China to focus on energy restructure in 2010

From China Daily - has links to other relevant articles as well.
http://www.chinadaily.com.cn/bizchina/2010-03/03/content_9529833.htm

China to focus on energy restructure in 2010

China would put more emphasis on adjusting its energy structure this year with focus on renewable energy and nuclear power, director of China's National Energy Administration (NEA) said in Beijing Tuesday.

Zhang Guobao, also vice-minister of the National Development and Reform Commission and member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), made the remarks in an exclusive interview with Xinhua before he attends CPPCC's annual session.

"I'm proud to say that China is at the world's advanced level in new energy development, but there is still much room for improvement," he said.

Zhang took wind power as an example. "Compared with wind power reserves of 2.6 billion kilowatts (kW), China's installed wind power capacity stood at only 22 million kW."

Zhang also highlighted China's determination in developing nuclear power projects, 21 of which are under construction in the country. Currently China has 11 nuclear power projects in operation.

The Chinese government has voluntarily announced ahead of the Copenhagen climate summit that it would cut carbon dioxide emissions per unit of the GDP by 40 percent to 45 percent by 2020 from the 2005 level, which represents reduction of roughly 1.5 billion tons of emissions.

Follow up on solar presentation yesterday. Highlights from the article below:

February 10, 2010

Financial Crisis Paves the Way for Chinese Solar Giants

Sales of Chinese solar modules, which accounted for nearly one third of the global market share, were shadowed in the wake of the financial crisis. However, what did not kill the Chinese companies made them stronger, especially in terms of product cost and market access.

Along with sales recovery, the Chinese may have grabbed more market share from their international competitors. "Trina's global market share is estimated to have reached 6 to 7 percent in 2009, up from 3.5 percent in 2008, " said Tzou. "We also estimate that Chinese solar module manufacturers, including Taiwan, answered over half of the world's demand in 2009."

Better cost advantages played a key role. Up until mid-2008 Chinese manufacturers had to buy extremely high priced polysilicon, a major part of solar modules production cost, while their international competitors had access to long-term supply agreements at significantly lower prices. However, following the financial crisis, the global polysilicon price slumped by 87.5 percent, giving the Chinese a way in.

Another major advantage for Chinese solar companies is their ready access to finance amid the global economic downturn. Backed by China's preferential policies towards renewable energy, domestic solar modules makers have benefited from supportive local banks.

China Renews Its Commitment to Renewable Energy

Discussion of the Renewable Energy Law and its implementation. Two significant changes to the original law.

Blog post: http://switchboard.nrdc.org/blogs/bfinamore/china_renews_its_commitment_to.html


Some highlights:

1. Changes to the Mandatory Connection Policy

One of the most significant aspects of the Renewable Energy Law when it was originally passed was the introduction of the “Mandatory Connection” policy, which essentially required grid companies to connect and purchase all renewable energy generated that could be fed into the grid. After four years of experience with the Mandatory Connection policy, however, it became clear that not all grid companies were complying with their obligations to purchase all renewable power and connect it to the grid.

While China has rapidly increased its installed capacity of renewable energy over the last five years, there are concerns that too much of this capacity is not promptly connected to the grid and that not all power being generated is being purchased as required by the law. For example, China’s installed wind capacity has doubled every year for the last four years, but according to recent reports, about 30% of China’s wind capacity is not connected to the grid and may be lying idle (emphasis added).

Unlike any of the previous targets, the new target created by the amendments places responsibility directly on grid companies to purchase a fixed share of their power generation from renewable energy sources, and these grid-level targets will be enforced through penalties for non-compliance (Art. 29). A Mandatory Market Share (MMS) that sets the percentage of non-hydro renewable power generation out of total power generation was introduced in 2007 in the Mid and Long Term Plan for Renewable Energy that was issued by China’s chief national economic planning agency, the National Development and Reform Commission (NDRC). (See here in English and here in Chinese) While this 2007 target is similar to the new target provided for in the amendments, this is the first time in China that an RPS-style target has been expressly provided for in the law, creating an enforceable, legal obligation with which grid companies must comply.

While much of the detail still remains to be worked out, the amendments on their face clearly impose a new obligation on the grid companies that did not exist under the original legal framework.

While setting compulsory national technical standards is a positive step, one issue with the amendments is that they do not specify who will set the standards and how they will be monitored. Although technical guidelines for wind, solar and geothermal were issued in China in 2005, compulsory national standards do not currently exist.

2. Streamlining the Renewable Energy Development Fund

One other very important change to the law is how grid companies are compensated when purchasing renewable energy instead of cheaper, dirtier forms of energy, such as coal.

Given that renewable power is generally more expensive than conventional fossil fuels, China has instituted feed-in tariffs for a variety of renewable energy technologies to compensate grid companies for the additional cost of purchasing renewable energy. The original law created a system in which these feed-in tariffs and additional costs associated with connecting a renewable generator to the grid would be funded by a surcharge on end-users of electricity.

Under the original law, the grid company would directly withhold the surcharge from the end-user’s regular electricity bill. This surcharge is set by the government and is periodically increased (as of Nov. 2009 the surcharge is set at RMB .004/kWh). Now, instead of the grid companies’ collecting the surcharge directly from the end-user, the end-user will pay the surcharge into a Renewable Energy Development Fund. Once the surcharges have been pooled, the grid company will then seek compensation from the fund for the additional cost of purchasing the renewable energy, including the costs associated with integration. Although this change might seem like a mere technicality, it is actually quite significant because pooling all the surcharges into one large fund will allow the government to use this considerable amount of money (689 million USD in 2009 and an estimated 1 billion USD in 2010) not only to compensate grid companies, but also to invest in various renewable energy development projects, including R&D (Art. 24).

Solar and Biomass Plants to Work in Tandem in China

China’s plans to build 2,000 megawatts of solar thermal power using technology from a California company, eSolar, will also include the construction of biomass power plants to generate electricity when the sun sets.

The solar and biomass plants will share turbines and other infrastructure, reducing the projects’ cost and allowing around-the-clock electricity production, according to Bill Gross, eSolar’s chairman.

“That supercharges the economics of solar,” said Mr. Gross in a telephone interview, noting that the addition of biomass generation will allow power plants to operate at 90 percent of capacity.

Under terms of the deal announced Saturday in Beijing, eSolar will license its “power tower” technology to Penglai Electric, which will manage the construction of the power plants over the next decade.

Another Chinese company, the China Shaanxi Yulin Huayang New Energy Company, will own and operate the first projects to be built in the 66-square-mile Yulin Energy Park in northern China.

A local shrub grown in the surrounding region to fight desertification, called the sand willow, will supply fuel for the biomass power plants, according to Penglai Electric.

“It’s an economical use of a resource that’s already in place,” said Nathaniel Bullard, a solar analyst with Bloomberg New Energy Finance, a research and consulting firm. “That’s a very savvy move, rather than attach an energy storage system to the solar project.”

(A 107-megawatt project in California being developed by a Portuguese developer plans to use a similar biomass hybrid solar design.)

As The Times’ Keith Bradsher pointed out in his story, one issue with solar power plants in China is the large amount of land they require.

Eric Wang, a spokesman for Penglai Electric, wrote in an e-mail message that the relatively small footprint of an eSolar plant compared with other solar technologies proved attractive to the Chinese developer of the $5 billion project.

ESolar’s power plants deploy fields of mirrors called heliostats to focus the sun’s rays on a water-filled boiler that on a tower. The heat vaporizes the water and the resulting high-pressure steam is piped to a power block, where it drives an electricity-generating turbine.

The company uses a software control system and imaging technology to control 176,000 small mirrors that form arrays at its standard 46-megawatt power plant. The software positions the mirrors to create a virtual parabola to focus the sun on the receiver tower. That allows eSolar to make the mirrors cheaply and pack them close together to reduce the size of the power plant.

Mr. Gross noted that in California unskilled workers need 15 minutes training to learn how to install the solar fields. “In China, they wanted to use untrained labor as well,” he said.

Friedman: China Awakens

NY Times columnist Tom Friedman has a new piece on China's entry into the technological/national transformation race of the 21st century, what he dubs the "Energy Technology Revolution." Friedman says he has been "stunned to learn about the sheer volume of wind, solar, mass transit, nuclear and more efficient coal-burning projects that have sprouted in China in just the last year."

As an example, he quotes Bill Gross of eSolar, "a promising California solar-thermal start-up":

On Saturday, in Beijing ... Gross announced “the biggest solar-thermal deal ever. It’s a 2 gigawatt, $5 billion deal to build plants in China using our California-based technology. China is being even more aggressive than the U.S. We applied for a [U.S. Department of Energy] loan for a 92 megawatt project in New Mexico, and in less time than it took them to do stage 1 of the application review, China signs, approves, and is ready to begin construction this year on a 20 times bigger project!”

What it boils down to for China is this:

Yes, climate change is a concern for Beijing, but more immediately China’s leaders know that their country is in the midst of the biggest migration of people from the countryside to urban centers in the history of mankind. This is creating a surge in energy demand, which China is determined to meet with cleaner, homegrown sources so that its future economy will be less vulnerable to supply shocks and so it doesn’t pollute itself to death."

Despite the competitive nature of this Green Technology Revolution, there's still an important role for bilateral cooperation:

In the process, China is going to make clean power technologies cheaper for itself and everyone else. But even Chinese experts will tell you that it will all happen faster and more effectively if China and America work together — with the U.S. specializing in energy research and innovation, at which China is still weak, as well as in venture investing and servicing of new clean technologies, and with China specializing in mass production."

Friedman sums it up nicely: "It is clear that if we, America, care about our energy security, economic strength and environmental quality we need to put in place a long-term carbon price that stimulates and rewards clean power innovation. We can’t afford to be asleep with an invigorated China wide awake."

Article URL: http://www.nytimes.com/2010/01/10/opinion/10friedman.html (1/10/10)

I suppose my only quip is that, yes, China seems dedicated to acting on this. The question is how projects are executed, whether quality and performance can be assured, and whether local actors are empowered and incentivized to act. These would all be factors in determining the long-term success of this transformation.

Renewable energy law amended

Article in The Wall Street Journal (Dec 28)

Chinese Law Aims to Increase the Use of Renewable Energy

"China announced new regulations to increase the use of renewable energy such as wind and hydropower by forcing electricity-grid operators to prioritize their use...

The new measures were passed Saturday by the standing committee of the National People's Congress, China's legislature, as an amendment to the 2006 renewable-energy law. The amendment will force powerful state-owned electric grid companies, responsible for distributing electricity from power plants, to buy all the electricity generated from renewable sources even when it is more expensive and more complicated to use than electricity from coal-fired plants."

Coal currently accounts for 70% of China's total energy use. China wants to increase use of renewable-energy sources to 15% of its total by 2020, up from 9% last year.

The government's efforts have encouraged a boom in renewable-energy development in China that has added more generation capacity than China's electricity grid has been using. That has left between a quarter and a third of China's wind farms stranded."