http://news.xinhuanet.com/english/2009-02/16/content_10826822.htm
BEIJING, Feb. 16 -- The deepening financial crisis has put China's
energy industry in a tougher situation: energy demand is dwindling,
production is sagging, stockpiles are rising, and energy companies are
competing to cut prices. Meanwhile, the nation's giant oil and
electricity firms are losing money by a large margin.
However, the temporary energy glut will not stop China from
expanding energy output: it needs more when its economy starts to
recover.
This simple fact means that the nation's energy watchdog is well
prepared for the upturn in economic development.
China recently decided to step up the construction of nuclear
power stations, wind farms and solar power stations. This is a welcome
policy change in this coal-dependent country as it will help
restructure the nation's energy mix and offer more green jobs for
floods of laid-off workers.
As part of China's stimulus package to revive its economy,
National Energy Administration Director Zhang Guobao announced that
the nation plans to work on "at least" four nuclear power stations in
2009.
His announcement came after China launched construction of three
nuclear power stations in October last year. This really is a U-turn
in power policy compared to the past three decades, when China built
less than 10 nuclear power plants in coastal areas.
This change is being promoted by the economic downturn and China's
growing ownership of key technologies in nuclear power construction.
Further boosting the development of nuclear power, according to Zhang,
is an important way for China to restructure its energy mix.
Compared with coal-fired, which now accounts for over two-thirds
of the country's power generation, nuclear energy is more energy-
efficient and environmentally friendly. China is aiming to have a
nuclear power capacity of 60 gigawatts by 2020, a 50 percent jump from
the earlier target outlined in its energy blueprint.
The National Development and Reform Commission (NDRC), China's top
economic planning body, is considering revising the target in its
medium- and long-term plan (2005-20) in the first quarter of 2009 and
submitting the revised plan to the State Council.
According to the earlier plan for the industry, China would
increase its nuclear power capacity to 40 gigawatts by 2020,
accounting for 4 percent of the nation's total power capacity. China
currently has only 9 GW of nuclear power capacity, or about 1.3
percent of its total.
Meanwhile, construction of nuclear projects is an effective way to
boost domestic demand, as they require large amounts of investment and
can boost many industries such as steel and cement. As a result,
nuclear power companies have recently received capital injection both
from the government and banks.
China National Nuclear Corp, China's largest nuclear company
signed agreements with eight domestic banks, under which the company
got bank facilities of 350 billion yuan, and it also signed agreements
with 10 banks for 11.8-billion-yuan in loans in 2009.
At the same time, industry insiders said that too many coal-fired
power plants are in the process of being built, which will further
contribute to the overcapacity situation. China's power capacity will
exceed 800 GW in 2009, up from a little over 700 GW.
The Chinese government is well aware of this problem. Recently, it
introduced stricter environmental standards to stop the construction
of polluting coal-fired plants. At the beginning of January, the
Ministry of Environmental Protection revealed that 11 big projects in
the country's stimulus package, involving more than 40 billion yuan in
investment, had not won its approval following environmental impact
assessments. Most of them are coal-fired projects.
This appears to be a continuation of the policy implemented in
2008, as statistics indicated that the country slowed down investment
in coal-fired plants. The China Electricity Council said in January
that the country's nuclear and wind power investment soared in 2008,
while investment in coal-fired plants declined year-on-year.
Nuclear and wind power investment increased by 71.85 percent and
88.10 percent respectively compared with the same period in the
previous year, while thermal power investment dropped 21.99 percent,
according to the council. China's total power generating capacity
reached 790.25 million kW in 2008, up 10.3 percent year-on-year.
However, China's electricity consumption fell 8.6 percent from a
year earlier in November and 3.7 percent from the same month the year
before in October - its first such decline since 1999.
Meanwhile, two large solar power plants will be built in the
western provinces of Qinghai and Yunnan in 2009, as China cuts its
reliance on coal and oil. Construction of the first phase of the
Qinghai project, a gigawatt-level solar station, will begin this year.
The plant, funded by an initial investment of 1 billion yuan, could
become the world's largest when completed, according to a recent
statement by its developers.
In December 2008, the southwestern Yunnan province announced it
would begin construction of a 166-megawatt solar plant with an
investment of 9.1 billion yuan - the largest in China at the time.
Overseas cooperation
Meanwhile, Chinese energy investors have been encouraged to
"become bold" in acquiring stakes in overseas enterprises. That's the
message from Zheng Xinli, vice-director of the Policy Research Office
of the Central Committee of Communist Party of China.
He suggested recently that China should use its 2-trillion-dollar
foreign exchange reserves to encourage overseas mergers and
acquisitions, especially in energy and resources.
He said that the foreign exchange reserve should be invested in
removing energy and resource bottlenecks that have hindered the
country's development for so long. Zheng said the Chinese government
should cooperate with investors, if necessary, by offering
preferential loans to improve infrastructure of the destination
countries.
As an advisor directly serving China's highest leadership, Zheng's
suggestions are likely to become the central government's policy to
boost overseas investment with the priorities being exploring overseas
oil, gas and other mineral resources.
Amid global recession, many resource-exporting countries have
pinned their hopes on manufacturing-led countries. This is a mutually
beneficial solution for China and the rest of the world.
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