China’s new energy oversight body, the State Energy Committee (SEC) was announced by the State Council at the tail end of 2009, but the timing should not be allowed to undermine its significance. The move not only underscores the high priority attached to moving the energy agenda forward, but also highlights the challenges involved in coordinating China’s energy initiatives.
At the very center of these initiatives is the smart grid, a project that is the core enabler of much of what China needs to accomplish in the power sector.
It is hard to identify certain elements in the basket of uncertainties that trouble any attempt to conceive a future for renewable energy. There is uncertainty about the relative importance of scale (commercial vs. distributed), approaches (solar vs. wind) and technologies (crystalline solar vs. vapor or otherwise deposited transducers). But one thing we can be sure of is that grid technologies will play a key role.
A power distribution grid balances supply and demand and provides stability through channel redundancy. Smart grids are more a kind of grammar than a network – they articulate the flows and storage of power in intelligent ways across four functions in between generation and consumption: transmission, transformation, distribution and management.
Over and above the ability to maintain balance, smart grids add a capacity to reduce losses and otherwise increase efficiency, interact with all forms of consumers and producers, and manage complex trade among producers, consumers and distributors.
What this all points to is a market-based exchange of power. In this respect, smart grids are as critical to reaching commercial sustainability for renewable energy as they are to distributing power physically.
In the unfolding Chinese plan, the sole owner and operator will be State Grid Corporation of China (SGC). The rallying call for the project is for a "united and solid" smart grid, reflecting both the fragmented nature of the country’s current electricity "plant" and the fractious nature of the internal debate.
In some ways, it is coordinated. Technology developers like China Electric Power Research Institute (CEPRI), the State Grid Energy Institute, North Chinese Electric Research Institute and others all have become affiliated with the SGC.
The investment figures involved are eye-popping, with US$146 billion for the distribution system alone. Yet the budgeting is frugal when seen in the context of the project scale. And the implementation responsibility is distributed, with regional firms tasked to contribute solutions from the field. In other words, the projects will proceed with Chinese characteristics, combining high-tech and low-tech solutions, central and local designs and decisions.
More than 30 SGC affiliates are at work across the country. The pros of that are prospects of unforeseen innovation at the grass roots level, from which the industry globally will benefit. The cons are prospects that the projects will develop unevenly, possibly inconsistently, lacking even optimal levels of interoperability.
Shanghai and Tianjin’s Binhai Zone are advanced installation sites. The Shanghai Expo zone is one of the most massive trial projects, and includes an underground transformation facility, advanced power security system, offshore generation units and complex power distribution and management equipment. Shanghai’s economy relies on abundant, competitively priced power, but with an estimated 40% of the city’s needs met from outside the jurisdiction, the municipal leaders are eager to improve transmission and distribution efficiency, and maximize the potential local supply of power from renewable sources.
All in all, the smart grid initiative is the kind of project that tests China’s ability to coordinate a large and complex number of funders, suppliers and regulators, amid changing and converging technologies.
To date, the investment levels are actually somewhat under plan, with SGC Chief Liu Zhenya apparently moderating progress. About six months ago, Liu changed the overall description of the project from an ultra-high-voltage transmission system to a high-technology smart grid system. But a truly workable comprehensive plan is yet to emerge, and there is lively debate about how complete a remake of the national system China could reasonably afford. So, while there is more and more discussion in the domestic and global media about the country’s smart grid as representing an important and valuable target of stimulus spending, actual progress may be somewhat less than the discussion suggests.
Order to the chaos
As a kind of inter-agency work group that the government often uses for priority projects that demand coordination across agencies, the SEC is intended to shape the smart grid challenge.
The committee is the most recent in a parade of energy regulators and ministries that goes back to the earliest days of reform. The formal Ministry of Energy was dismantled in 2003 and replaced by a Bureau of Energy as part of efforts to reduce and simplify cabinet-level agencies. Yet, as the energy situation grew more complex in 2006 and 2007, there was discussion about re-establishing a ministry that ultimately did not come to pass.
In addressing the need for better coordination, it remains to be seen how the SEC will relate to the broad constellation of interested parties, including SGC. But like the grid itself, the agencies involved will need to be smart – very smart – to interact with all forms of consumers and producers, and manage the complex energy trade.