Small Hydro Power (SHP) China - Institutional Set-up
Overview
China has 17% of the earth’s hydro power resource and has installed over half of the world’s small hydro power (SHP) capacity (31,200MW). The economic SHP resource is estimated to exceed 70,000MW. 90% of the number of stations and 30% of this total capacity is in the mini-hydro and micro-hydro range. The use of small-scale hydro power to achieve rural electrification is a major characteristic of renewable energy development in China, started in the 1950s with strong central government lead. At present, there are over 600 counties (accounting for 30% of all of China’s counties) that rely mainly on small-scale hydropower for electricity (serving over 300 million people) and there is a programme for rolling this out to 400 more counties.
Since 2000, the rate of commissioning of new small hydro capacity has been increasing to an average of 2,000 MW per year and posting healthy annual average growth of over 7%. The country has built up such an experience in SHP that it now has a strategy of ‘going-out’ to other developing countries to help develop projects (usually with Chinese technology).
Financing Small Hydro Power (SHP) in China
Each year, the Chinese Government invests EUR30 million in the development of small-scale hydro power, attracting additional substantial investments from local governments, enterprises, and individuals of a further EUR10 billion. However with declining government investment in the sector, other sources are often required to bring targeted projects to development, and the Clean Development Mechanism (CDM) is one avenue that Chinese developers are now considering.
The financing of hydropower in China is currently stable. The 4 major Chinese (state) banks lend to hydro projects as they are considered low risk and their loan terms are usually 3-5 years and financing negotiations take only 3 months. Some companies already have credit ratings up to fixed amount of capital which enables them to borrow up to this ceiling in one month. Meanwhile small hydro power is attractive to commercial Chinese banks, who are very active in the sector. The Ministry for Water Resources also continues to provide low interest loans for SHP development, worth about RMB300 million per year.
Small Hydro Power (SHP) Policy in China
A new ‘Renewable Energy Promotion Law’ was approved by the National People’s Council in February 2005 which targets 10% of the country’s electricity generation being supplied by renewables by 2020. This is ambitious given that China’s GDP may quadruple in the next 15 years, (perhaps) requiring the total grid installed capacity to (perhaps) have reached 1,000GW. Nevertheless, experts have suggested that 60,000MW of SHP capacity be developed from the yet untapped small hydro resources and certainly, with the enactment of this law in 2006, faster SHP development can be expected.
Small Hydro Power (SHP) Industry in China
China has a wide range of domestic SHP turbine manufacturers (about 80 in total) as well as construction companies that specialize in SHP infrastructure and these have been supported since the early 1960s to deliver the technology to the sector and are therefore well-established. However there is scope for technology transfer to improve performance and quality to European standards, and introduce more advanced systems particularly, in the area of automated control.
In April 2003, the Ministry of Water Resources (MWR) released guidelines for the modernization of hydropower systems in rural China, which provide further direction and standards for small hydropower development. Its overall objective is to modernize 50% of rural hydropower plants by 2010, and modernize 100% of the rural hydro sector by 2015.
Further Information
- Portal:Hydro
- China - UNEP Wind Reinsurance Facility
- China Wind Power Programme – Applied Research and Training
- Small Hydro Power (SHP) Overall Institutional Set-up - National Level
References
