State Grid's Green Road Back to Power Generation

Corporation, page 25
Issue 425, June 29
Translated by Liu Peng

Original Article: [Chinese]

State Grid Corporation, the larger of China's two power distribution giants, will invest around 15 billion yuan in constructing model wind and solar power production bases in Hebei over the next two years. The move is being interpreted as a sign that the state-owned corporation maybe angling to re-enter the lucrative power generation market.

After the "Plant-Grid Separation" reforms of 2002, the power generation capabilities of the former State Electric Power Corporation, along with 80 billion yuan worth of capital, was divided up between five newly-formed power generation groups. State Grid was left to focus on power transmission and distribution in all but five of China's provinces, and was prohibited from investing in or conducting any power generation.

However, in a sign that the company is hoping to use the opportunity provided by renewable energy projects to get around the regulatory provisions that prohibit it from being involved in energy production, State Grid plans to invest over 10 billion yuan over the next two years, in a wind power project about two and a half hours drive from Beijing, in northwest Hubei.

An official with the working group involved with reforming the national energy system revealed that there are currently no restrictions on State Grid investing in the construction of renewable energy facilities. Adding that, as long as they receive permission from the state, there is no problem.

Experts said that the biggest problem with the development of wind and solar energy is connecting projects to the grid, and therefore they see State Grid as having a natural advantage in pursuing solar and wind energy.

State Grid's Model Wind and Solar Project

Two months ago, State Grid along with China's Ministry of Finance and Ministry of Science and Technology decided to build one or two model wind and solar power production projects.

State Grid Xinyuan Company (SGXYC), a subsidiary of State Grid, was put in charge of implementing the project and set up a team to find a suitable site for the project.

Eventually the commission of inquiry recommended that the model base be constructed near the existing Manjin Wind Energy Farm in Hebei's Zhangbei County, due to its proximity to Beijing and the area's plentiful wind and solar resources.

At the end of May, representatives of State Grid Xinyuan Company began consulting with the local government and by mid-June an initial agreement had been reached.

A development proposal is expected to be completed in three months, and work on the first phase of the project will begin within 12 months. It's estimated that it will take 2-3 years to complete the 300,000-kilowatt wind power project.

Yu Wangming, who is in charge of developing the county's wind power resources, told the EO that in total the whole project consisted of five national-level model bases: a 300,000-kilowatt wind power project, a 100,000-kilowatt solar power generation project, a 75,000 kilowatt chemical energy storage project, a wind turbine device inspection center and a wind power outlet line project.

"Investment in the five projects is estimated to be between 10 and 15 billion yuan," Yu added.

The EO learned that the state had capped investment in the project at 20 billion yuan.

State Grid also has plans to construct another wind farm in the adjacent county of Shangyi, which will be capable of producing 200,000 kilowatts of electricity.

At present, Zhangbei has attracted 13 large corporations including five domestic state-owned power generators. According to Wang Xuebin, a worker in the county's wind power generation office, the present installed wind power capacities in the county reached 283,000 kilowatts. This is expected to rise to as much as 500,000 kilowatts by the end of the year.

State Grid's Long Term Goals

Is State Grid attempting to use renewable energy as a way of eluding the restrictions that were introduced seven years ago during the reform of China's power sector?

Some experts maintained that State Grid's foray into the field of renewable energy was limited to this model project and was simply aimed at solving some of the technical problems associated with hooking wind energy up to the power grid. They thought it natural that State Grid could play a role in helping to find solutions to thisongoing barrier to the development of the wind and solar power sector.

However, although local wind power generation companies appreciate that State Grid can help contribute to the technological development of the field, they remain worried that once State Grid got its toe in the water, it may decide to enlarge the scale of its investment in the sector.

An official from the State Power System Reform Office told the EO that although the two major power transmission companies were banned from investing in conventional thermal power plant sector, there weren't any clear regulations that prohibited them from investing in new energy projects.

Links and Sources
New York Times: Green Power Takes Root in the Chinese Desert  
State Grid