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The Status Quo, Barriers, and Countermeasures to Small
Hydropower Development in Rural China
Hydropower and Rural Electrification Development Bureau, the Ministry of Water
Conservancy
Liu Liu JingheJinghe
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Contents
Small Hydropower Resources in ChinaAchievementsBarriers
Internal problems of small hydropowerInstitutional, market, and policy barriers
RecommendationsProspects
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I. The Small Hydropower Resources of China
Theoretical potential: 676GW, annual electricity generating capacity: 5920TW.h.Technologically exploitable: 378GW, 13.22% of the world total, annual: 1920TW.h.Of which: small hydropower 128GW,annual: 640TW.h. Share in China’s hydropower production: 29.7%,ranking No. 1 in the world.
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Hydropower Resources of Selected Countries
0
100
200
300
400
China Brazil Russia Canada USA
180% 120%
250%210%
Small hydropower 128GW
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The Distribution of Small Hydro-power among Different Regions
东部,18.50%
中部,17.80%
西部,63.60%
West
East
Central
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The Untapped Shares in Different Provinces
0
500
1000
1500
2000
2500
Hebei
Shanxi
Inner
Mongolia
Liaoning
Jilin
Heilongjiang
Zhejiang
Anhui
Fujian
Jiangxi
Henan
Hubei
Hunan
Guangdong
Guangxi
Hainan
Chongqing
Sichuan
Guizhou
Yunan
Tibet
Shannxi
Gansu
Qinghai
Xinjiang
省份
装机
容量
Untapped
ExploitedProvince
Inst
alle
d Ca
paci
ty
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II. China’s Small Hydropower Development Achievements
Development speed: 5%~10%By the end of 2003: there have been 48000 small hydropower stations in over 1600 counties, 31.2GW , 110TW.h, both accounting for 40% of the national total
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Achievements (Contd.)
More than 800 county grids and over 40 regional grids have been built, more than 800 counties mainly rely on small hydropower for electricity supply Accumulatively, giving electricity supply access to more than 500 million people
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Achievements (Contd.)
In through 3 phases, 653 rural counties realize preliminary electrificationCultivated thousands of small hydropower experts for 60 countries and regions, participated in the construction of hundreds of small hydropower projects in more than 50 countriesEcological and environment protection, 100 mt t CO2 of GHG emission reduction
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III. Barrier to Small Hydro-power Development in China
1. Inherent problems of small hydropower
Small electricity production scale Instable supply: high water seasons and low water seasons, peak and bottom hoursLow technology level and efficiency of the generating units Improper operation modes Operation suspension during overhaul and accidents
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Barriers (Contd.)
2. Institutional, market, and policy barriers
The resource administration system is imperfect, vagueness in responsibility and function division Electricity sales difficulty– market monopolyCommonweal nature restriction— policy-based supply is insufficient, without the necessary compensation
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Impacts of the Barriers (economic analysis)
Capacity deducted 30%, in some cases even as high as over 50% (Fig.)The electricity production deduction in 2002 was 41TW.h, in terms of revenue loss, over RMB 10 billion
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0
50
100
150
1998 1999 2000 2001 2002
(Tw.h)
设计发电量 实际发电量Actual outputDesigned output
A comparison of the theoretical and actual electricity Output
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Capacity deduction higher unit generating capacity construction cost and unit electricity generating cost losses (Fig.)In 2002, actual average generating cost is 0.06 RMB/kW.h higher than the average designed generating cost
economic analysis
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0
0.1
0.2
0.3
0.4
0.5
(元/kw.h)
理论发电成本 实际发电成本
(RMB/kw.h)
Theoretical and Actual Production Costs of the 64Hydropower stations
Theoretical generating costs
Actual generating costs
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economic analysis
Among the 64 small hydropower stations studied: 11 realize some profits; 13 break even; 40 are in the red; namely, 62% of them report losses. The average actual electricity generating cost is 0.05RMB/kW.h higher than the average electricity price (Fig.)
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The actual costs and sales price of the 64 small hydropower stations
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
(元/kwh)
实际电价 单位售电成本
Actual cost
Electricity price
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IV. Policy Recommendations
Policy Direction: internalize the positive externality costs of rural hydropower through such macroeconomic measures as administrative laws and regulations, preferential electricity price, tax, subsidy so as to bridge the gap between production costs and social costs (Fig.)
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Project cost curve
Policy direction
Market quantity
Optimal quantity
Electricity output(Tkw.h)
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Recommendations (Contd.)
Eliminate institutional and market barriers
Specify and quantify the market share of small hydropowerGiving priority in grid access and require the grids to purchase all the electricity output of small hydropower plants
Acknowledge its commonweal nature
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Recommendations (Contd.)
Optimize the electricity pricing mechanismOffer market price protection to the grid entry of rural hydropower ; protect them from direct competition with regular energy sources.On the above basis, establish a grid entry and price control system to stimulate the development of rural hydropower
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Recommendations (Contd.)
Strengthen capacity building on small hydropower enterprises
Improve adjustabilityOptimize operating modesAdopt advanced technologiesIntensify management, lay off redundant workers, and increase efficiency
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V. Development Prospects of the Chinese Small Hydropower Industry
Market demandSustained rural economic growth, urbanization, increases in farmer income, huge potential market. 400kW.h
Market supply Abundant resources, low exploitation rate. 128GW-31.2GW=96.8GW,The Renewable Energy Promotion Law– expected. Enormous financing potential: fiscal support, credit, private enterprises, foreign investment (Fig.)
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0
500000
1000000
1500000
2000000
2500000
3000000
3500000
1996 1997 1998 1999 2000 2001 2002 2003
Total National investment
Domestic loans Foreign investmentLocal fund-raising (province, prefecture,city, county)
Other fund (electricity sales revenue,electricity construction foundation
Sources of Investment
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Therefore, in terms of demand and supply potential, small hydropower projects have very promising market prospects in China.
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~End~~End~
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