Industry Overview

In 2007, China’s energy supply and demand both surged ahead at an amazing pace in the shadow of its 11.4% GDP growth. Total energy consumption increased by 7.8% equivalent to 2.65 billion tons of standard coal while the amount of electric power generated grew by 14.1% in 2007, to 326.32 million kWh. Thermal power still accounts for the bulk of the energy generated, 83%, followed by 14% from hydro, 2% from nuclear and less than 0.1% from wind power.

To end the State Power Corporation’s (SPC) monopoly of the power industry, China’s State Council dismantled the corporation in December 2002 and set up 11 smaller companies. SPC had owned 46% of the country's electrical generation assets and 90% of the electrical supply assets. The smaller companies include two electric power grid operators, five electric power generation companies and four relevant business companies. Each of the five electric power generation companies owns less than 20% (32 GW of electricity generation capacity) of China's market share for electric power generation. Ongoing reforms aim to separate power plants from power-supply networks, privatize a significant amount of state-owned property, encourage competition, and revamp pricing mechanisms.

The construction of power generating facilities has also maintained an accelerating pace. Newly installed capacity reached a record level and electricity grid construction also gained a larger footing. The total power generation capacity in China stepped up to 622 GW, up from 517 GW in 2005, with 77% coming from thermal power. Government policies point favorably in the direction of developing more clean energy. In the 11th Five-Year Plan, the goal is to build a sustainable economy and develop clean energy substitutes for coal and oil. In the guidelines, the National Development and Reform Commission (NDRC) also recommends forming price and tax incentives to encourage energy conservation. With $200 billion of investment planned for energy efficient building features by 2020 and international cooperation at the top of its agenda, there are many opportunities for U.S. businesses to take part in this clean energy effort.

Companies wishing to enter the Chinese market should pay attention to new energy laws that are completed or in the drafting process. In 2005, China’s 10th People’s Representative Congress passed the “Renewable Energy Law”. On Jan 24, 2006, the Office of the National Energy Leading Group National Development and Reform Committee and 13 other agencies formed a committee to draft China’s new Energy Law. Even though China has become an important energy producer and consumer in the world, it has yet to come up with a comprehensive legal framework guiding energy policy. With its rapid economic development, inherent energy conflicts are becoming more apparent; there is a dire need for China to create a complete energy law.

By 2010, the Central Chinese Government plans to double its per capita GDP relative to 2000. However, despite its plans to reduce energy consumption per unit GDP by 20% compared with that in the late 10th Five-Year Plan period, statistics show that in the first half of 2006 actual figures were up 30.8% from 2005.

Best Opportunities

While China recognizes the need to import foreign technology, it also wants to localize as much of this technology as possible. China continues to demand full technology transfer and localization whenever possible, despite provisions in the WTO agreement between China and the U.S. that should give U.S. exporters some relief in these areas. Many U.S. power equipment manufacturers and related construction/engineering firms have formed joint ventures in this market.

Market potentials for U.S. companies are in advanced power generation systems, control, monitoring and safety equipment, energy-efficient and environmentally friendly equipment, and management support systems for power generation and electric utilities.

As the world’s fastest growing economy and the second largest energy consumer, China is increasingly looking towards nuclear power to establish a balanced mix of energy generating methods. Nuclear power has become the third most important method of electricity generation in China, following thermal and hydropower. The country’s nine completed nuclear power generating units now account for about 2.3% of the total power output of China. The nation plans to increase nuclear generating capacity to 40GW and build 30 to 35 nuclear reactors by 2020, when nuclear power is projected to account for 4% of the nation’s total generating capacity.

There is also strong demand for the following products:

• 900 MW and above thermal power generating equipment, gas turbines
• 700 MW and above hydro power turbines, large-capacity pump storage units, advanced nuclear power station equipment, clean-coal technology power generating equipment
• 300 MW and above cogeneration and trigeneration units
• 600 MW and above air cooling power generation units
• Combine Cycle units
• 300 MW and above circulating fluidized-bed boilers and Integrated Gasification Combined Cycle (IGCC) units
• 750 kv and above transmission lines equipment
• 1.3MW capacity and above wind turbines, thermal power plant flue gas desulphurization equipment, power industry automation equipment, power grid safety supervision and control software and equipment, and middle and high voltage capacitors.

Chinese Regulation Authorities

Energy Bureau, National Development and Reform Commission of China

State Electricity Regulatory Commission (SERC)

Major Projects

Power Generation projects:

Projects	Capacity	Developer
Xiangjiaba Hydropower Station of Sichuan Province	6000 mw	China Three Gorges Hydropower Engineering Corporation
Hongyuan River Nuclear Power Station of Liaoning Province	4x1000 mw	China Guangdong Nuclear Power Group China Electric Power Investment Group Dalian City of Liaoning Province

Wind projects on concession:

Projects	Capacity	Developer
Rudong Wind Farm of Jiangsu Province	100 mw	Huariu Investment Group Co. Ltd. Lianneng Wind Power Investment Co. Ltd. Ouzhong Electric Power Co. Ltd.
Huilai City Shibei Hill Wind Farm of Guangdong Province	100 mw	Yuedean, GD Power Development Co. Ltd. Chaokong Investment Co. Ltd.
Tongyu Wind Farm of Jilin Province	100 mw	Huaneng
Huixile Wind Farm of Inner Mongolia	100 mw	Beijing Int’l Power New Energy Co. Ltd.
Taidong Wind Farm of Jiangsu Province	200 mw	Guohua Energy & Shenhua (HK)

Market Research on China

Power Generation Equipment Market in South China

Power Transmission and Distribution Market in South China

Nuclear Market in China

Key Contacts

National Development & Reform Commission, Energy Bureau
38 Yuetan Nanjie, Beijing 100824
Tel: (86-10) 6850-2876
Fax: (86-10) 6850-1458
Website: http://www.ndrc.gov.cn

State Electricity Regulatory Commission, Department of International Cooperation
86 West Chang’an Boulevard, Beijing 100031
Tel: (86-10) 6659-7322
Fax: (86-10) 6659-7305
Website: http://www.serc.gov.cn

China Electricity Council, Department of International Cooperation
No.1, Lane 2, Baiguang Road, Beijing 100761
Tel: (86-10) 6341-5533
Fax: (86-10) 6354-5305
Website: http://www.cec.org.cn

Useful Websites

Links to non-Commercial Service organizations are provided solely as a convenience to our users. The Commercial Service makes no representations about the accuracy or suitability of the information provided on the following web sites. The FCS is not responsible for the content of the individual organization webpages found through these links, and their inclusion here should not be understood as an endorsement of these organizations.

State Electric Regulatory Commission

Guangzhou Institute of Energy Conversion

Zhongdian Feihua – Electric Power Industrial Yellow Page

Shenzhen Energy Efficiency Association

Xiamen Energy Efficiency Center

Zhuhai New Energy Research Institute

Major Events and Trade Shows

This section provides a listing of upcoming power generation-related events in China, including industry shows and trade missions. While FCS China is directly involved with some of these events, the others listed here have no direct relationship with the FCS and are listed solely as a convenience to our users.

For more information, please contact the organizing group as listed in the event description. Verify the information before making any commitments - we are not responsible for accuracy of information or changes in events' schedules.

EP Shanghai
July 8-10, 2009
Shanghai

U.S. Commercial Service Contact Information for Power Generation

The U.S. Commercial Service offers a broad array of market entry services to U.S. companies in the power generation industry. Please refer to the following relevant contacts for additional information on how we can help you expand your business in China.

Beijing Office:
Tel: (86-10)8531-3000
Fax: (86-10)8531-3701
Bryan Larson
Mingming Ma

Shanghai Office:
Tel: (86-21)6279-7630
Fax: (86-21)6279-7639
Gregory Harris
Scott Yao

Guangzhou Office:
Tel: (86-20)8667-4011
Fax: (86-20)8666-6409
Lena Yang

Chengdu Office:
Tel: (86-28)8558-3992
Fax: (86-28)8558-3991
Cui Shiyang

Shenyang Office:
Tel: (86-24)2322-1198x8142
Fax: (86-24)2322-2206
Liu Yang