Nanjing Shuige Landfill Gas Power Plant

Nanjing Shuige Landfill Gas Power Plant, located in Nanjing, Jiangsu Province, is owned by Nanjing City Govt and built and operated by Australian Cleanway Co.

Completed in 2001, the plant has 4 generators with 1.3 MW of capacity, each one costing 10 million RMB. It has signed a 15 year contract for gas from an adjacent municipal solid waste landfill, free of charge; the landfill owner would otherwise face fees under environmental regulations.
Biofuel plants receive a 0.25 RMB/kWh subsidy from the Chinese government, and the energy tariff set by Jiangsu province is 0.38 RMB/kWh, giving the plant a total price of 0.63 RMB/kWh.

Foreign investors play a dominant role in Chinese LGP projects because of Clean Development Mechanism credits. Moreover, the plant engineer we spoke to claimed that often domestic projects fall short of expectations due to poorer management. A key reason for underproduction lies in the amount of gas which can be harness from landfills. Poor management could result in gas being flared; many smaller Chinese landfills do not meet standards for proper waste burial and may leak gas into surrounding water bodies.

China Institute of Contemporary International Relations (CICIR)

At CICIR we discussed energy policymaking in China with a top scholar and policymaker. She argued that there should be a single energy ministry that handles the numerous energy portfolios residing in other offices. Over the last 28 years, she noted GDP has quadrupled and energy consumption has only doubled, but the energy elasticity of growth is now a real concern. Over the last 6 years the elasticity has been 1, i.e. energy demand growth has been roughly 9.5% annually. Major gains in demand reduction, she argued, are unrealistic in the short term because heavy industry is too large a part of the economy. China is only starting to take demand reduction policies seriously, recently lifting tax rebates for energy-intensive exports and taxing them instead. She believes China must follow EU, Japan in realm of taxing energy consumption.

China Institute of International Studies (CIIS)

The China Institute of International Studies (CIIS) is the Foreign Ministry’s think tank. According to the Institute, diversification is at the heart of China’s energy policy. Chinese NOCs are much more cautious given CNOOC’s inability to purchase Unocal. Xia Yishan, a top energy and Russia expert with CIIS (on the far left in photo), argued that CNOOC should have done its homework before attempting to purchase Unocal in 2005. He argued that if they had they would have realized that the timing was bad and their rival bidder, Chevron, was in an advantageous position. The price negotiations with Russia for natural gas are extremely sensitive and he expects the price to be negotiated up to the last hour before the first gas is delivered China. On the climate change issue, he remarked that China understands that there are real trade-offs between growth and the environment, and that China has a responsibility to the world on reducing emissions.

Conghua Hydraulic Power Station

The Conghua Hydraulic Power Station located in Guangzhou Province near Hong Kong and Shenzhen is owned and operated by the China Southern Power Grid. It is the first pumped storage hydro plant in China and the largest in the world. The plant has eight 300-MW generating units. It was built in a package with the Dayawan Nuclear Plant for reliability and load balancing reasons (nuclear plants provide base load output).

At the beginning of operations, the Dayawan nuclear site made up a large percentage of the power flowing through the grid; this, plus the inconvenience of shutting it (and other plants in a coal/nuclear power dominated region) down, made the Dayawan facility a possible threat to grid reliability during trough demand times (if supply were to overshoot demand).

Thus, when the power on the grid exceeds demand by 10%, the Conghua station uses the excess power to pump water into storage. Due to its economy, peak and trough demand levels in southern China (including Guangzhou) differ much more than other regions, making the plant useful for load smoothing.

In China’s non-competitive electricity markets, pumped storage plants which play a significant role in maintaining grid reliability are often owned by the state-owned grid company. Because this particular plant uses about 4 kWh of electricity to generate 3 kWh, it would not be economical if compensated based on electricity produced (peak demand prices do not rise enough to recoup the plant’s costs). Rather, it receives a fixed annual payment determined in a long-term contract.

Like the Dayawan nuclear site, the government has turned Conghua’s reservoir area into a tourist destination, complete with a five-star hotel and a promotional video showcasing this “miracle of the Chinese people.”

Dayawan Nuclear Plant Base

Dayawan Nuclear Plant, located in Guangzhou Province near Hong Kong and Shenzhen, is owned/operated by Guangdong Nuclear Power Holding Co. Ltd. The largest nuclear power base in China (6000 MW), Dayawan has six pressurized water reactor generating units (some still under construction) using Areva technology. Its later units have increasingly local content. Its large capacity and long startup time led to the simultaneous building of the pumped storage Conghua Hydraulic plant for reliability and load smoothing reasons (elaborated on more below).

Located along one of the most photogenic coastal areas of China, the power base is an example of the government’s increasing use of PR in the PRC. During construction in the 1990s, huge protests in Hong Kong spurred the hiring of a public relations firm. The site now hosts several waterfront pavilions and a visitor’s center with placards explaining nuclear technology and “Why Chernobyl won’t happen here.”

ExxonMobil in China

The group met with an executive in ExxonMobil's Beijing office. ExxonMobil (XOM), the world's second largest energy firm by market capitalization, sponsored the group's trip. We discussed several trends that are shaping the energy world and XOM's business. 

Conventional projects are falling as a share of XOM's portfolio, and will drop to only 60% of XOM's production by 2010, from 80% in 2006. “Unconventional” sources include deepwater, heavy oil and sour gas, tight gas, and LNG.

Given retail price caps on oil products in China caps, the break-even price of crude for refiners is $55, which means huge losses in the downstream oil business. XOM offsets these losses with huge profits in petrochemicals industry.

In this high-oil-price environment, the international oil companies (IOCs) are expendable to producer countries, and thus are not needed to provide expertise, capital, and technology. The Chinese NOCs, the XOM representative said, go to countries where XOM simply cannot go, such as Zimbabwe and Sudan.

He noted that China’s equity oil in Saudi Arabia doesn’t count against Saudi Arabia’s OPEC allocation.

Greenpeace Beijing

The group had the pleasure of meeting with members of Greenpeace's China team in Beijing. They face unique working conditions. Unlike in many other countries in which Greenpeace operates, in China Greenpeace cannot borrow power from the public to push for policy change.

The success thus far has a lot to do with individual relationships with government officials—-typically younger ones that are much more concerned about the environment than older bureaucrats, for whom environmentalism is a very recent consideration.

They noted that Chinese policymakers have a hard time with detailed rulemaking on technical and environmental issues, which is a new challenge for them.

The Greenpeace staff said implementation of policy in China is very problematic due to the power of provincial governments: A policy change in Beijing is no guarantee of results on the ground.  

With regard to strategy, Greenpeace in Beijing is focused on promoting renewables, because it is relatively pleased with the government's emphasis on improving energy efficiency.

Huaian Chuzhou Bio-straw Power Plant

Huaian Chuzhou Bio-straw Power Plant, located inHuaian City, Jiangsu Province, is owned and operated by Guoxin Huaian Biomass Gen. Co. and Puzhou Provincial Government.

Slated for completion at the end of 2007, the plant will have two generators at 15 MW of capacity each. Although standard biostraw generators come with nameplate capacities of up to 25 and 50 MW, the 15MW capacity was chosen due to its slower pace of erosion (thus lower maintenance costs), as well as to match the amount of straw supply that could be procured within a 30 km radius. With a location next to the electrical substation, its cost of connecting to the grid are minimal. Its cold startup time is approximately 3 hours, and it is projected to run 5-6000 hours out of a year.

Two tons of the straw used by the plant can produce energy equal to that of one ton of coal. The plant uses both wheat and rice straw (which grow in alternating seasons). The straw would otherwise be burned by farmers. The power plant has invested in a local collecting agency which buys straw directly from farmers and bundles it.

As a biomass plant in Jiangsu, this plant faces similar subsidy and tariffs as the landfill gas plant.

Jiangsu New Energy Development

Jiangsu New Energy Development is a government body that invests funds received from:
• Large state-owned enterprises
• Provincial state-owned enterprises
• Private companies

The group belongs to Guoxin Investment Group, the largest state-owned group in Jiangsu. Jiangsu has two biomass power stations, three power stations under construction and other sites are being examined. 18 projects were being approved at the time of our visit (August 2007). The capacity of each is between 25,000-30,000 kw.

The group is also very active in wind power development within the region. Jiangsu's wind resources are estimated at 1.5 GW. The local market is also considered to be competitive with Xinjiang and Inner Mongolia because of relatively high electricity tariffs. The group has 800 MW of wind power projects in the pipeline and is collaborating with other companies in the development of a 1.5-2MW turbine (China currently only domestically produces 1 MW wind turbines) .

Jinhuagong Coal Mine

Jinhuagong Coal Mine, located in Datong, Shanxi, is a state-owned enterprise. Coal makes up 70% of China’s energy needs. With not much other industry in town, Datong has one of the largest production sites in the country, along with growing income inequality. Many smaller caves are privately-owned mom-and-pop operations that may escape regulation, making China’s coal mines among the deadliest in the world.
In contrast, the underground coal mine we visited was used to receiving politicians and tour groups. It was well-equipped with safety features such as gas concentration readers, hydraulic pumps to secure the cave roofs, and a series of chambers to regulate the cave’s regulate air flow. Even more reassuring were the signs which read:

“UndergroundExplosionTravelling” and

“WELCOME YOU MEN OF INSIGHT WHO CARE COAL UNDERTAKINGS.”

National Development and Reform Commission: Center of Regulatory Power

The NDRC is a power regulatory body with a headquarters in Beijing as well as at the provincial level. We met with energy regulators and they had some interesting things to impart. First, they voiced concern that the energy intesity of China's economy was growing, and that polluting industries are growing rapidly, with industrial sector growth at 18.5% in 2006. They were concerned that industry in China is too slow to adopt new and cleaner technologies for their plants and facilities. They also noted that they do not the power to regulate standards within China's Special Economic Zones.

They stated frankly that a large part of the problem in pollution was that local governments are not incentivized to meet environmental targets and comply with environmental regulations.

On the international front, they said that the United States and China should cooperate more, saying that they were quite pleased that in 2007, the U.S. DoE consulted China on boosting Strategic Petroleum Reserve allocations before making a decision on allocations to the reserve. As sign of progress, they noted that a 2007 DoE report to Congress on oil was not critical of China.

Zhenwu Oil Fields

The group met with management at the Zhenwu oil fields in Jiangsu province.

The field is ageing and has a 90% water cut, typical of mature fields long past their peak production. Zhenwu peaked in 2002.

Limited domestic prospects for large new increments of production has spurred China's international quest for equity oil.