China invests half a trillion in smart grid

Energy Matters0

The “smart grid” is the merging of electricity infrastructure with information technology. The purpose is to add monitoring, analysis, control and communication capabilities to any national electrical delivery system to maximize efficiency while reducing energy consumption. Creating a unified power grid and upgrading aging power systems will increase productivity, reduce carbon dioxide emissions and increase national security.

The Need for a “Smart Grid” in China

In 2002, China established five independent electricity generating companies and several transmission companies. The five generators have an equal share of the assets — China Huaneng, China Datang, China Huadian, Guodian Power, China Power Investment — and compete to sell electricity.

The State Grid Corporation of China (SGCC), the Southern Power Grid Corporation and the Eastern China Grid Corporation are among China’s transmission companies. The largest utility in the world, SGCC serves 26 provinces and 1.08 billion people with a peak load of 343 gigawatts (GW) and total investment in grid construction valued at US $31.8 billion in 2007. China’s second largest utility, China Southern Power Grid, is ranked 226th in Fortune Magazine’s Global 500 listing with revenues exceeding US $30 billion.

Throughout China, the existing regional grids have weak interconnections between provinces and largely non-existent interconnections between grids. In order to solve this deficiency, the Chinese government has plans to create a unified national power grid network by 2020.

The plans include what is known as the “West-East Electricity Transfer Project,” which requires the construction of three major west-east transmission corridors: North, Central and South. The transmission capacity of each corridor is expected to reach 20 GW by 2020. While planning for such major infrastructure investments, the government would be well-positioned to lay the foundation for “smart grid” capacity across the country.

The Eastern China Grid Corporation initiated a feasibility study of “smart grid” technology in October 2007. Shi Junqing, the General Manager of Eastern China Grid Corp. described the findings earlier this year. In terms of the large load on its grid, the assets that it has built into its system, the necessity of continuing to build out the network and the increasing environmental, safety, reliability and efficiency pressures that it faces, Eastern China Grid Corp. believes that the conditions are now ripe for it to put in place a smart grid system; to that end the company has established a goal of gradually putting in place the elements of a “smart grid” over the coming years.

Smart Grid” Accommodates Breakthrough Technology

The State Grid Corporation of China (SGCC) has plans to create a nation-wide electric-vehicle charging network with charging stations currently installed in Shanghai, Beijing, and Tianjin to name a few. It was recently announced that General Motors is collaborating with the SGCC to meet Chinese market demand for the Chevy Volt.

However, without aggressive investment in “smart grid” technology, this initiative may stumble as it attempts to expand across the country. The plug-in electric vehicle will depend on network improvements as much as today’s car depends on petrol stations, which will require sophisticated appliances to communicate oscillations in energy supply and demand.

Exporting Smart Grid Technology to Other Asian Countries

In addition to creating a “smart grid” infrastructure, China also has the opportunity to export “smart grid” best practices. Recently it was reported that the State Grid Corporation of China won a US $3.95 billion bid for a 25-year contract to manage the Philippines’ electricity grid (arguably the largest privatization deal in Philippines’ history). A significant opportunity exists for China to collaborate with the rest of the world on investing in the grid of the future.

China is in a unique position to develop the world’s most advanced power distribution network by adopting smart grid technologies as it further develops and enhances its power grid. The question is whether China is willing to take the lead and be at the forefront of the “smart grid” revolution that is surely the future of worldwide power distribution.

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