July 1, 2010

China: A World Powerhouse

By Sonal Patel

Turning up Transmission

A highly efficient, unified national grid system ranks high on the government’s stack of reform priorities. Lack of transmission interconnection between provinces has in the past spurred construction of many regional coal-fired plants to meet localized peak electricity demand, and a more robust grid is expected to reduce the number of these plants going forward. Also, it is expected to link key load centers to the country’s abundant coal and hydro resources.

To that end, China has planned as many as eight long-distance high-voltage lines by 2015 and as many as 15 by 2020. After it put into operation a 600-km 1,000-kV UHV AC circuit in late 2008, the government announced that it had plans to build 17,600 km of lines by 2012. Meanwhile, last December, grid operator China Southern Power Grid put into operation the first pole of a transmission link between the southern Chinese provinces of Yunnan and Guangdong, a 1,418-km UHV DC system. That line has a transmission capacity of 5 GW, and it operates at a voltage of 800 kV—a world record. The Yunnan-Guangdong line will transmit power from giant hydropower plants under construction in southwestern China to rapidly growing southeastern industrial cities like Shenzhen and Guangzhou in the Pearl River delta of Guangdong Province.

A second 800-kV DC project has been planned between the Xiangjiaba hydropower plant, located in southwest China, and Shanghai, 2,071 km away. That line—which will possibly be the longest power transmission link in the world when operational later this year—will transmit 6,400 MW of power for its owner, State Grid Corp. of China.

By 2020, the capacity of the UHV network is expected to be 300 GW, of which hydropower will account for 78 GW and wind power from the north will constitute another significant portion.

The Implications of Technology Transfer

China has been cited as the “factory of the world” because it eventually absorbs various technologies. This sort of “technology transfer” is especially apparent in the country’s nuclear dealings with foreign component and reactor makers.

In its ambitious plans to increase nuclear plant capacity to 160 GW by 2030, China is driving companies to manufacture equipment domestically. This strategy seems to be paying off: The country kicked off its 21st nuclear project, Ningde 3, in January, and for the first time, 80% of the project’s components were sourced from Chinese suppliers, including the digital control system. The Ningde facility will comprise four CPR1000 reactors, indigenous 1,080-MW versions of an AREVA-designed pressurized water reactor. Also in January, the State Nuclear Power Technology Co. (SNPTC) said it had selected 10 Chinese equipment manufacturers to accelerate the country’s deployment of domestically developed third-generation nuclear power technology.

Technology transfer will also reportedly play a role in contracts between the SNPTC and Westinghouse for that company’s AP1000 reactor design. While in the U.S. and in Europe that design is slowly moving through federal certification processes, at least four Westinghouse AP1000 reactors are currently being built at Sanmen and at Haiyang. At least eight more are being planned after them, involving substantial technology transfer, with about 30 more proposed to follow. China is expected to own the intellectual property rights for those designs, which could mean, as the World Nuclear Association concludes, that the AP1000 is to be the main basis of the country’s move to Generation III technologies.

This type of “technology diffusion” is a positive aspect of technology transfer, and it could bode well for addressing climate-change mitigation, suggests an August 2009 study from nonprofit and nonpartisan research group Resources for the Future. That study separately evaluated the diffusion and deployment of supercritical and ultrasupercritical and natural gas combined-cycle technologies as licensed to Chinese equipment makers Harbin, Shanghai, and Dongfang. It found that among 713 supercritical and ultrasupercritical plants planned, constructed, or operated in the world in 2008, 38% were in China. And in 2006, combined-cycle plant operating capacity was about 10 GW, while capacity in planning or construction was 21.8 GW. Existing units made in China even exceeded those manufactured in Japan or Europe, it found.

Moreover, it said, even if Chinese manufacturing companies imported key components from foreign firms, construction costs for supercritical plants per kilowatt-hour were about 20% of costs in Japan, while combined-cycle costs were 25% of those in Japan. The group noted, though, that the comparison does not adequately reflect the differences in specifications for environmental equipment: “If Chinese power plants were required to satisfy as stringent environmental standards as Japanese plants do, construction costs in China would be much greater.”

One negative impact of technology transfer is that quality may be sacrificed in some cases, the study found. But even this could change, according to Resources for the Future, as Chinese manufacturers “trade up” to maintain export markets and to satisfy higher quality standards set by other governments. Finally, it adds that intellectual property rights will not likely be a barrier for technology transfer. The study suggests that license fees could cause price increases, but “price reduction by local production has been so steep that it seems the price increment by licensing is almost canceled out.”