China Power Industry Update Quarter 4 2011

  • August 2013
  • -
  • Business Monitor International
  • -
  • 71 pages

BMI’s China’s power market projections have been revised this quarter following both the release of new historical data by two of our main reference sources. Furthermore, we have pencilled in a number of policy changes introduced by the Chinese government in the aftermath of the Fukushima crisis and in response to changing dynamics in the global solar segment . Although, as a result, some significant quantitative differences have appeared in our projections, we highlight that our main view on the industry remains unchanged. China's overall electricity generation and consumption will remain considerable and in a league of its own. Yet, growth rate of consumption and generation of electricity in the country will moderate in the coming years, especially as our Country Risk service anticipates that real Gross Domestic Product growth will fall significantly to 8.1% in 2012, from 9.2% in 2011 as the investment boom comes to an end and the growth in global trade flows cool.
We now projection that annual average growth of total electricity generation will be 7.08% between 2011 and 2015, while consumption will grow by 7.3% over the same period. We stress, however, that we see downward risks to our projections for consumption stemming from the government's plan to impose strict controls on market 's carbon emissions and energy intensity.
In terms of fuel mix, conventional thermal sources are expected to continue dominate electricity generation in the coming years, as many projects under construction or planned will use coal or gas. Coal currently fires 80.61% of total power generation and 98.23% of thermal, and given that China has vast coal reserves, much of which have yet to be developed, coal projects tend to be much cheaper than gas or other sources. This considered, coal is expected to show the largest increase in absolute terms, but our projections suggest that gas will see the greatest percentage rise in installed electricity generation capacity over the next decade.
Last quarter we had also factored in our projections the policy changes that likely to be implemented in the coming years as a result of the Fukushima Daiichi nuclear accident in Japan. The most recent policy developments have confirmed our analysis and prompted us to assume an even more bullish posture with regard to renewables, especially wind and solar. While we still see nuclear as a necessary part of China's future energy mix, we have moderated expectations on growth in output and nuclear capacity. Considering this key themes, major trend and changes for China’s power segment this quarter include:
- China's National Development and Reform Committee (NDRC) significantly ramped up its targets for China's solar output to 2020 in H111. While China is the largest manufacturer and exporter of photovoltaic panels (PV) globally, it has not yet developed solar capacity domestically, due also to a very unclear pricing regime. With the new targets stipulating that solar PV capacity should reach 50GW by 2020, the government finally introduced a unified grid solar power FIT in August 2011 in an attempt to give a clearer signal to the industry and encourage the expansion of domestic solar capacity.
- Chinese state media announced in August 2011 that the government will increase renewable energy targets for 2015 (accelerating the roll out of new renewable capacity as part of its next five-year plan) as it seeks to beef up efforts to curb greenhouse gas emissions. According to China Securities Journal (quoted by Business Green), the government is now planning to further increase its targets to 100GW of wind capacity by the end of 2015, 260GW of installed hydropower capacity and 10GW of solar energy capacity.
- In spite of several measures adopted by China’s policymakers, the country has experienced one of the worst summer power crunch in years. With hydroelectricity generation in the Southern parts of the country, including Guangdong Province, negatively affected by a lack of rainfall and rising prices of coal, profitability at power plants was eroded, causing generators to cut production or even shut. According to national sources, the situation may not improve until October.

Table Of Contents

Executive Summary ... 5
Industry SWOT Analysis .... 7
China Power SWOT . 7
World Market Overview . 8
World Power Projection . 8
Regional Market Overview ... 12
Asia Pacific Power Regional Projection ... 12
Nuclear Power In Asia .. 17

Market Projection Scenario .... 18
China Macroeconomic Snapshot 18
Country Snapshot: Economic and Demographic Data .. 18
Country Snapshot: Power Segment 18
China Projection Scenario ... 19
Electricity Generation and Power Generating Capacity 19
Data : China Total Generation Data And Projections, from 2007 to 2015 . 19
Data : China Total Generation Long-Term Projections, from 2012 to 2020 ...... 22
Data : China Electricity Generating Capacity Data And Projections, from 2007 to 2015 ...... 25
Data : China Electricity Generating Capacity Long-Term Projections, from 2012 to 2020 .... 26
Electricity Consumption ..... 33
Data : China Total Consumption Data And Projections, from 2007 to 2015 ..... 33
Data : China Total Consumption Long-Term Projections, from 2012 to 2020 ... 33
Transmission and Distribution, Imports and Exports ... 34
Data : China Electric Power Transmission And Distribution Losses Data And Projections, from 2007 to 2015 34
Data : China Electric Power Transmission And Distribution Losses Long-Term Projections, from 2012 to 2020 .... 35
Data : China Trade Data And Projections, from 2007 to 2015 .... 35
Data : China Trade Long-Term Projections, from 2012 to 2020 .. 35
Key Policies/Market Structure ...... 37
Regulation and Competition 37
Sustainable Energy Policies. 38
Pricing ..... 40
Key Projects Database 42
Data : Major Infrastructure Projects - Power Plants And Transmission Grids 42

Environment Overview ... 49
Asia Power Regional Risk/Reward Ratings ... 49
Asia Power Risk/Reward Ratings 50
China’s Power Risk/Reward Ratings . 54
Rewards ... 54
Risks . 54

Competition Overview .. 56
Huaneng Power International .... 56
China Huaneng Group .. 57
China Datang Group .... 57
China Huadian Corporation 58
China Guodian Corporation 58
China Power Investment Corporation ...... 58
China Southern Power Grid 59
State Grid Corporation . 59
Company Profiles ..... 60
Huaneng Power International (HPI) . 60
Glossary of Terms .... 64
Data : Glossary of Terms ..... 64
Methodology and Sources ..... 65

Market Projection s ...... 65
Power Market - Data Methodology .. 66
Generation and Consumption Data ... 66
Electricity Generation Capacity Data 67
Power Risk/Reward Ratings Methodology 67
Data : Power Risk/Reward Indicators ...... 70
Sources .... 71

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