Cleaner Greener China

While many in China, and out, have been focused on the impressive speed by which China has been able to grow its economy over the last 15 years, those inside the central party have been focused on ensuring that the economic energy had its energy needs met. Made difficult by the fact that the highest growth areas for energy demand China have been on the East coast, and the sources of energy were found to the west and north, it has forced China’s planners to overcome a number of logistical hurdles.

A hurdle that was front and canter throughout the first day at the 2009 Smart Grid Forum (hosted by China Decision Makers Consultancy), a forum that brought together leading Smart Grid experts to discuss and debate the future of Smart Grid in China. With roughly 180 in attendance, standing room only, the event early on took a very interesting tone as members of China’s State Grid and Energy Bureau laid out the conditions that exist in China, and how they have been closing communicating with counterparts in the United States.

In the words of Hu Zhaoguang, the Chairperson for the event, critical to the rollout of Wen Jiaobao’s recent emission cut announcement is China’s ability to integrate smartgrid into their low carbon emission plan as it will contain the information and measuring equipment that increase the grid’s ability to manage and balance energy, improve the reliability of system, and safety of the network.. and engage customers into making wiser energy decisions based on real time pricing, improved education on their footprints, and investment in new appliances.

At no time did anyone suggest that a significant movement away from coal could take place, but that the emphasis would turn towards clean coal and improving efficiency in those coal plants (see Green Leap Article for more on this plan). Moreover, while speakers quoted the statistics behind the future mix Hydro, geothermal, wind, and nuclear energies, solar was not present in any of the discussions, which is particularly interesting given the recent announcement surrounding the Golden Sun Program

Of the hurdles that seemed to be the biggest, it was the communication between national and regional government agencies that appeared to be the most tenuous. That, as national projects, many of the regional governments were not buying into the programs unless there it brought a positive economic impact or jobs to their area. hardly surprising, however one comment was made that suggested this had become a wider maintenance and efficiency problem as local governments were less likely to proactively maintain the equipment and train personnel. The other big hurdle, and one that has been known for years, is China’s geography and the fact that its energy sources are located in areas that have the lowest supply. As China develops this is a problem that will see improvement, but under the current model where the coastal cities demand the largest amount of energy, this creates a need for China to serve up energy 2000km away from its source. A very inefficient way to balance the load. A condition that is not without its benefits as China has developed their capacity for ultra high and high voltage transmission cables

Paired with the supply side issues was the understanding that China could not continue to grow as it has and still expect to meet its reduction and efficiency targets, a topic that Yang hengkun of Dongfang Dianzi addressed by pointing out that china is losing significant efficiencies through the distribution of energy, and how that energy is used. That, in addition to smartgrid, policy makers needed to work with customers to create regulations and efficiencies, or in his words:

smartgrid should be a holistic issues for energy, environment, asset management, customer satisfaction.

At this point in the conference, the floor was turned over to highlight some of the solutions, and solution providers, that are beginning to work on the problems. Martin Hauske of IBM, Fabian Hess of ABB, and Peter Johnon of Alcatel-Lucent both presented some of the ways in which their firms have been working in China to develop services and equipment that can be used to the benefit of China’s smartgrid. For ABB, it was working with the energy generators, producers of 40% of carbon emissions, for IBM it is working at the city level to develop test pilots for cities to learn from, and Alcatel-Lucent focused on their communications capabilities that help producers and consumers.

By the end of the day, there were a few key issues that were visited by nearly all the speakers.

1. Smartgrid should be a platform that improves reliability of service, reduces production and transmission efficiencies, and must engage consumers to effective educate them on their own footprints.
2. Regulations and standards are going to be very important to ensure that rollout of the grid occurs, and can be maintained. China already suffers significantly from different local standards conflicting with each other, and any investments in smartgrid should be made to remove those inefficiencies from the market
3. While time is of the essence, China’s smartgrid progress is not happening fast enough. Many of the big steps are still left to be taken, there is still a lot of uncertainty, and any investments are now focused on moving energy from old sources to old areas of demand (i.e. West to East).
4. Grid operators feel pressured to implement new grid and maintain old. Incentives will be needed.
5. Marketplace education will have to happen. Consumers are currently not willing to invest 100RMB for new meters.

Issues that leave me with the following questions:

1. How will China begin to implement smartgrid, and who will be the primary catalyst? Between rewiring China’s various industrial zones (largest demand group), and creating regulations for real estate developers, there is still a large question of who will oversee the implementation of installations, and which firms will be given the equipment contract (Huawei was mentioned).
2. Will smartgrid really “save” anything? One member of the State Grid party said that they currently have an average of 6.5% loss in transmission, and have goals already in place to improve that by .05% per year. Smartgrid was put forward as a platform that would further reduce by 50% (so 3% effectively). Does that number justify the investment
3. How closely are grid developers, operators, and policy makers working with industry on this? Keeping in mind it was a smartgrid conference, little reference to these groups (the demand side of the equation) was mention, and absolutely there was absolutely no mention of coordinating standards among these groups. Which leads me to wonder what level of latent inefficiencies will exist even when the “holistic” platform is in place.

Stay tuned for part 2 tomorrow. I will once again be tweeting the sessions under the @EnergyCollectiv account, and will be happy to ask questions on behalf of readers!