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Three Gorges Dam Migrants To Move In New Plan

Reuters in Beijing, SCMP – Updated on Feb 05, 2009

Some of the farmers displaced to make way for the vast Three Gorges Dam will be resettled again under a plan issued on Thursday that vows to cure poverty, unemployment and environmental hazards in the area. The “co-ordinated urban-rural” plan for sprawling Chongqing municipality in country’s southwest also covers the dam area, which has been troubled by social unrest, algae-tainted water and landslides and quakes triggered by the rising reservoir.

The document approved by the State Council, or cabinet, and issued on the central government’s website does not say how many of the some 1.4 million residents moved to make way for the dam will have to move again, or where they will go.

But it acknowledges that previous plans to find homes for many residents on steep slopes near the dam have fallen short of official blueprints and left some residents jobless and exposed to dangerous geological jolts.

“Based on the ecological carrying capacity of the dam area, steadily promote ecological migration and establish an ecological protective screen and protection belt,” states the plan.

It also promises to find a lasting solution to geological hazards around the dam and deal with a backlog of social problems that have stoked protests by locals in past years.

“Problems left over from migration and resettlement must be dealt with in detail, helping migrants to solve the real hardships and problems in their work and lives, building a harmonious and stable dam area.”

The Three Gorges Dam plan was controversial long before construction began in 1994, and domestic critics said it would create more problems than it could ever solve.

Beijing now promote it as a triumph of national ingenuity and resolve. But the new plan for Chongqing, which has over 31 million people, mostly farmers, shows rare candour about the social and environmental burdens.

Last July, officials said they had finished evacuating residents from the last town to be submerged by the 660-kilometre long reservoir on the Yangtze River, ending an exodus begun four years earlier.

The 2,309-metre-long dam, the world’s largest, aims to tame the river and provide cheap, clean energy. Reservoir engineers began withholding outflows in September to push the dam’s water level up to 175 metres above sea level.

But implementing the plan’s calls for both economic development and green protection may be difficult and costly.

The plan promises to cut industrial and agricultural pollution, which has nurtured blooms of algae choking nitrogen-rich water on offshoots of the main reservoir. But it also demands faster development to create jobs for locals.

Green Investments Get Pruned

Asian Investor By Simon Osborne | 2 February 2009

Investment in environmental technology and clean energy was a headline maker just a few months ago, on the back of high fossil fuel prices, climate change and wars in the Middle East. Since then the credit crisis has pushed the quest for environmental alpha into the background.

Whilst folk may be concentrating less on saving the planet in preference to saving their own personal environment, investment in green themes and clean energy was always based on hard money-making objectives in the line of producing sustainable returns.

Investors are looking up the wrong end of 30% falls to the value of green portfolios this year. That is because the environment sector is capital intensive and in the crunch it got hit. Liquidity has dried up for environmental projects, which tend to be enormously expensive to build.

Many clean-energy companies are at early stages of development and have found it hard to find funds. Venture capital and private equity investment in the space totaled $4.4 billion in the third quarter of 2008, a fall of 24% from the second quarter. The credit crisis has played havoc with the debt-laden and subsidy-driven renewable energy sector.

“Most environmental infrastructure plays are leveraged 70:30. It costs a massive amount to build these things,” says Glenn Fung, the portfolio manager of the Verde Fund in Hong Kong. The Verde Fund is 5% long and goes 10% long or short maximum net exposure, but the fund is down double digits for 2008. “There are lots of value plays, at 15 year lows in terms of value. Those entering now can get into deals at very good price levels.”

The second big black hole has been the fall in the oil price. As the oil price has tumbled to less than half of its peak levels it has meant that people are less interested in buying clean energy, which was meant to serve as a substitute. The propensity to invest in new energy sources has started to erode.

The China Growth Opportunities Fund allocates 70% to energy and clean technology, so it has not been as badly impacted as many funds. The main hit been from listed water stocks, because as project finance dries up these struggle to expand, and their valuations have tanked in line with the general stock market.

“When people are losing their jobs, companies are going bankrupt and asset prices are falling, the environment tends to get pushed to the sidelines, especially when the cost of oil more than halves,” says Simon Littlewood, who runs the China Growth Opportunities Fund. “The interesting angle is how the clean-tech sector is now being heralded by politicians like Barack Obama and Gordon Brown as the big job creator, the next wave of growth for Western economies. The question is where the funding will come from?”

President-elect Obama is promising emissions cuts of 80% by 2050, but offers no goals for 2020. He and similarly minded politicians such as Australian prime minister Kevin Rudd are motivated by energy security as well as more altruistic environmental concerns. However, given the state of the financial sector and the huge amount of distressed assets available to anyone looking to invest money, it is going to take a lot of government and state involvement to drive the sector forward, nudging the investors towards key specific environmental sub-sectors.

Governments and politicians need to take the lead in driving green investments through regulation,” says Joost Bergsma, the head of clean energy at Fortis Investments. “This is both a national as well as a local responsibility. Local governments can be somewhat slow in approving investments and this bottleneck needs resolution.”

It is already the case that governments have acted as by far the main promoter of environmental investment. Ethanol and petrol substitute investment remain driven by governments, and as an experimental business, subsidies are still vital.

The gloomy atmosphere doesn’t mean that entrepreneurs are not pressing ahead with their green projects. PT FirstFruits is an Indonesian firm planning to produce green bio-ethanol from the nipah palm, which is grown in plantations in Papua, Indonesia. The feedstock for ethanol production varies from sugar cane, sugar beet and other agricultural products. Producing the sugar-rich Nipah Palm sap is price-competitive compared to the cost of using, say, sugar cane, palm oil, Jatropha or Arenga palm to create ethanol. Costs of production equate to approximately $0.10 per litre, with a sale price of $0.71 per litre. With this level of margin, it means that ethanol production is less affected by the lower crude oil price, as would be the case with oil sands, a field in which operating costs are a lot higher, making that investment decision more marginal.

“For investors in our project, we have been looking to high-net-worth individuals in Brunei, Hong Kong, and Japan, plus we’ve been talking to private-equity houses,” says Yan Mandari, majority owner of PT FirstFruits. “We chose this route rather than Indonesian commercial banks, which don’t have a lot of credibility in this area. Right now it is incredibly difficult to get funding from an Indonesian bank for a project such as this.

On the private-equity side there is a full spectrum of investment opportunities ranging from risky new technology venture capital, through to more solid infrastructure such as power stations.

On the listed side there are very large companies, for example Shell, BP, and Veolia Environment, which are active in clean technologies, but as that accounts for just a small part of their revenues; these are not pure clean-energy investments. Purer plays include solar panel manufacturers such as Suntech, Suzlon Energy (which makes wind turbines), or China High Speed Transmission (a maker of gears for wind transmission equipment). These companies tend to be smaller and subject to far more volatility. To short that end of the sector is difficult because of a dearth of liquid borrowable stocks, so hedge funds have found it hard to profit from their stock price falls.

Capital funding is drying up, but also the dislocation of markets is affecting firms in other ways, even those companies with solid order books. The shares of China High Speed Transmission fell 50% in two days during October when it ran into trouble on its convertible bond-hedging program, having offered the bonds with put protection that proved to be out of the money.

So where are the clean energy funds looking for the future?

Converting waste to energy via incineration has additional potential as an environmental investment theme,” says Andrew Pidden, CIO of Clean Resources Asia, which runs long only and long/short clean energy and water funds. “Forestry also looks interesting, as and when subsidies are forthcoming for leaving forests intact instead of cutting them down.” He also cites hybrid technology as benefiting as electricity or biofuels replace oil in transport, as well as the cutting edge of generating fuel from algae.

The green investment space has come to an impasse. Take cars. Gas guzzlers like sports utility vehicles (known in Britain as ‘Chelsea tractors’) continue to sell below cost. The death of the Humvee may yet be premature as oil prices tumble. Investment into alternative energy has abated. Yet the long-term trend for oil prices must be upward, once China gets its growth story back on track. In China, coal is trading at $130 per ton, down from the peak of $154 per ton but well above the long-term average price of $70.

This means the old methods and fuel sources are proving more lucrative to investors than the new alternatives.

Utilities and power used to be regarded in investment circles as a ‘defensive’ area of the market. To the extent that clean energy has tried to affix itself to that sector, then given the performance of 2008, it can hardly be defined as defensive. In the Asian market, investors simply perceived alternative-energy stocks them as China-related mid caps and sold them off.

Here’s the rub: in spite of all the green initiatives, investment dollars, subsidies and carbon-credit change incentives, the world’s population is still belching out more carbon into the skies every year. None of the good intentions have paid off.

“Sadly, the credit incentives might seem good, and be well intentioned,” says Hong Kong-based scientist Dr Martin Williams, “but they are clearly woefully inadequate when it comes to tackling climate change, as are all other measures adopted so far.”

There’s still a mountain to climb, and whether you’re an investor, or just a person inhaling the pollution, the message is that dirty energy still rules.

Air New Zealand Holds Successful Trial Flight With New Biofuel Blend

Charlotte So in Auckland, SCMP – Updated on Dec 31, 2008

New Zealand’s national carrier is hailing a successful trial flight of a Boeing 747-400 jetliner using jatropha oil as proof that biofuels can be viable in future.

The trial, a joint programme with the aircraft maker, Rolls-Royce Group and Honeywell International’s UOP unit, tested a 50-50 blend of jatropha oil and conventional jet fuel in one of Air New Zealand’s four engines.

Just under two hours of flight tests were conducted over the Hauraki Gulf.

The first sustainable biofuel flight test took off in Auckland at 11.30am local time yesterday.

The two-hour flight test will provide data for civil aviation authorities.

Although oil prices were now more than US$100 below their July peak, the airline said the flight showed the commercial potential of the biofuel.

Air New Zealand chief executive Rob Fyfe said the jatropha-extracted biofuel was still competitive.

“Biofuel could help to eliminate 40 to 50 per cent carbon footprint from the airline, which translates to US$20 million in savings a year,” Mr Fyfe said.

The European Union is implementing an emissions-trading scheme for air travel to and from and within Europe in 2012, to offset carbon emissions. Since jatropha absorbs carbon dioxide from the atmosphere during the growing process and produces less emissions upon burning, the airline could save money on the offset cost.

Air New Zealand had set a target of adopting biofuel in 10 per cent of its domestic flights in five years. Mr Fyfe said it would expand its use of biofuel to international flights if biofuel won international recognition.

Jennifer Holmgren, the general manager of renewable energy and chemicals at UOP, a Honeywell company responsible for the production of jatropha oil for the flight test, said large-scale production of the fuel would be achieved by 2012 when output topped 100 million gallons. It was estimated that the percentage of second-generation biofuel to jet fuel would amount to almost 3 per cent by 2012, Ms Holmgren said.

The biofuel does not compete with conventional food crops.

The jatropha plant grows in arid regions, and each seed produces as much as 40 per cent of its weight in inedible oil.

A Virgin Airlines test flight in February used a 20 per cent biofuel blend made from babassu nuts and coconut oil.

Continental Airways will test a jatropha-algae blend next month; Japan Airlines Corp will test a fuel based on the camelina oilseed next month.

Additional reporting by Bloomberg

Clean Coal Best Way To Fuel Asia’s Growth

Frank Ching, SCMP – Updated on Dec 23, 2008

As China this month celebrates 30 years of extraordinary growth, it is also keenly aware that it has had to pay a steep environmental price – in terms of the health of its people because of severe pollution of its air, water and land.

Pan Yue, deputy environment minister, wrote recently: “China’s reform and opening has achieved in 30 years the economic gains of more than 100 years in the west – yet more than 100 years of environmental pollution in the west have materialised in 30 years in China.”

That is to say, the pace of China’s environmental pollution matches that of its economic growth. China has now overtaken the United States as the world’s greatest emitter of greenhouse gases.

That is not a record of which to be proud. To be sure, the developed countries, in particular the US and those in western Europe, have been responsible for the bulk of greenhouse gases already in the atmosphere. But China now contributes more than the US, and India is not far behind.

But the Earth is a vessel in which we all are journeying and we will all sink or swim together. Finger-pointing is not going to help: we need to reduce, as much as possible, the carbon dioxide being put into the atmosphere by all countries.

There has been a lot of talk about switching from fossil fuels to non-polluting forms of energy such as wind, solar or nuclear power. However, in the foreseeable future, there is no alternative to fossil fuels and, in particular, coal.

Coal is abundant and cheap, and is going to be used anyway, so there is a compelling need to come up with technology to “clean” the coal. Such technology is now on the lips of politicians and scientists from Australia to Canada, and from China to the US. It is an idea whose time has come.

One example of the recognition of the need to use coal without polluting the air is the announcement in Hong Kong this month by Washington University in St Louis of its partnership with 24 premier research universities around the world, 17 of which are in Asia, including universities in the mainland, Taiwan and Hong Kong.

“The consortium’s goal is to bring university researchers, industries, foundations and government organisations together to research clean coal technology,” Mark Wrighton, chancellor of Washington University, said. “The results of such research could support the fast-growing economies of Asia to fuel further development while at the same time increasing the awareness of coal as an efficient and environmentally safe form of energy.”

At present, research into clean coal technology is going on in many developed nations. There is already some co-operation between China and the US. At the latest session of the strategic economic dialogue in Beijing earlier this month, it was announced that an “EcoPartnership” had been formed between Energy Future Holdings of the US and China Huadian. Both companies are pursuing the development of sustainable business models for “clean energy”, particularly clean coal.

China and Britain, too, have jointly launched a near zero emissions coal initiative that aims to capture and geologically sequester carbon dioxide generated by coal combustion. It is expected that a demonstration near-zero-emissions plant will be built in China by 2014.

Currently, researchers are focusing on ways in which coal can be burned without releasing carbon dioxide into the atmosphere. The thinking is that the carbon can somehow be captured and then safely stored in the ground permanently, or until science has progressed to the point that it can be disposed of in some other way.

Pooling efforts in a consortium should make the research more efficient. This is something that the world, not just China or the US, needs badly.

Frank Ching is a Hong Kong-based writer and commentator.


Mainland Power Output Slumps 7.1pc As Plants Shut

SCMP – 12 December 2008

China’s power production slumped 7.1 per cent last month, the biggest decline in more than seven years, as factories shut because of reduced exports, preliminary data from the nation’s largest power distributor showed. Electricity output fell to 252.6 billion kilowatt-hours in November, according to statistics in an internal newsletter published by the State Grid Corp of China. That is the steepest drop since January 2001, data on the website of the National Bureau of Statistics shows. November is the second consecutive month in which electricity output has fallen. Production dropped 4 per cent to 264.5 billion kilowatt-hours in October, the first decline since March 2005. Bloomberg

Guodian, Huaneng Plants Approved

Eric Ng, SCMP – Updated on Dec 11, 2008

China Guodian Group and Huaneng Power International have received approvals to build coal-fired power plants costing an estimated total of 7.5 billion yuan (HK$8.47 billion), despite concerns of oversupply next year.

China Guodian, the country’s fourth-largest power producer by capacity and parent of mainland-listed GD Power Development, got the green light to construct two 600-megawatt (MW) generating units in Xingyang, Henan province, the company said.

A prerequisite of their construction is the closure of small plants in the area as part of Beijing’s “build large, shut small” policy, aimed at raising fuel efficiency and cutting pollution in the power industry.

The 2.52 billion yuan, 600 MW phase two of Huaneng’s Jinggangshan plant, 200 kilometres from Jiangxi province’s capital, Nanchang, has also been approved by the central government, Huaneng said.

Dao Heng Securities analyst Fan Yunfeng and a Huaneng spokesman said the projects were part of a long pipeline of applications made much earlier and not part of Beijing’s 4 trillion yuan economic stimulus package.

The energy spending component of the stimulus plan focuses on expanding renewable power generation and power grids in which there has been insufficient investment.

Beijing has slowed approval of new coal-fired power projects in view of sharply lower demand growth due to the global economic downturn and its desire to steer the addition of new capacity to clean-energy projects.

Industry-wide output slumped a worse than expected 7 per cent year on year for all fuel types last month, and coal-fired plants showed an even steeper 14 per cent decline, according to a BOC International research report.

Coal-fired output tumbled 5.2 per cent in October, according to a Nomura Securities research report.

“We think the sharp deceleration in power demand for nine consecutive months heralds a significant industrial slump to be confirmed later, as downstream industries, like steel, metals mining and cement, among others, take time to clear inventory and close factories,” wrote Peter Yao of BOC International.

He expected power demand growth to rebound only in next year’s second half and projected it to average 4.7 per cent next year and 6.2 per cent in 2010, down from 8 per cent this year and 14 per cent last year.

Oversupply could see industrywide capacity utilisation fall to 53.5 per cent next year, close to the trough in 1999 and compared with 57.2 per cent last year, he added.

Alarm Raised Over Energy, Population

By Doreen Yu, – Updated December 04, 2008 12:00 AM

HONG KONG – Before an audience held in rapt attention, Minister-Mentor Lee Kuan Yew of Singapore painted a dire world scenario, both in the short and the long term.

In a dialogue with former US President Bill Clinton at the Clinton Global Initiative-Asia here last Tuesday, Lee said he believed the current financial crisis will not be a short one, but whether it will be of medium or prolonged duration depends on what the US economic team tasked to sort out the mess will do in the next three to six months.

“The unorthodox must be considered,” he said when asked about prescriptions to fix the problem.

“The danger now is not inflation but deflation. People feel poor and so they don’t spend. Assets lose their value. You have to put a floor on this,” Lee said, even as he expressed confidence in the economic team that US President-elect Barack Obama has put together, including Larry Summer and Paul Volcker.

The minister-mentor, who had reportedly just gotten out of hospital after implantation of a pacemaker, was uncompromising in his assessment of the global energy situation.

Alternative energy – solar, wind, tides – cannot replace carbon or fossil fuels, he said, since these can only meet about 5 percent of energy demand the world over. The only possible replacement is nuclear energy, which has a lead time of 10 years to implementation.

A $6-billion solar project of a Norwegian corporation is currently in development in Singapore.

He moreover believes that the current drop in world oil prices is only temporary.

“We are in for a spike in oil prices,” he stated, which would mean more coal plants will be put up, which in turn means more CO2 emissions.

As Clinton noted the expected increase in world population from the current 6.7 billion to about 9.5 billion by 2050, Lee said that “population growth is one of the basic problems societies must confront.”

“How many people can the world hold?” he asked.

In response to Clinton’s proposition that the only answer to the population problem is “to send more girls to school,” Lee said that education alone is not enough; there must also be equal job opportunities for women.

Eliciting laughter from the audience that included Mongolian President Nambaryn Enkhbayar (Clinton had remarked in his introduction that he “just wants you (Lee) to tell him how to make Mongolia as rich as Singapore”) and actress and UN ambassador Michele Yeoh, Lee said that in many cases women in Asia – particularly Japan, in response to a question from a Japanese – were highly educated but were merely prepped to become “wives of CEOs.”

“They are highly educated but they don’t work. They stay at home and have many children,” prompting Clinton to quip, “Boy, if I had made that statement…”

With more people in the world, “the demand for all resources will grow,” straining these resources, especially carbon fuel, which is finite and exhaustible.

While encouraging energy efficiency measures such as automatic climate controls and efficient lighting for hotels and other buildings, Lee said this “still won’t solve the problem, only delay it.” Even the discovery of new sources of fuel – citing reports from Russia of rich deposits in the Antarctic – is not a solution but merely a delay of the inevitable.

This delay, however, is “a good thing,” Clinton pointed out, “because it will give us some time to figure out what to do.”

Lee was less pessimistic about the issue of water, contrary to the view that water will increasingly become an ever more valuable resource and that more wars will be fought over water than over oil.

Citing the example of Singapore, which used to import more than half of its water from Malaysia but is now practically self-sufficient, Lee explained that the city state retains all rainfall on the island, and waste water is recycled for industrial use. He also cited the importance of fighting pollution, saying that all factories in Singapore are required to treat their waste water before release into the sea or river.

“It (water self sufficiency) can be done if you fight pollution,” and implement technologies that are already available for water resource management. Besides, he added, with global warming, seas will rise, which will lead to more precipitation and thus more water.

Acknowledging that climate change is an inescapable reality, Lee says that “the world must prepare for more adaptation” as a response to climate change, by taking a hard and serious look at the way we live, what we consume, and how we behave.

The two-day Clinton Global Initiative-Asia is a project of the William J. Clinton Foundation, and gathered 11 current and former world leaders, plus leaders of business and industry, education, health, environment and non-government organizations.

Green Investment Makes Business Sense

Lau Nai-keung, SCMP – Nov 14, 2008

In an interview immediately after his US presidential election victory, Barack Obama listed four priorities for his administration. The first one is, of course, the economy, then energy, health care and the environment. To him, directing more resources away from oil dependency and saving the environment are good for the economy, too. He is right on the button.

Our government, and for that matter, authorities in Guangdong, have to understand that money spent on improving the environment is not a budget extravagance that should be cut during hard times.

Instead, it is a growth area that can, first of all, employ people, including the less educated and unskilled. Moreover, it can be hi-tech. Reduce, reuse and recycle is a dirty phrase here, but there are a lot of technologies involved, including physics, chemistry, biochemistry, engineering and logistics. Doing it on a regional scale requires highly sophisticated management skills, too.

In fact, China is now the world’s leading producer and user of solar water heaters. DuPont’s new venture in Hong Kong and Shenzhen will put us at the forefront of solar energy technology. Electricity-generating wind turbines are sprouting like mushrooms in certain parts of Guangdong. Nuclear energy, which is back in vogue and considered clean energy worldwide, is now gaining a bigger presence in the province, with at least two new plants in the pipeline.

Hong Kong, on the other hand, is too obsessed with hi-tech. If our recycling business does not join its counterparts in the Pearl River Delta, it will not survive. And, without government subsidies from both Hong Kong and Guangdong, the whole recycling industry may die as commodity prices fall.

Some 2.81 million tonnes of Hong Kong’s solid waste was separated for recycling last year, slightly less than in 2006. However, only 1 per cent, or 30,000 tonnes, was recycled in Hong Kong, compared with more than 11 million tonnes a year earlier. The remainder of the recoverables was exported for recycling. This is one area where we need co-operation between Guangdong and Hong Kong. Collaboration on used tyres or construction materials is an ideal way to start. There has been talk about recycling used tyres since 2003.

Investing in the environment is money well spent, because it can cut social costs, such as health care, and reduce hardship and suffering. These costs are estimated to total more than 3 per cent of gross domestic product, according to the Organisation for Economic Co-operation and Development.

Carbon trading is another area of regional co-operation where Hong Kong will play a prominent role. Our power plants generate more than 60 per cent of carbon emissions in Hong Kong. Figures from last year show that the two plants generated about 28 million tonnes of greenhouse gases, and are therefore good candidates to start the ball rolling. Guangdong also has its mandatory emissions targets to fulfil.

China, on the whole, is the largest carbon trading market in the world and is the biggest beneficiary of the United Nations Clean Development Mechanism. It is estimated that, by 2012, China, which is by far the largest carbon-emitting developing nation, will occupy about 50 per cent of the multibillion-euro carbon trading market.

There is much discussion on the mainland about setting up a carbon exchange. Hong Kong is the most suitable place for this institution. It should take the initiative and approach the central government about the subject.

If Guangdong wants to be the number one province, regional co-operation in environmental protection is perhaps the only viable option. If Hong Kong wants to seek opportunities in a depression, this is also the most feasible direction. We only have to “liberate our thoughts”, as Guangdong party secretary Wang Yang has urged.

Lau Nai-keung is a member of the Basic Law Committee of the NPC Standing Committee, and also a member of the Commission on Strategic Development

China’s Hydro Potential And UHV Transmission: John Kemp

John Kemp, Reuters – Wednesday November 12 2008

–John Kemp is a Reuters columnist. The opinions expressed are his own–

LONDON (Reuters) – China has two related (but somewhat distinct) power problems:

(1) The country is struggling to generate enough power overall as price controls encourage wasteful use of cheap electricity. China is unable to mine enough coal or transport it in sufficient quantities to meet demand, while the enormous volume of coal burning generates massive pollution.

(2) China suffers regional power shortages when generation drops in one province or region and the lack of long-distance power transmission capacity means that power cannot be routed in from other regions where there is surplus capacity.

The country has six distinct regional electricity grids – five managed by the massive State Grid Corporation of China (SGCC), and a sixth managed independently by China Southern Grid Corporation covering the provinces of Guangdong, Guangxi and Guizhou. Even within these grids, power transmission capacity is limited, and the links between them are weak.

The central government has made creation of a unified national grid system a top economic priority to improve the efficiency of the whole power system and reduce the risk of localised shortages. It will also enable the country to tap the enormous hydro potential from western China to meet booming demand from the eastern coastal provinces.


The main problem is voltage drop when power is sent over very long distances from one region of the country to another. But SGCC believes long distance inter-regional transmission will be possible by using ultra-high voltages (UHV) of 800kV, based on an extension of technology already in use in other parts of the world.

Following research and testing, SGCC has announced construction of the first long-distance UHV line from Sichuan, which is rich in hydro-electric potential, to the eastern load centre of Shanghai.

Shanghai already receives hydro-electric power from the massive Three Gorges Dam on the Changjiang (Yangtze) at Sandouping in Hubei province. But the new DC 800kV UHV line would enable it to receive power from twice as far west from the Xiangjiaba dam on the Jinsha river (a tributary of the Changjiang much further upstream).$file/Xiangjiaba-Shanghai_176x268.jpg

(For more details see

Xiangjiaba will have total generating capacity of 6,400 MW. When completed, the nearby Xilodu Dam will add a further 12,600 MW (about 55 percent of the size of the planned Three Gorges output), making it the world’s third-largest hydro-electric dam, ranking after the Three Gorges and Brazil’s Itaipu.

Xilodu and Xiangjiaba are two of a series of massive new hydro projects that the government plans in south-western and western China to take advantage of the massive run off from the Himalayas and the Tibet plateau.

SGCC plans to bring a single pole of the Xiangjiaba-Shanghai line into commercial operation within two years (2010) and the second pole a year later (2011). SGCC plans to complete a total of 10 UHV projects by 2015 and 15 by 2020 (see

In most cases, these will bring power from massive new hydro facilities in south-western China to the industrial and residential centres of the east.


China has massive untapped potential for generating hydro-electric power. The government’s official survey data show the country could theoretically generate 694 GW from hydro sources, of which about 541 GW is technically feasible and 401 GW is economically feasible (see table

By end-2005, the country had installed 130 GW of hydro capacity. But there was still another 270 GW of capacity which would be both technically and economically feasible to develop. Untapped economically feasible hydro potential is equivalent to 4.5 times the peak summer power demand of Guangdong province – the site of China’a massive export-oriented and often foreign-invested manufacturing hub.

Two-thirds of the untapped hydro potential is located in the two neighbouring provinces of Yunnan and Sichuan in the south-west, which could each generate an additional 87 GW of power from hydro sources. The key point is both provinces could be linked by UHV transmission lines to the major load centres at Guangdong on the south coast and Shanghai-Zhejiang on the east coast.

Dams and power lines are already under construction. Provided both technologies can be mastered, south China’s power problems could be solved within the next 4-7 years.


There are much smaller amounts of untapped feasible potential in the far west in Xinjiang (13 GW) and Qinghai (10 GW), though both provinces are largely empty and a long way from either industry or population centres.

The biggest hydro potential of all is in Tibet which could theoretically generate 201 GW alone but where conditions are so challenging that only 110 GW is technically feasible and only 8 GW would make any economic sense.

The untapped potential in the rest of China is much more limited – amounting to no more than 66 GW in total. Some 22 GW is located in other southern and central provinces – leaving about 40 GW of untapped but feasible potential across the rest of northern and north-eastern China.

Northern and north-eastern China relies heavily on thermal generation from the local coalfields. But the skewed distribution of untapped hydro resources suggests the country has substantial capacity to bring on new clean and cheap power in the south, while northern China will remain reliant on increasingly expensive and polluting thermal generation.


South China from the Changjiang valley down to the South China Sea was the first part of the economy to liberalise in the 1980s and 1990s and is home to much of the country’s most modern and often foreign-invested manufacturing industries. Northern and north-eastern China’s older industrial base has fallen behind, remains focused on the domestic economy and has suffered relative decline.

Top officials have repeatedly urged northern provinces to make greater efforts to modernise. But the distribution of hydro reserves suggests this divide could be reinforced in future. It is the northern provinces, not the south, that have been plagued by coal shortages and power rationing this summer.

It seems likely the cost of power will need to rise substantially over the medium term (2-5 years) to curb wasteful consumption and slow the rate of growth in electricity demand. In theory, the government could raise power costs by a similar amount across the whole of China in the interests of inter-regional equity.

But given that the power shortages are already in the north, while much of the new hydro potential is in the south, it is possible that energy charges will rise further and faster in the north, accentuating the existing regional imbalances further.

Power Producers Fined For Air Pollution By Coal-fired Plants

Bloomberg | 6th Nov 08

Four of the mainland’s five biggest power producers, including China Datang Corp, were fined for emitting excessive amounts of sulphur dioxide last year, the government said. Seven coal-fired power plants operated by companies including Datang, China Guodian Corp, China Huadian Corp, China Power Investment Corp and Shenzhen Energy Group released more sulphur dioxide into the atmosphere than permitted, the Ministry of Environmental Protection said yesterday. Shenzhen Energy is partly owned by Huaneng Power International, a unit of the mainland’s biggest electricity generator.