GRID:

China rebuilds its power grid as part of its clean technologies push

SHANGHAI -- As the world's largest fossil fuel consumer, China is trying to use more clean energy, but it has a major handicap to overcome: Its current electric grid can't handle it.

State Grid Corp. of China, the country's top electricity distributor, hopes to get around this impasse by building what it calls a "strong, smart grid." After two years of testing its grid plan, the company is now throttling up to full-speed implementation.

The hope is to rescue renewable energy, especially wind power, from a technical bottleneck. Additionally, a smarter power grid would create demand that could give China a better position in the lucrative and highly competitive global smart grid component manufacturing race. Finally, it would also help reduce the nation's transportation emissions by developing a nationwide electric vehicle charging network.s

Since Chinese leaders have yet to regulate this nascent sector, it is State Grid that will make the decisions for national grid development. The result of its ongoing grid plan will not only affect its more than 1 billion customers in China, but also be felt by the outside world.

The overarching goal for the more advanced transmission network, according to the company, is to reduce enough carbon emissions to help China achieve at least 20 percent of its targeted emission cuts.

China's emission cuts have never been more important to the success of combating global warming. With its population of 1.3 billion and its energy-guzzling manufacturing industry, China now consumes more energy than any other nation, accounting for more than a fifth of the world's energy-related greenhouse gas emissions.

Hooking up stranded wind power

For the sake of its environment and energy security, China in recent years has been trying to add renewable energy into its power mix, but the country's strongest winds, brightest sunlight and most powerful rivers aren't found near the nation's energy-hungry regions. That poses a challenge to transmitting electricity generated from renewable sources, with wind power being the prime example.

Rajesh Panjwani, who heads power research at Hong Kong-based investment firm CLSA, noted that the development of Chinese grids has failed to keep pace with the rapid growth of China's wind farms. Thus, at the end of 2009, about one-third of installed wind turbines in China were unable to get connected to the grid.

And for those lucky ones that are connected, they often have to be shut down when wind is at its peak because the existing grid is too weak to handle the unpredictable off-and-on nature of wind power surges.

That has been causing a huge energy waste. In the first half of 2010 alone, wind-generated electricity that could have been used by about 10 million Chinese for a whole year had nowhere to go, according to the latest government figures.

State Grid wants to remove that bottleneck. Its strategy is to adopt ultra-high-voltage power lines that can carry heavy flows of electricity across the vast country. Such network -- nonexistent in 2008 -- would stretch across China as a lifeline for absorbing wind power.

By 2015, the company declared, its grid infrastructure would be in line with growth in the nation's wind power sector. China last year surpassed the United States to become the world's No. 1 in wind power generating capacity, and this capacity is scheduled to more than double in the next five years.

Clean power to Shanghai and greener power for cars

Meanwhile, more solar and hydro power would be able to flow into the grid. Already, through State Grid's recently built pilot project, electricity generated from hydro power is being sent over a thousand miles to Shanghai, allowing it to style itself as the biggest clean energy-consuming city on Earth.

In addition, technology innovation is under way to make the grid smarter. This year, State Grid began cooperating with the Asian Development Bank to research wind forecasting, with the hope of someday being able to make better use of intermittent wind power, said Yang Hongliang, who leads this cooperative project at the Asian Development Bank.

Moreover, the grid development is also expected to forge Chinese manufacturing power, as was in the case of a clean energy sector in which China now leads the world.

Driven by strong domestic demand, China's wind turbine industry -- which barely existed in 2004 -- now holds four seats among the world's top 10 manufacturers. And local maker Sinovel, which got its start with imported technology, later used its own invention to develop the first major offshore wind farm outside Europe.

Just like wind turbine makers, "the development of the grid in China will nourish Chinese smart grid component makers, preparing them for future global competition," said Peng Ximing, an energy specialist from the World Bank in Beijing.

China's grid upgrade will also help boost the nation's green car sector. Over the next five years, hundreds of thousands of electric vehicles charging points will be added as part of the grid plan, in order to help State Grid position itself in a much-anticipated market.

In return, that will encourage Chinese automakers to produce electric cars and pave the way for drivers who want to switch, said John Zeng, auto analyst at global marketing firm J.D. Power and Associates. Until now, Zeng added, electric car demand has been stifled partly because of a lack of charging stations.

Can China's grid become a two-way street?

Still, some problems remain unsolved in State Grid's master plan. The initiative is especially upsetting providers of one emerging clean energy solution that allows consumers to generate their own electricity and recycle energy waste to meet heating and cooling needs.

Feng Jianghua, who represents the natural gas distributed power generator industry at the China Gas Association, pointed out that the advanced grid plan lacks specifics on how it will resolve a major problem that is preventing consumers from embracing the industry's low-carbon energy solution.

According to Feng, switching to such a solution requires the grid connection as backup, but grid companies are reluctant to integrate power systems installed by consumers, claiming technical barriers and conflicts of interest.

"Rising distributed generators use means declining sales for grid companies," Feng said, adding that consumers that want to switch are usually energy-intensive factories, office buildings and shopping malls that are considered as VIPs for grid companies.

But this conflict could see an end within the next five years. Peng of the World Bank noted that the government here is now drawing national grid connection standards, which include addressing grid constraints on the growth of distributed clean energy.