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Power Generation and Distribution

Industry Overview

In the past 10 years, China has become the world’s largest consumer of energy, surpassing the United States in 2010. In 2011, China’s energy supply and demand both surged ahead at an amazing pace in the shadow of its 9.3% GDP growth. Total energy consumption increased by 7% equivalent to 3.48 billion tons of standard coal while the amount of power generated grew by 12% in 2011, to 4.6 trillion kWh.

Market Opportunities

Thermal Power
In line with rising consumption, construction of power generating facilities is rapidly accelerating. Figures recently released show that power consumption in 2012 increased by 5% and that power generation equipment accounted for almost two-thirds of the total infrastructure industry value. Thermal sources, particularly coal, still provide the vast majority of electricity generation capacity although renewables are gaining market share.

Nevertheless, thermal power sources are expected to supply the majority of China’s power over the next decade. Coal will maintain its dominant position, with industry adding 550GW of generation capacity between 2010 and 2020. Beyond coal, analysts predict that gas will play a greater role in the power generation mix over the coming years. Some have suggested that gas could more than double its contribution to 10% of total consumption by 2020, if the market matures in line with expectations.

On top of this growth, there is an increasing interest in technologies that improve the efficiency of existing thermal power plants. Recent government energy strategy initiatives have attempted to bring more emphasis upon reducing the amount of pollutants generated by thermal plants. As a result, the market for desulfurization and denitration equipment has been growing rapidly.

Smart Grid

China’s power generation and transmission systems have come under increased pressure in recent years as greater demands have been placed upon them. Not only does China consume more energy than any other country, but the distance between the centers of power demand on the country’s east coast and generation in the center and west is growing. In addition, China’s boom in wind and solar energy construction is necessitating the need for a grid system that can manage the fluctuation in supply that these sources entail. On top of these, China is moving forward with the development of an electronic vehicle ecosystem (EVs), aiming to have 500,000 on the road by 2015. This push will require the development of the world’s largest charging network necessitating further investment in distribution technology.

Reacting to these demands, China is developing one of the most ambitious power transmission systems in the world. In 2009, the Chinese government laid out its plan for smart grid development in the “Strong and Smart Grid Plan”. This strategy envisions rolling out a smart grid across the country by 2020, with total investment potentially reaching RMB 3.8 trillion ($630 billion) over that period. Construction of this system began in 2011, with efforts primarily focused on the development of Ultra High Voltage (UHV) transmission lines between rural and urban areas. (Source: CGTI 2012 Annual Report)

The implementation of China’s smart grid is being primarily managed by local State Grid and Southern Grid utilities. Between them these two companies supply 92% of the Chinese population with electricity and accordingly manage the majority of procurement activities for the sector. Given this market environment, foreign firms interested in pursuing smart grid opportunities in China will have to develop partnerships with these major utilities. International companies have been particularly successful in the areas of: smart grid related IT-services, advanced smart metering products, converter/transformer solutions and energy storage technologies.

Best Prospects

While China recognizes the need to import foreign technology, it also wants to localize as much of this technology as possible and China continues to demand full technology transfer and localization whenever possible. As a result, many U.S. power equipment manufacturers and related construction and engineering firms formed joint-ventures in this market. Government policies point favorably in the direction of developing more clean energy. 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.

Regulatory Environment

Even though China has become an important energy producer and consumer in the world, it still lacks a comprehensive legal framework to guide energy policy. With its rapid economic development, inherent energy conflicts are becoming more apparent. China’s goal is to build a sustainable economy and develop clean energy substitutes for coal and oil. In its 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.

China’s leaders have identified energy saving and environmentally friendly technologies as a Strategic Emerging Industry (SEI). Because smart grid distribution systems fall under this category, the industry is subject to increased regulatory oversight. On the one hand, identification as an SEI ensures that Chinese authorizes will work to create legislation that is conducive to sector growth. At the same time, SEIs can create challenges for foreign investors and international companies looking to supply products to Chinese firms because of local competition.

Reports and Statistics

China Greentech Initiative Reports
This is an open source commercial collaboration of over 80 of the world's leading technology companies, services firms, entrepreneurs, investors, NGOs and policy advisors, united to contribute to a sustainable China and world.

Major Events and Trade Shows

This section provides a listing of upcoming clean and renewable energy-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.

2014 International Exhibition on Electric Power Automation Equipment and Technology (EPA 2014)
Date: October 22-24, 2014
Venue: China International Exhibition Centre, Beijing, PR China
Website: http://www.epchinashow.com/EP14

U.S. Commercial Service Specialists

The U.S. Commercial Service offers a broad array of market entry services to U.S. companies in the power generation and distribution 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
Grace Cao

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

Guangzhou Office:
Tel: (86-20)3814-5000
Fax: (86-20)3814-5310
Lena Yang

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

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

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