The Remarkable Developmental Phases in China’s Electric Power Industry
The genesis of electric power industry in China could be traced to the later years of the nineteenth century when the first generating plant in China was built. To state more precisely, this generating plant, which was located at Shanghai, commenced operation in 1882. (www.pserc.org/cgi, 2002). As common to most industries in their early years the industry’s developmental pace was relatively slow. Virtually all the generating units were located in only the few large cities along the coastal regions and generated only but small power, with little capacity thermal efficiency. For over a century, the sector was run as a monopoly, under the state Power Corporation, until the recent past, in 1990s when the monopoly was broken. (www.pserc.org/cgi, 2002).
China’s electric power industry did not experience much remarkable improvement until the 20th century, but since 1994, it has witnessed a continuous high growth rate. In the year 1996, China witnessed the most remarkable event in the history of the industry, a law was enforced which gave investors ample opportunity to have a say in the industry. Consumers were also incorporated to regulate generation, distribution and consumption. (ww.eva.ac, 2004). On December, 2002, the industry witnessed a restructuring of the State Power Corporation of China, a final stroke in breaking the market monopoly.
This development naturally generated a competition which invariably improved the industry. Since this reformation, the industry is controlled by five state-owned holding companies, which are China Huaneng Group, China Datang Group, China Huandian, Guodian Power, and China Power Investment. All these five companies handle over 80 per cent of China’s power supply. (www.eva.ac, 2004). Before the end of 2000, a total of 315GW was already installed, a 5.5% increase to the 298.5 GW generated in 1999. Several plant were built across the country and the Hydropower was increased to 77GW (15% increase), thermal power generation moved to 235GW (a total of 83%) and nuclear power amounted to 2GW (1% increase). The total amount invested to achieve this was said to be a wholesome14 billion US dollars as at 1999, out of which 49.3% was spent on thermal power, 12.5% , “12.5 % to hydropower 6.4 % to nuclear 26.1 %, to transmission lines and transformers and 5.7 %.to other investments”. (www.eva.ac, 2004).
Apparently, these developmental phases were achieved without much challenges, however, like other industries across the globe the electricity industry in China has had its own fair share of challenges. Among these challenges areas follows:-
Mining and transportation of coal have always been a great challenge, for the quantity produce is always inadequate to meet the quantity required to generate the electricity demand. Again, the industry has bestowed China with the problem of pollution due to the massive quantity of coal burning. The introduction of price cap also was a great challenge, for it makes electricity cheap which encourages wastage of power. Yet another challenge and the virtually the main problem in the industry is that the voltage drops when power is being sent over a very long distance. This drop in voltage occurs every time electricity is being sent from one region of the country to the other. (www.pserc.org/cgi)
However solutions have been proffered to tackle many of these challenges, for instance, technology has produced an ultra-high voltages (UHV) of 800kV, which can be used to reduce the drop in voltage. By 2015, the government intends to have installed eight of these long distance UHV lines and five more by 2020. Already, more than two has been constructed and yet more is under construction. In respect of pollution, China has started to diversify from coal as the major source of generation; hydro-electric and nuclear power are being favoured as subsistute.
Irrespective of these challenges, China has achieved a total capacity of 713.29 million kilowatts as at the end of 2007 and has been able to maintain an annual 14.36% increase in power supply (www.pserc.org/cgi).
By the year 2004, China has achieved the status of the second largest hydroelectric power producer in the world, by generating 328billion kilowatthours (Bkwh) of electricity using hydroelectric sources, which was well over 15% of China’s total generation. During this period, all former traces of shortage in power supply had been totally erased. Irrespective of its enormous population, “china has a cocktail of energy mix” (www.eva.ac, 2004).
However, most of the power generation was from coal and other fossil fuel sources, which has led to the government to prioritize the expansion of natural gas-fired power plants. Hence, many power projects are under construction to achieve this.
With its increasing population, China is projecting to triple electricity consumption between 1990 and 2010. Recently, foreign investments were invited to partake in the industry due to this projection. The country has started to modify its legal structure to accommodate these investors, although several joint ventures have already been established, soon full foreign ownership of power plants will commence. By the end of 2010, China aims to have achieved a total of 500 GW capacities. By same year, the annual electricity generation has to have exceeded 2040 TWh. This China hope to achieve with the concerted effort of both foreign investors, local companies and the government.(www.iea.org/textbase)