National Energy Grid
China
GRID SUMMARY
As with coal, China's electric power industry experienced
a serious oversupply problem in the late 1990s, due
largely to demand reductions from closures of inefficient
state-owned industrial units, which were major consumers
of electricity. The Chinese government responded to
the short-term oversupply in part by implementing
a drive to close down small thermal power plants and
by imposing a moratorium (with a few exceptions) on
approval of new power plant construction, which ran
through January 1, 2002. Until recently, the backlog
of projects approved in the mid-1990s had kept pace
with demand increases. In the first half of 2003,
however, the Chinese government has approved 30 major
new electric power projects, with a total of around
22 gigawatts (GW) of capacity. Construction has begun
on 17 of these projects. A total of 18.5 GW of new
capacity is scheduled to be completed this year.
The largest project under construction, by far, is
the Three Gorges Dam, which, when fully completed
in 2009, will include 26 separate 700-MW generators,
for a total of 18.2 GW. Plans were announced in March
2002 to reorganize the Three Gorges project into the
China Yangtze Three Gorges Electric Power Corporation.
The corporation is expected to seek capital through
an equity offering open to foreign and domestic investors,
similar to those already carried out by the major
Chinese oil companies. The IPO has been scheduled
for September 2003. The reservoir created by the dam
began to fill in June 2003, and the first test runs
of the initial group of electric turbines is set for
August 2003. Another large hydropower project involves
a series of dams on the upper portion of the Yellow
River. Shaanxi, Qinghai, and Gansu provinces have
joined to create the Yellow River Hydroelectric Development
Corporation, with plans for the eventual construction
of 25 generating stations with a combined installed
capacity of 15.8 GW.
Many of the major developments taking place in the
Chinese electricity sector recently involve nuclear
power. China's total installed capacity for nuclear
power generation increased from 2.1 GW at the beginning
of of 2002 to 5.4 GW at the beginning of 2003. The
first generation unit of the Lingao nuclear power
plant in Guangdong province began commercial operation
in May 2002, with a capacity of 1-GW. The second 1-GW
generating unit began operating in January 2003. An
additional 600-MW generating unit at the Qinshan nuclear
power plant in Zhejiang province began operation in
February 2002, and another 600-MW unit at the same
site came online in December 2002.
A major issue for China's electric power industry
is the distribution of generation among power plants.
China's stated intention eventually is to create a
unified national power grid, and to have a modern
power market in which plants sell power to the grid
at market-determined rates. In the short term, though,
traditional arrangements still hold sway, and state-owned
power plants which have government connections tend
to have a higher priority than independent private
plants. Additionally, some private plants with "take-or-pay"
contracts, which provide for guaranteed minimum sales
amounts, have had trouble getting the provincial authorities
running the local grids to honor those terms.
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