On a Growth Trajectory

China steps up strategic investments to achieve energy transition

Over the past few years, China has been making planned efforts to achieve its energy transition goals. Today, renewable energy accounts for 21 per cent of the country’s electricity generation capacity, as compared to 8.8 per cent in 2014. In a span of five years, during 2014-19, renewable energy’s share in the country’s generation mix has grown at a compound annual growth rate of about 28 per cent. Over the next five years, it is estimated that another 62 GW of renewable energy will be added to the country’s capacity mix.

China is also investing heavily in new technologies to create a resilient and smart network. To significantly boost its grid capacity, the country’s power grid developers – State Grid Corporation of China (SGCC) and China Southern Power Grid (CSG) – are developing ultra-high voltage (UHV) alternating current (AC) and direct current (DC) lines. Besides, the country is developing cross-border links as part of its Belt and Road Initiative (BRI), which plans to restore the ancient Silk Road to promote trade and economic integration among the countries of Asia, Europe and Africa.

China, in its 13th Five-Year Plan, for 2016-20, had earmarked about CNY 2.38 trillion to be invested in grid projects, including UHV schemes. Interestingly, exceeding this planned investment, an amount of CNY 3 trillion has already been spent on power grid projects, till 2019.

Owing to its commitment to the Paris accord to ensure energy transition, the country has been paying considerable attention to the development of electric vehicles (EVs) and offshore wind transmission. Further, the country’s private players, many of which are world renowned such as Jiangsu Zhongtian Technology Company Limited (ZTT) and Huadian Heavy Industries (HHI) Company Limited, are taking significant steps to contribute to the development of these markets. The improved performance of these players has reduced equipment costs for clean energy, thereby enabling its establishment on a strong footing in the country.

Grid expansion initiatives

China is progressing towards the completion of some major transmission projects, which will enhance grid connectivity. Over the next few years, over 20 UHV AC and DC projects, aggregating 17,000 km of line length, will be commissioned in the country. Some of the key projects to be commissioned during 2020-25 are the 1,000 kV Weifang-Linyi-Zaozhuang-Heze-Shijiazhuang line, the Zhangbei-Xiongan line and the Mengxi-Jinzhong (Central Shanxi) line, all being developed by SGCC, and the 800 kV DC Kunbei-Liubei-Longmen line project being developed by the CSG.

China’s efforts to expand its power grid via UHV AC and DC transmission are being strengthened by strong cooperation from its provinces. Several agreements have been signed for cooperation by provincial governments to enable smooth construction and commissioning of transmission projects spanning across different provinces.

Recently, in March 2020, the Shaanxi Provincial Development and Reform Commission released the Shaanxi provincial key projects plan for 2020. The plan includes 600 projects, of which 312 are continuation projects, 188 are newly started projects, and 100 are pre-projects. This includes the under-construction ±800 kV North Shaanxi-Hubei line. The project has been marked as a key project in the 13th Five-Year Plan, 2016-20, to promote the development of the western and central regions of China. The CNY 18.5 billion project involves construction of the 1,137 km long North Shaanxi-Hubei DC transmission line from Yulin city (Shaanxi province) to Wuhan city (Hubei province). The line will have a transmission capacity of 8 GW. In April 2020, a long-term tripartite cooperation agreement was signed between SGCC and the Shaanxi and Hubei provincial governments for the project. This is the first UHV DC transmission project to be constructed in China’s Hubei province. The project is slated for completion by 2021.

Strengthening the rural network

China launched a three-year action plan (2018-20) for upgrading its rural power grids, involving about 8,769 administrative villages in 210 counties. The country has been focusing on strengthening its rural network, with central and state councils being deployed to implement the upgradation work. This upgradation plan focuses on establishing monitoring and evaluation systems for improved grid connection to remote village areas, ensuring enhanced rural productivity and consumption. The rural electrification demonstration projects have successfully been completed in Shouguang city (Shandong province), Anji county (Zhejiang province) and Qianjiang city (Hubei province).

Since the 13th Five-Year Plan, 2016-20, the investment arrangements within the central budget for rural network transformation and upgradation have been prioritised for poverty-stricken areas. Rural areas in Hunan province have also attracted investments in the power grid and, cumulatively, the country has witnessed about CNY 7.46 billion worth of rural network transformation and construction tasks, which were completed in 2019.

Integrating advanced technology

Recently, Swedish-Swiss power and automation technology company ABB, in partnership with SGCC, commissioned the world’s first 1,000 kV UHV gas-insulated line, which was laid in the Sutong tunnel under the Yangtze river located in China’s Jiangsu province.

Another significant project under way is the Kunbei-Liubei-Longmen DC project, being developed by CSG. It is the world’s first UHV, multi-terminal, hybrid DC transmission project. The CNY 24.25 billion project involves the construction of a 1,452 km long, ±800 kV power line spanning four provinces and the autonomous regions of Yunnan, Guizhou, Guangxi and Guangdong; and the construction of three converter stations at Kunbei (Yunnan province), Liubei (Guangxi autonomous region) and Longmen (Guangdong province).

Cross-border interconnection projects

In 2016, SGCC, with the aim to establish a Global Energy Interconnection (GEI), incorporated the Global Energy Interconnection Development and Cooperation Organization (GEIDCO). The GEI will serve as a platform for the extensive development, deployment and utilisation of clean energy globally through building interconnected smart grids using UHV technology. GEIDCO comprises national governments, grid operators, academic institutions, development banks and United Nations agencies to launch the global renewable energy grid.

GEIDCO released the Northeast Asia Energy Interconnection Planning Research Report in 2018 to integrate clean energy development with power grid construction. The aim of this integration is to establish an energy internet in northeast Asia by developing power infrastructure to enable energy cooperation among China, South Korea, Mongolia and Japan. In 2019, the northeast Asia energy internet saw the debut of the China-South Korea power interconnection, highlighting the fast-paced progress made by the interconnection project, which has completed the pre-feasibility study stage. Energy and power cooperation via grid interconnection is also being promoted with Mongolia and Kazakhstan.

China is also planning a cross-border power link with Nepal, as part of its BRI. The 400 kV Ratmate (Nepal)-Kerung (China) transmission line will be the first power grid interconnection between Nepal and China and will ensure energy security by facilitating power trade between Nepal and the Tibet autonomous region of China. It involves the construction of approximately 70 km of a 400 kV double-circuit transmission line from the Rasuwagadhi (Nepal) border point in Rasuwa district to the new 400 kV Ratmate substation in Nuwakot district. A converter station will be constructed in Gyirong county, Tibet, for the evacuation of power to the load centres.

The study to conduct load flow tests for the 400 kV line was initiated in January 2020. On operationalisation, the power line will have the capacity to transmit 5,000 MW of power. The transmission link between Ratmate and Kerung will be approximately 800 km long, of which only 70 km will be in Nepal. The line is targeted to be completed within six years.

Promoting clean energy

China is emerging as one of the fastest expanding offshore wind markets in the world. As of 2019, China had 6.83 GW of installed offshore wind farm (OWF) capacity, with 2.3 GW being added in 2019 alone. Further, the country has a cumulative target to reach 10 GW by 2020.

A major upcoming OWF project is the Jiangsu Rudong 800 MW (H6, H10) project, which will employ a ±400 kV flexible DC submarine cable to supply power to the grid. Other planned OWF projects include the YangjiangShapa project (Phases II-V) with a cumulative capacity of 1,400 MW; the 300 MW Huadian Fujian FuqingHaitan Strait project; the PutianPinghai Bay project (demonstration project being funded by the New Development Bank); and the YangjiangFanshi 1 and Fanshi 2 projects (1,000 MW each).

Another key focus area has been the promotion of EVs. The country has been offering incentives such as subsidies, rebates, exemptions and tax benefits, both at the national and provincial levels, to incentivise consumers to purchase EVs. Further, the Chinese government is drafting an EV development plan – New Energy Vehicle Industry Development Plan (2021-35) – which is intended to shape the sector through 2035.

Future outlook

In the wake of the recent outbreak of the Covid-19 pandemic, the country is focusing on the timely delivery of various major transmission projects. In February 2020, SGCC announced the resumption of transmission projects such as the ±800 kV UHV DC Qinghai-Henan, Yazhong- Jiangxi and Shaanxi-Wuhan lines, and other major projects with a cumulative value of CNY 100 billion.

Despite the ongoing pandemic, in June 2020, work on the CNY 22.6 billion worth 1,587 km Qinghai–Henan project, which extends across four provinces – from northwest China’s Qinghai, Gansu and Shaanxi provinces to central China’s Henan province – was completed. It will have a rated transmission capacity of 8 GW, with an annual transmission capacity of about 40 TWh. The Mengxi- Jinzhong UHV AC project has also resumed construction and is nearing completion. The 304 km long, CNY 4.96 billion project is a key project planned under China’s 13th Five-Year Plan, 2016-20. Once operational, it will facilitate the transmission of power to Beijing, Tianjin, Hebei and Shandong in north China, thereby improving power grid reliability in the region.

Furthermore, to recover from the Covid-19 pandemic, the Chinese government has set its sight on finding growth drivers to stimulate the economy. To this end, the government zeroed in on seven key infrastructure sectors. Referred to as “new” infrastructure, these sectors are 5G base stations, EV charging points, big data centres, artificial intelligence, industrial internet of things, UHV power projects, and intercity and urban rail transportation. In March 2020, the government convened a meeting to speed up the construction of this new infrastructure. It is estimated that China will witness a cumulative investment of about $205 billion in all the seven infrastructure sectors in 2020.

The National Energy Administration (NEA) recently held a planning meeting for the development of the power sector plan under the 14th Five-Year Plan. For the 14th Plan, the NEA will focus on three key areas – planning and construction of new power projects andpromotion of research to improve the power grid structure; improvement in the overall power efficiency and transition towards clean energy; technological innovation to revolutionalise the power sector; and strengthening of the power interconnections with neighbouring countries.

China has set ambitious goals for developing clean energy technology, which can only be fulfilled with strategic investment in advanced technological initiatives. The planning of “new” infrastructure is a huge leap in this direction and will help in further improving the country’s infrastructure by integrating digital information and energy transmission.

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