china pullout, page-7

Hard to see them being able to hold off for long, expectations in China will make it very difficult to govern if things get held back. Chinese history shows that the 'peasants' get upset when left out and Govt is very aware of this.

Below article is interesting also.

http://perso.orange.fr/petrostrategies/rec_artE/china.htm
China will need 1,230 GW of installed capacity in 2020, 30% more than forecast

In order to cope with an average annual economic growth of 6.5% over the next 15 years, “China needs to add new annual capacity of 48 GW (…), equivalent to two-thirds of the UK’s total installed power generation capacity today”. This is one of the findings made by the consultant Capgemini, in association with Electricité de France (EDF) and China Electricity Council (CEC), in a survey carried out with between July and December 2005 with around 50 middle to senior executives from the energy sector. The result of 48 GW was obtained by taking the “low” scenario for 2020 selected by Capgemini (1,150 GW)… a higher figure than that of Beijing’s forecasts.



For the 2020 time horizon, China’s National Development and Reform Commission (NDRC) predicts an installed capacity of 950 GW, compared with 441 GW in 2004. But the “high” scenario devised by Capgemini is for an installed capacity of 1,300 MW that China will need in 15 years, and 1,230 MW, according to the middle reference scenario. The difference between the NDRC’s forecast and the latter scenario is 280 GW, corresponding to an investment need of e150 billion. In all, the investment required for Chinese power capacity is expected to exceed e500 billion by 2020. Indeed, the power supply cuts that China has suffered over the last three years have sparked a relaunching of investments, while at the same time delaying the liberalization of the wholesale market. Indeed, according to experts questioned by Capgemini, “the balance of short-term demand and supply will be restored by the end of 2006”. But the problems with supply could very well reoccur in the following years.

In the short term, coal (accounting for 83% of the current power mix) ought to benefit the most from the growth in power demand, but its share is expected to fall to 60% by 2020, according to the government’s plan. At present, the setting of coal prices is liberalized, while that of power is regulated. In 2004, the average price of coal used for power generation leapt by 41.7% (contracted coal), and even by 100 to 150% for new orders. At the same time, electricity prices have increased by only 4.5%… As a result, a number of power generation groups have opted for an integrated strategy. Thus, Huaneng Group purchased some 100 million tons of coal in order to supply its 75 power plants spread over 23 provinces and this year it revealed its plan to buy shares in mining fields in order to ensure a further 30 million tons as of 2006, rising to as much as 80 million tons in 2010.



A number of laws to protect the environment are expected over the next few years, which will be to the benefit of nuclear power, natural gas and renewables. In 2005, China adopted a law on renewable energy, which incorporates plans to boost the installed capacity of the country’s wind farms to 30 GW in 2020, i.e. an average growth of 26% per annum! According to estimates, 50% of the gas consumed in China towards 2020 is to be imported, particularly from Russia and Central Asia. With 40 GW in 2020, nuclear is expected to account for 3.3% of China’s installed capacity, compared with 1.55% today. Some $49 billion of investments would be required for the nuclear sector alone: “With more than 25 sites planned for the next 15 years, and with every site consisting of 2-4 units each above 1,000 MW, China is by definition the center of the global nuclear power industry”, the report observes. From the point of view of international operators, “technology transfer is the decisive factor in gaining a foothold in the nuclear power market”. According to Capgemini, investment opportunities in the Chinese energy sector involve four sectors: long-term hydrocarbon supply contracts; equipment for nuclear, wind power and clean coal; mergers and acquisitions leading to the restructuring of public companies; and the provision of services (customer relations, advanced technological solutions and energy savings).