Energy in China
In 2004, China generated 2200 TWh of electricity from a total capacity of 441 GW,2 up almost 15% on 2003. China’s power generation capacity growth was expected to reach 500 GW by the end of 2005, according to the State Electricity Regulatory Commission. Over 120 GW of generating capacity is currently under construction from new projects approved since 2002, but it is likely to take until 2007 for generating capacity to catch up with demand in most areas. Despite this growth in capacity, power shortages (blackouts and power rationing) have become a major issue in many provinces particularly during the peak summer demand for air-conditioning. In recognition of this, the Government of China moved ‘Energy Week’, an initiative to encourage people to save energy, from its traditional slot in November, the start of the heating season, to June, the start of the cooling season.
Energy consumption in China is dominated by coal (69% in 2004), with oil second (22%). A multitude of other energy forms make up the rest, including hydroelectricity (5.4%) and natural gas (2.5%).4 The country has substantial energy reserves, but these are mainly located in the west while two thirds of power demand is in the east. China has embarked on a major expansion of its natural gas infrastructure, with the completion of a major ‘west-to-east’ pipeline in January 2005.
GOVERNMENT POLICY ON COGENERATION
The 1998 Energy Conservation Law promotes energy conservation including cogeneration, while the new Renewable Energy Law provides a legal framework to support the development of decentralized energy, including CHP.
Local cogeneration is one of 10 energy-efficiency programmes announced by the National Development and Reform Commission (NDRC) in November 2004.5 These programmes will be promoted through the China Medium- and Long-Term Energy Conservation Plan, which will be implemented in two phases – the 11th Five-Year Plan (2006–2010) and the period between 2010 and 2020. Measures to be undertaken as part of the local cogeneration programme include:
Small is beautiful?
microgeneration is exciting politicians, utilities and investors alike
If small is beautiful, then the smallest must surely be close to perfection. Microgeneration is thus at the prettier end of the decentralized energy (DE) ‘space’, and is fascinating not only because it includes a range of emerging technologies racing for commercialization, but also because it offers a prospect of transforming the way in which energy is supplied to homes and other small buildings. It therefore represents a unique opportunity for power generation to become, for the first time, a mass market.
As with DE itself, microgeneration means different things to different people – so its definition is sometimes unclear. But the mass market opportunity implies the residential sector so we are talking here about 1–10 kWe systems, including micro-CHP and micro renewable systems such as photovoltaics and micro-wind.
Micro-CHP systems can be based on fuel cells, reciprocating engines, Stirling engines and (very small) microturbines and, as a package, can be about the same size as a domestic boiler or furnace. Indeed, it is this residential boiler market that represents the mouth-watering target for the product developers. While a small handful of products are already commercially available, the rest of the pack of 25 or so product developers are striving to bring to the market reliable products that can be manufactured in large numbers at a competitive unit cost and – crucially – that can cut customer energy bills.
Microgeneration is beginning to show itself to have a particular appeal to policymakers. Conventional cogeneration, which has been around for years, has traditionally scored close to nil on the energy attractiveness meter. In contrast, the emerging microgeneration sector is more photogenic, is new and has the potential for genuine popular appeal. In the European countries where the market prospects are particularly good (including Germany, the Netherlands and the UK), politicians seem to be on the point of identifying a DE technology that they are keen to be associated with. Significant policy incentives may well be close behind. In the meantime, proven, cost-effective (but conventional) commercial and industrial cogeneration systems miss all the fun. Policymakers continue to steer clear.
Microgeneration may have a similar impact on power companies. Utilities in most countries, with only a few notable exceptions, have traditionally seen on-site DE systems as an aggravation that should be discouraged, and they have been good at doing so. Microgeneration, however, presents a solution to the new and unfamiliar challenge of the liberalized market, at least in Europe – how to hang on to residential customers by improving the services they provide. A small number of power companies are making a genuine and positive commitment to microgeneration, which can only be a good thing for market prospects.