co., Ltd.
- Sichuan Xichang Electric Power Co., Ltd.
- Sichuan Mingxing Electric Power Co., Ltd.
- Sichuan Guangan Aaa Public Co., Ltd.
- Sichuan Leshan Electric Power Co., Ltd.
- Fujian MingDong Electric Power Co., Ltd.
- Guizhou Qianyuan Power Co., Ltd.
Nuclear and hydro:
- China Guangdong Nuclear Power Group
- China Yangtze Power (listed)
- Sinohydro Corporation an engineering company.
- Guangdong Meiyan Hydropower Co., Ltd.
Grid operators include:
- State Grid Corporation of China
- China Southern Power Grid
- Wenzhou CHINT Group Corporation ("Zhengtai")
- China Electricity Council (Brief Introduction Of CEC)
- International Energy Agency
- North China Electric Power University
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