Mr. Yang Qing is the Executive Vice President of the State Grid Corporation of China (SGCC). In this capacity, he is in charge of the Department of Marketing, which oversees the development of smart meters and electric vehicles, the Department of Rural Grid Developments, and the National Power Exchange Center amongst others. Mr. Yang began his career in the power sector as an engineer in an electrical power research institution. From 1988 to 1994, he worked in the power planning department in the then China National Energy Ministry. From 1995 to 1998, he held the position of Executive Vice President in the China Power Investment Corporation. He then worked in the State Power Corporation (the former SGCC) from 1998 to 2002, and later took on the post of Executive Vice President of the China Datang Group. He assumed his current role in 2002.
1. At the moment, one of China's most critical economic targets is the construction of a unified power grid by 2016. How does China plan to achieve this target? What are the risks and challenges in a nationwide infrastructure construction project like this one? How will the national power grid help enhance the electrification level of underdeveloped areas?
Currently, China has six synchronised grids: the Northern-central, Eastern, Northwestern, Northeastern, Tibetan and Southern grids. Transmission between power grids is done through direct current. Therefore, China has already achieved a unified national network, excluding the Taiwan region. According to the national power grid plan, the country will further reorganise its power grids into five synchronised grids: Northern-central-east, Northwestern, Northeastern, Tibetan and Southern grid. Communication will become easier within and between the synchronised grids, thus further strengthening the unified power grid.
The State Grid Corporation of China plans to achieve the targets of the national power grid plan in stages and will continuously improve grid planning and accelerate grid construction. By 2015, "Two Vertical & Two Horizontal" will be achieved and the Yangtze River Delta UHV Ring and 7 back HVDC will be constructed. By 2017, "Three Vertical & Three Horizontal" will be achieved and the relevant UHV contact lines and 13 back HVDC will be constructed. By 2020, the "Five Vertical & Five Horizontal" will be achieved and the relevant UHV contact lines and 27 back HVDC will be constructed. At the same time, communication between the country's five synchronised grids will become tighter and the grid framework will be stronger.
One of the major challenges that the State Grid Corporation of China faces are the stricter regulations on environmental protection and land utilisation that comes with economic and social growth. There is now greater difficulty in the early stages of the construction of the power grid project. A second challenge would be the uncertainties faced during the construction of the power grid. The project's construction cycle is relatively long, but the country's economic and social development moves at a much faster pace, and hence power needs would have changed from the time of the grid's planning and construction. These changes, will affect the implementation of the power grid plan.
The State Grid Corporation of China has adhered closely to the country's policies and strategies to help develop the Western region by increasing the electrification level in under-developed areas. Firstly, construction has been accelerated for the Northwestern grid. This will in turn help accelerate the construction of power grids of different levels in underdeveloped areas in the western and northern regions. It will strengthen the 500 and 750 kV main grids and increase the power supply level to satisfy the local economic development and resource output needs. Secondly, the country's Xinjiang and Tibet assistance strategies have been implemented. The company has adopted a "Help from East & West" model by getting provincial companies with good operational efficiency from Jiangsu and Zhejiang to participate in the investment and construction of key projects of the Xinjiang power grid. This resolves the conflict between lack of investment power from Xinjiang companies and the rapid development of the power grid. We have also actively arranged for targeted power aid to Tibet, and increased capital support to accelerate the construction of the power grid in the area and support the development of Tibet. Thirdly, we are also encouraging the conversion of resource advantages in the western and northern regions into economic advantages. Underdeveloped areas in the western and northern regions are rich in coal power, hydropower, wind power and solar power resources. The State Grid Corporation of China has planned and constructed a UHV direct current transmission channel with starting points in the country's western and northern regions. According to the power grid plan, the trans-region UHV transmission capacity will reach 210 million kilowatts in 2015, 290 million kilowatts in 2017 and 450 million kilowatts in 2020. This will help promote the economic and social development of the western and northern regions.
2. Just like many other Asian countries, China is looking for diversity in energy sources. What is the ideal power generation combination that can satisfy the constantly growing demand for power and sustainable development? What challenges are there in integrating renewable energy sources like solar and wind energy into the grid?
1. Ideal power generation combination
The Chinese government has been actively working on the adjustment of the energy structure and development of renewable energy to increase the proportion of non-fossil sources in its energy consumption. According to China's "12th Five-Year Plan on Renewable Energy Development", by 2020, hydropower capacity will reach 350 million kilowatts, wind power will reach 200 million kilowatts, solar power will reach 50 million kilowatts and biomass power will reach 30 million kilowatts. To satisfy the power requirements against the backdrop of green development in 2020, the national power generation capacity has to double that of 2010 and reach 1.97 billion kilowatts, of which coal power will constitute 56.1%, hydropower will constitute 17.5%, wind power will constitute 10.2%, nuclear power will constitute 4.1% and solar and biomass power will constitute 4.1%. Clean energy capacity will increase from 27% in 2010 to 36%.
In the next 20 years, in order to satisfy China's power demands, China's power generation capacity and the proportion of clean energy will have to grow drastically.
2. Challenges faced by renewable energy grids such as solar and wind power
China's wind and solar energy resources are mostly concentrated in the western and northern regions, of which the "Three North" region constitutes more than 90% of the country's wind power resources, while the western and northern regions constitute more than 80% of the country's solar energy resources.
Currently, the major challenges faced by renewable energy grids, such as solar and wind power, are constraints from market capacity, power structure and delays in distribution channels. The "Three North" region where wind power resources are concentrated faces great challenges in consumption. Firstly, China is lacking in peaking technologies, which makes consumption of new energy extremely difficult. China's power structure is very different from that of overseas countries. The "Three North" region has a one-dimensional power structure based on thermal power. In addition, there is a heavy reliance on heating units, with flexible power generation such as gas power and pumped storage power constituting less than 2%. Peaking is particularly difficult during the winter season, resulting in greater challenges to the consumption of new energy. Secondly, China's "Three North" region has limited market capacity for new energy, and transmission over long distance is not easy. The four regions, West Inner Mongolia, Eastern Inner Mongolia, Gansu and Northern Hebei, constitute 51.3% of the nation's wind power generation, but their energy consumption is only 9.3% of the country's total. To resolve the country's wind power consumption problem and to effectively implement centralised development, large scale output and national allocation of the wind power bases in the "Three North" region, it is necessary to integrate wind power into the power grid, accelerate the construction of trans-regional power transmission channels to expand wind power generation from the "Three North" region to national level consumption.
3. As a pioneer in global smart power grid development, China has achieved significant results in the research and development of power grid technology in recent years. What is the status of the smart grid construction outlined in SGCC's three-stage plan and what are some of the company's research and development priorities?
In order to optimise energy resource allocation, enhance the capability of the grid to accept clear energy and satisfy the needs of rapid economic development, the State Grid Corporation of China created the intelligent national power grid plan in May 2009 and proposed the construction of a strong smart power grid that is "informative, automated and interactive" through coordinated development of the grid at different levels, based on the UHV framework. The plan has three stages: "pilot planning", "comprehensive construction" and "adoption and enhancement". By 2020, a solid smart power grid will be fully completed. The "pilot planning" stage took place from 2009-2010, while the "comprehensive construction" stage, began in 2011 and will continue into 2015. At the moment, everything is progressing as planned and the State Grid Corporation of China has already concluded the "pilot planning" stage. Construction of 14 different projects has been ongoing for three yearsincluding a technical support system for smart grid scheduling, automated power distribution and power consumption information collection.
With the constant advancement of technology, the State Grid Corporation of China has continued with research on technologies relating to smart power grid with a focus on the following exploration and applications:
Smart power grid technology is advancing constantly and the continual push for smart power grid construction is a common goal of power grid construction companies and operators of different countries. The State Grid Corporation of China looks forward to developing more extensive and deeper collaborations with power generators around the world to fully utilise modern network industries, control technologies and information technologies to build an "Energy Internet" that consists of new energy, large energy bases, distributed power and strong smart power grids.
4. China has recently released a revised pricing system to better reflect market demands. In your opinion, what makes this kind of multi-level pricing system successful? How will it help to promote effective utilisation of energy and ease the tension of energy shortage eventually?
China has always been promoting power pricing reform to facilitate efficient use of energy resources. In 2005, the country's Development and Reform Commission issued the "Measures for the Implementation of the Power Price Reform" (No. 514 [2005] of the National Development and Reform Commission), which stated the decision to use competition between supply and demand to provide a transition for power price reform. In terms of grid power prices, following the reform of the power system in 2003, the grid power price mechanism based on benchmark prices was implemented during the transitional period. Pricing was reviewed after the reform to reflect social advancements. This had a very good effect on lowering the construction costs of power generation projects and costs of power control. In future, we will continue to move towards market pricing. In terms of power transmission and distribution prices, the regulations on transmission and distribution business will be strengthened and the provinces can approve the current power distribution price standards based on actual investment and operation of power grids. In terms of retail power prices, it consists of four components: power grid tariff, power transmission tariff, distribution losses and governmental funds. There is also implementation of a two-part tariff, the wet and dry season tariff and other adjustments.
In May 2013, the National Development and Reform Committee issued the "Notice of the National Development and Reform Commission on Issues concerning Adjusting the Classification Structure of Retail Power Prices" (No. 973 [2013] of the National Development and Reform Commission) that stated the decision to gradually adjust the classification structure of retail power prices, shifting towards classification based on power costs and load characteristics to build a classification system that is structurally clear, reasonably priced and appropriately simplified.
Major changes in the new retail power pricing system will: 1. Promote pricing based on power costs and load characteristics to further reflect the supply and demand relationship of the market and the level of depletion of resources through two-part power prices, which reflect the time of use and the season. This will promote optimal allocation of power resources and reasonable utilisation to ease the tension on energy. 2. Increase the pricing options available to power users to promote orderly development of supply and demand competitions. 3. Simplify the classification of retail power prices. Progressively introduce market pricing by providing classification based on power utilisation of residents and agricultural industries and classify other power utilisation under commercial and industrial power in a five-year transitional period.
5. The State Grid Corporation of China has established itself as a major player in the global energy space and as part of the company's ongoing development plans, has recently expanded into Australia's power grids. What value does SGCC bring to its overseas partners, and how will the company benefit from its portfolio of enhanced assets?
The State Grid Corporation of China continues to insist on "localised operations" and "localised employment" to provide value to business partners and other relevant parties. In addition, it continues to strictly adhere to local laws, regulations and regulatory policies.
The State Grid Corporation of China is committed to ensuring safe, reliable and sustainable operation of project assets and companies.
The State Grid Corporation of China strives to utilise its advanced technical expertise and rich management experience in power network development to further enhance the company's operational performance and create synergy to enhance the overall strength and efficiency of the nation's power grids.
The State Grid Corporation of China's powerful research and development capabilities ensure that the company remains as a global leader in the following areas: