China’s long march into distributed energy


As both US and EU gas-fired CHP equipment manufacturers are keen to enter what promises to be a very large market, many seminars and studies intended primarily to transfer market, project and institutional know-how to China have been conducted since 2001. However, the key shift for new Chinese CHP was undoubtedly the November 2003 China Development Forum in Beijing that discussed national energy strategy and reform for the period 2004-2020.

The discussions were underpinned by findings from an extremely influential 2001 Tsinghua-Princeton university study of China’s least cost energy technology development options to 2050. The study shows that China can achieve its aggressive long-term social and economic development objectives at very little extra cost compared to ‘business-as-usual’ – and with acceptable environmental impacts – provided that it develops:

  • a broad, clean primary energy base that would include gas, nuclear and the country’s enormous wind and biomass resources
  • advanced clean coal polygeneration, including CHP and syngas
  • energy efficiency

This third requirement is so central to the overall goals that the State Council’s Development Research Centre (DRC) that directed the forum gives it first place. In its view, ‘energy saving should be given priority, and can contribute more than increasing energy supply in satisfying the increasing demand for energy.’ Moreover, industry ‘is still the key field for energy saving’, and its potential by 2020 is ‘up to 500 million tonnes of coal equivalent (mtce).’

This volume is roughly 60% of the 800 mtce that needs to be saved compared to business-as-usual by 2020 to keep total primary energy consumption by that date under 2500 mtce. This target is in turn the optimum milestone on the path to 2050 targets.

The DRC wants industrial energy savings to be achieved through five core strategies. These are:

  • revising energy saving design specifications (for manufactured goods as well as factories and industrial processes)
  • carrying out corporate energy auditing and report/ standard-reference management
  • giving impetus to technological advancement in energy saving
  • establishing energy management information systems
  • pushing policies and measures such as energy performance contracting

All these thrusts clearly favour small-scale distributed CHP directly. Because DRC advice feeds straight into the State Council and because pilot activities in all strategy areas have already been launched, future energy conservation policy can be expected to closely follow these guidelines.

There is an inevitability about the growth of cogeneration and decentralized energy. As limits to the fossil fuel resource become established and prices begin to rise, as system security starts to be important, as climate change starts to reveal itself, and as consumers demand higher reliability, the advantages of locally produced, high-efficiency energy become irresistible, as Michael Brown contends.

Can you predict the future? Of course not, nobody can. Not even on energy issues? No, certainly not – the energy sector today is more complicated and uncertain than ever. Even the pricey projections of the world’s top consultants are rarely right.

There is, however, a one-way bet that is impossible to imagine not coming about. It is a challenge that has been staring at us in the face for 30 years and yet has not been addressed in any significant way whatsoever. It is a challenge that represents the foundation of the work of the World Alliance for Decentralized Energy (WADE) to promote clean and efficient on-site generation. It is a concept that is so obvious and important, yet, perversely, it has been neglected by policymakers and energy companies for decades. Like the wind, it’s always there but we never hear it because we don’t listen; like a handsome picture hanging on the wall for years, but we never see it because we no longer look.

The efficient conversion and use of energy has always been the Cinderella of energy policy. Unexciting, drab, easy to ignore. There has been little incentive to implement it because energy has been relatively cheap and because the role of energy producers and suppliers has been to sell as much of it as possible.

The one-way bet is that this will change. It will change because there is a rapidly converging range of global drivers that have a common bottom-line – the imperative need to use energy more efficiently, the importance of recognizing that the cleanest energy supplied is the energy that is not used. Indeed, even the drivers are obvious – those assessed in this article are not exactly novel. But the implications are dramatic.

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