Friday November 23, 2012

Poser over China’s power grid plans

BEIJING: China's State Grid Corp is lobbying hard for approval of a US$250bil upgrade plan that it says would make the nation's grid an international trailblazer, but which critics say is too costly and could expose the system to blackouts.

The world's No.2 economy has struggled to expand its grid fast enough to keep up with demand after a decade of explosive growth. Capacity needs to grow to 1,500 gigawatt (GW) by 2020 from 1,060 GW at the end of last year, according to the Energy Research Institute, a think tank at China's top economic planning agency.

As China's leaders met last week in Beijing for a once-in-a-decade transition of power, Liu Zhenya, the politically powerful chief of the world's largest utility, pushed the nation's power brokers to approve the monumental plan to upgrade the transmission system. The price tag is over four times that of the Three Gorges Dam, which was already one of the nation's most expensive projects.

Liu is calling for China's leaders to agree to criss-cross the country with as many as 20 ultra high voltage (UHV) power lines, dubbed power corridors, by 2020, industry sources say. The lines would connect China's disparate regional grids and help resolve China's geographical energy imbalance, Liu says.

Critics say Liu is aiming to strengthen his and the state grid's position, already the world's seventh largest company, as much as to strengthen the network that supplies electricity.

Analysts also question whether the huge costs will deliver commensurate benefits.

”The UHV projects are massively expensive and, together with many observers, I am not convinced of the projects economics and not convinced the projects make sense from an energy supply security perspective,” said Joseph Jacobelli, a Hong Kong-based independent energy analyst, who was formerly head of global cleantech research at HSBC Holdings PLC.

Most of China's coal, natural gas and renewable energy resources lie far from the cities in the east and the south, and hauling coal from the mines to power stations on the other side of the country ties up more than 60% of China's rail capacity. Reuters

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