China’s Smart Grid for the future export

It is obvious that smart grid is nothing but agreed upon story about investment. In United States, President Obama revealed national smart grid policy immediately after the victory in presidential election. Based on his intention, Department of Energy made detailed plan of $39 billion smart grid investment and awarded funds to many power companies mostly for installation of smart meters. But in some regions, after deployment of smart meters, consumers started complaining about the result of smart metering. They said electricity price went up extremely higher than before. We know at present this happened because power companies lacked appropriate communication with consumers. Things started before consumers understood the story of smart grid investment.

Smart grid varies in countries. In Japan, transmission and distribution of electricity is highly integrated and automated by optical broadband communication lines. For example, grid system can detect power breakdown in certain area in a second, then disconnect the assumed mal-functioning area to protect the grid and finally, after ascertaining true accidental point, redistribute the power to the safe area. This is a sort of smart grid indeed. But this autonomous grid system was established far before the word “smart grid” was coined, it isn’t thought as smart grid here. Most Japanese businessmen are thinking smart grid would exist anywhere outside Japan. This is another case of smart grid investment story where understanding lacks.

How about in China? According to the recent report "China: Rise of the Smart Grid" released by Zpryme Research & Consulting, we have clues to believe that China will be the world leader of smart grid in coming years. Estimated investment is huge. From 2011 to 2015, China will invest more than $20 billion annually. Compound Annual Growth Rate is as high as 29.1%, and the investment will result in $61.4 billion in 2015.

What smart grid are they constructing? Numerous sources said that China’s smart grid is about adding 100 GW generation capacity annually, with more than 25% of the total is renewable energy, and making gigantic nation-wide power grid using 1,000 kV UHV (Ultra High Voltage) technology within five years.

China increased installed capacity of generation by about 100 GW annually in the last five years. This means China kept adding almost the same capacity of Italy every year. As of 2010 end, China’s total installed capacity became 950 GW. However, such a huge capacity doesn’t seem to meet with the peak demand in coastal mega cities like Shanghai in the hottest days of summer. So, China has to keep increasing massive generation capacity as before.

In addition to the current 950 GW, China’s State Electricity Regulatory Commission revealed that the country would add capacity of 495GW in the next five years. Of total addition, more than 25% are assigned to green power generation. As a result, China will be the largest power producing country followed by US. And presumably, the most advanced country in renewable generation. Recent news told that China'S installed capacity of wind power has become the largest.

This large enhancement of upper end of the grid inevitably requires huge investment in the transmission network. As the national land is wide, transmission lines of China are enormously long. And as energy loss of long lines of lower voltage transmission is huge, China must use highly efficient transmission technology called UHV (Ultra High Voltage).

In 2000, China made nation wide power grid plan named “Send West Electricity To East”. Since the western region has abundant energy resources of coal and hydro, this plan was intended to make following three major transmission routes from the western power plants the eastern large cities.

• North route: Hydropower generation in the upper/middle stream of Yellow River and thermal power of Inner Mongolia and Shanxi transmitted to Beijin, Tianjin and Tangshan.
• Middle route: World’s largest hydropower plants at Three Yangtze Gorge of Sichuan and Chongqing transmitted to Shanghai, Jiangsu and Zhejiang. Required the largest investment.
• South route: Hydropower and thermal power of Yunnan, Guizhou and Guangxi transmitted to Guangdong province.

Based on these routes, China has been upgrading national grid to “three vertical lines, three horizontal lines, and one ring” to cover the whole nation using UHV. Currently in other countries, technology of UHV is just under experiment or in standardization process. Japanese players such as Toshiba and Tokyo Electric Power Company have practical technology of 1,100 kV UHV and contributed to establish global standard at IEC. Also, they reportedly provided consulting service to China’s National Grid, world's  largest electric power company (#8 in Fortune Global 500) in development of UHV equipments. But, China is using “1,000 kV” UHV in their “three vertical lines, three horizontal lines, and one ring” and trying to keep it as China-made high technology. Numerous domestic venders are said to make UHV relevant products to realize gigantic grid.

The most important point, however, is that China is the only country that could actually deploy nation wide UHV grid and therefore, it is becoming a leading exporter of the technology as this article shows. It is not a matter of international standard making, but just an implementation with enough money.

As urgent necessity to match daily power demand formed China’s attitude to incorporate massive grid with state of the art technology, China is becoming the largest country in smart grid.

That is China’s story about smart grid investment in the 1st half of 2010’s. Though, this story isn’t shared with consumers, it is ok, because stakeholders of nation-wide grid development is very limited. In the next half of 2010, what will happen? I’ll bet that China’s ultra high efficiency transmission lines may export electricity to neighboring countries. Days of world wide smart grid will come.

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[Tokyo based research available]
Research on government policies, M&A opportunities, private sector's energy activities. dimaizum(at)gmail.com