Cleaner future

Updated: 2012-02-24 08:24

By Meng Jing and Liu Yiyu (China Daily)

  Print Mail Large Medium  Small 分享按钮 0

Cleaner future

Top: Pichler Heinz, China manager of Andritz Hydro. Wang Jing / China Daily. Above left: Jens Tommerup, president of Vestas China. Above right: Frank Li, lead partner for the clean-tech industry at Deloitte Northern China. Photos Provided to China Daily

The China Wind Energy Development Roadmap 2050 released by the Energy Research Institute with the National Development and Reform Commission in October 2011 shows that China's annual new installed wind capacity will remain steady at 15 gW per year until 2020, 20 gW per year from 2020 to 2030, and 30 gW per year for the final decade to 2050.

"Experience shows that government targets are often exceeded in China. Wind power prices are coming down and are cheaper than solar power. We believe that the newly installed capacity of wind power in China will at least reach 20gW per year," says Watson Liu, vice-president for Greater China with Roland Berger.

But the tempting market also draws more competitors, and thereby the inevitable overcapacity. Liu says China's demand for wind power equipment was 20 gW in 2010 whereas the production capacity by Chinese producers alone was 30 gW. The rapid growth has also had its downside due to the high number of accidents caused by failures and malfunctions of wind turbines, including massive power outages and even some fatalities.

China's National Energy Administration took a lot of initiatives in 2011, by moving toward a more mature industry with higher standards for safety and quality control, grid connection requirements and a centralized wind farm project approval process, all of which are expected to open up more investment opportunities for Western companies.

Banking on hydropower

Hydropower is the world's largest source of renewable energy and China has been no exception with 17 percent of its electricity requirements in 2010 coming from hydropower sources. Though development of large hydropower projects in China has slowed considerably due to higher awareness of ecological and social aspects, experts still say that it is the most matured and cheapest source of renewable energy. Hydropower is also an integral choice for China to satiate its growing demand for energy and achieve its carbon emission goals.

Pichler Heinz, the China manager of Andritz Hydro, one of the largest suppliers for hydropower plant maker equipment in the world, says though business has not been up to its expectations, the company has no plans to move out of China as it believes there is still huge potential. On the contrary, Heinz says, Andritz plans to invest more in its manufacturing partner in Southwest China's Sichuan province for an additional manufacturing joint venture.

"China's hydropower had an installed capacity of 216 gW in 2010. I believe the same amount is still available to be developed. The potential is huge," Heinz says. China set a goal in 2010 to reach 300 gW installed capacity of hydropower by 2015 which will be raised to around 330 gW by 2020.

In a hydropower report released by Deutsche Bank Group in late October 2011, the installed capacity of hydropower in China by 2020 is estimated to exceed the government goal of 330 gW to 348 gW.

Michael Carboy, head of China Investment Research with Deutsche Bank Group, says government goals and targets serve more as guide posts for development rather than as "speed limits" not to be exceeded.

Martin Andrae, president and CEO of Voith Hydro Shanghai, a joint venture between the world's leading hydropower equipment provider Voith and Shanghai Electronic Corporate, says that though there is a tremendous need for electricity in China to support its growth and eliminate power shortages, it needs to generate the energy in a green manner to achieve its carbon emission goals.

"Hydropower is one of the most effective approaches for China to achieve its goal of cutting down carbon emissions. Last year during summer, China faced shortages of around 30 gW in China's State Grid and by about 10 gW in China Southern Power Grid," Andrae says, adding hydro plants have a greater lifetime value. "If maintained well, they can be operational for 60 to 90 years, whereas wind power installations average 20 to 25 years and thermal plants 35 to 40 years," he says.

"Our research shows that in the first half of 2011, China's investment in hydropower plants was nearly the same as that of Switzerland, a tiny country in Europe," Heinz says.

Statistics from China Electricity Council show that the installed capacity of hydropower in China in 2011 was about 12.25 gW, which is significant growth from previous years but still behind the schedule of an average new installation of 15.4 gW a year between 2011 and 2015.

Nuclear future

Like hydropower, nuclear energy is one of the best sources of clean energy and accounts for nearly 13.8 percent of global electricity requirements. In China, the government is likely to set a target of generating 70-80 gW of its electricity needs from nuclear sources by 2020.

Like many nuclear equipment manufacturers, Jiangsu-based Shentong Valve Company is anticipating a huge increase in orders this year, boosted by expectations that China will resume approvals for new nuclear projects soon. The valve maker is the only supplier of butterfly and ball valves for newly built reactors since 2008. These valves are one of the key components in nuclear reactors.

"We expect to receive 150 million yuan worth of new orders if at least four reactors are built each year," says Zhang Qiqiang, secretary to chairman of Shentong Valve.

China recently upgraded its safety standards on nuclear power projects according to the finalized Nuclear Safety Plan that is awaiting approval from the State Council. It is widely believed that China will adopt the third-generation technology in all plants, including the AP 1000 developed by the US company Westinghouse and EPR developed by France's AREVA.

Industry analysts estimate the fresh nuclear project approvals will create a market worth 300 billion yuan in the next five years, in addition to the current 16 gW of nuclear projects that are in the works.

Despite the freeze in the industry after the nuclear accident in Japan last year, investment in the sector grew by 26 percent during the first 10 months of last year, according to estimates from the China Electricity Council.

French company AREVA and China National Nuclear Corp, China's largest nuclear plant operator, recently signed an agreement to further strengthen cooperation in areas such as nuclear safety and operational excellence. For AREVA, the big draw undoubtedly is the huge nuclear fuel reprocessing market in China and had signed an agreement for the pre-feasibility study related to the construction of a used fuel recycling plant as early as 2010.

China already represents an important source of revenue for the French nuclear company with about 10 percent of its 9.1 billion euros revenue coming from China in 2010. It is estimated that spent fuel will amount to 385,000 cubic meters if China is to reach 70 gW in nuclear capacity by 2020. However, the country has not been focusing on the spent fuel-reprocessing sector as much as it does for the power generation part. Industry experts estimate that the reprocessing market for spent fuels with intermediate level waste can be about 70 billion yuan.

Clean coal on fire

Though China is taking steps to "decarbonize" itself, it does not mean the end of the road for companies in the conventional energy sector, such as coal. In fact, companies such as the US-based LP Amina are expanding their operations in China in a big way to ride the clean energy wave.

"One of the major challenges we have in China is to cope with the fast market growth," says William Latta, adding he is expecting a boom in his company's China business. LP Amina, which was established in the United States in 2007, started its China operations in 2008 after witnessing a strong demand for pollution reduction techniques from coal-fired power stations.

China is the world's largest coal consumer with more than 70 percent of power in the nation generated by coal-fired plants. Though the country is keen to boost its renewable energy sector, there is also no sign of a slowdown in the demand for coal-generated power.

Statistics from the China Electricity Council show that the installed capacity of China's coal-fired power plants surged from 370 gW in 2005 to 650 gW in 2010, and is expected to reach 933 gW by 2015. With the increased power generation, there is also an inevitable rise in greenhouse gases and pollution, including nitrogen oxide emissions, part of the group of PM 2.5 - particulate matter smaller than 2.5 micrometers deemed hazardous for health.

Latta says that using LP Amina's clean coal technology, coal-fired power plants can not only reduce up to 95 percent of nitrogen oxide from the baseline but also improve energy efficiency.

For the first few projects in China, LP Amina took the initiative to find coal-fired plants, which were interested in the technology. "Things have changed now as more people are coming to us now. Our name is invariably mentioned for new projects," Latta says. The company finished its first project in 2009, and has so far completed 11 projects and is currently working on 100 projects across China.

Apart from the advanced technologies, Latta attributes his company's success in China to the country's booming clean coal market. According to him, his company's business in the US is fairly stable, because the desire to deploy cutting-edge technology among his home country's typical 40-year-old coal-fired power plants is not that strong. "But in China, nitrogen oxide control is the main target in the government's 12th Five-Year Plan (2011-15). The market is booming and that is why we are expanding," he says.

According to the government plan, China plans to reduce emissions for nitrogen oxide and ammonia nitrogen by 10 percent below 2010 levels, and cut sulfur dioxide and chemical oxygen demand by 8 percent between 2011 and 2015, all of which is expected to create a market worth $30 billion.

Latta says he does not think the market can be as big as $30 billion. "But it can be $20 billion at least. Even if we capture 3 percent of it, it will be huge," he says. The company has already raised its investment in China from $6 million to $11 million this year to cope with the strong market demand. Latta estimates that the China market will bring in $50 million for his company's pollution control business in 2012, which is expected to reach $250 million by 2015.

 

Previous Page 1 2 Next Page

8.03K