Energy Center


Alternative Structures for China's Electricity Market


The People's Republic of China (PRC) has a fast growing electricity rate of demand, (8.3% from 1980 to 1995, and 6% forecast for up to 2020, compared with the USA and Western Europe rate of about 1.9%). The remotely located huge hydropower schemes require new transmission lines, plans to construct combined cycle thermal stations (instead of building new coal fired stations) for environmental and economic effectiveness could mean new gas pipe lines are also needed to be built. These long distances between supply and demand centers and the expectations to speed up harmonization of the PRC electricity market, for operations and capacity expansion planning, therefore raise a number of strategically crucial policy planning problems. Energy by wire or by pipe and the hydro-thermal generation mix prompt provoking policy and planning issues for the PRC.

Inevitably with the hydropower and natural gas supplies being located so far from the demand centers the cost of shipment becomes a decisive operational variable. The shipment of coal supplies across the PRC to electricity generating sites has been a constant concern to PRC planners. The costly long HVDC transmission lines will still involve significant line losses over lengthy distances (10% and more) of several hundred km or more. Similarly the cost of gas pipelines will be a parallel problem and one that becomes more complex as harmonization gets considered more seriously. The level of cooperation and increased interconnectivity between the provinces of the PRC must be planned hand in hand with the expected type of pool being developed. The tight (very limited electricity trading) and open (flexible electricity trading is permitted) power pools require very different amounts of transmission capacity. Free trading across a region can cause congestion if insufficient load carrying capability is available interfering with using the grid for reliability. How much integration of these alternative fuel shipment lines should take place?

The substitution of gas by wire, planning of reserve requirements, accounting for load diversity across the extents of the PRC, consideration of economies of scale, and joint planning are each a vital issue that will be assessed in the configuration of proposed new pools in the PRC.

Phase 1 of the proposal (2002 to 2003), of a planned three year project, would involve establishing the China-Purdue partnerships, appropriately compiling of the latest Chinese electricity data-set, and preparing the preliminary regional electricity market model for specified provinces within China.


"Alternative Structures for China's Electricity Market -- Policy & Investment Priorities -- 2002 to 2012," F.T. Sparrow, Zuwei Yu, and Brian H. Bowen, Purdue University, Draft, December 20, 2001.
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Dr. Paul Preckel
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