2008 Report on China's Power Industry

Power supply is still far behind demand in China overall although the intensity has been defused a little in the past couple of years. In 2007, China achieved a fundamental balance between power supply and demand, with a power output of 3,255.9bn kwh, up by 14.44% year-on-year, while power consumption was 3,245.8bn kwh, up by 14.42%. The power supply kept growing rapidly in China in the first half of 2008, but the short coal supply and multiple natural disasters in China have underscored the imbalance between power supply and demand in some regions against the overall balance. Some generator units were even closed down because of short of a coal supply, thus that power supply fell severely behind demand. There were power strains and power cut-offs during rush hours in some regions, which were covered by as many as 22 provincial power grids.

Table 1: Statistics of Balance between Power Supply & Demand in China 2002-2007

Table 2: Balance Sheets of Power of Top 6 Power Grids in China in 2007

As for construction in the power industry, China spent RMB549.29bn on capital construction in 2007, with a new power capacity of 100.09 million kwh, up by 14.36% year-on-year; 41,500km new transmission lines of 220kv or above, up by 14.20%; and new transformer equipment with 188.48 million kva capacity, up by 18.71%. In the first half of 2008, China's power industry completed capital construction worth RMB133.71bn, with a new production capacity of 33.02 million kwh, among which hydropower, 7.04 million, grew by 1.37 million year-on-year; thermal power 24.5 million, by 9.07 million, and wind power 1.37 million.

China has also achieved a breakthrough in core technologies, such as power generation, power transmission and distribution, and energy conversion. As for coal-firing power, the country has command of the ultra supercritical power generation technology of 1,000MW generator units, and is able to manufacture the related supportive equipment for massive production, while for hydroelectricity technology China has a good command with 700,000kwh turbine generator units, which are already in mass operation at the Three Gorges, Longtan, and other power projects. As for nuclear power, China has basically been able to run with the second generation PWR technology, and has improved second generation CPR1000 technology. As for a power grid, China is in possession of the technology for 750kv and 500 kv super HV AC and DC transmission and distribution, and partially in possession of that for ultra HV. As for production of power grid equipment, China can produce most of it with the exception of  some ultra and super HV parts.

China's power industry will develop in the following directions 2008-2010:

1. Focus of investment will shift

Power grids, hydropower, nuclear power and wind power would be hot for investment in China during the country's 11th "Five-Year Plan". According to Beijing, the investment in power grids by the country would be RMB1,500bn, and the total investment in China's entire power industry RMB3,000bn, among which RMB300bn to RMB500bn would be in wind power, RMB700bn to RMB800bn in hydropower, and about RMB150bn in nuclear. Here we can see that the investments in the three would all increase greatly from before.

2. Power supply would still fall behind demand in China before 2010, i.e., there would be an overall balance between supply and demand, while imbalance would persist in some regions and in some seasons.

Specifically, since a lot of new generator units were installed in 2008 and 2009, the intensity between supply and demand would be mitigated before 2009. But since fewer new generators would be installed after 2009, the imbalance would have a relapse at that time. In long run, however, supply would surpass demand in 2020.

3. As for a power grid, China would shift its focus to ultra and super HV, while power plants and grids would extensively adopt automatic equipment.

As for thermal power, China's focus would be on air-cooling, ultra supercritical, desulfurizing, denitrifying and dedusting power generators with capacities of 600,000kwh and above. As for hydropower, the focus would be on large generators of 700,000kwh and above, and on high-efficiency generators. As for wind power, China would focus mainly on home originated generators of 1.5 MW and above that are able to withstand intense cold and strong wind. As for nuclear power, China is developing the third generation technology of its own based on the absorption of AP1000 technology.
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