New notices and industry trends within energy sectors
Energy Working Group Newsletter
15th September 2017
According to the European Chamber Working Group newsletter, a set of new notices and industry trends within the energy sectors are listed as a reference for companies or individuals involved in or willing to enter the Chinese market.
Laws, Regulations, and Notices
In order to better utilize the wind power, promote the application of new wind technologies, based on the Notice on Announcing the Wind Power Low Pricing Demonstration Projects issued by Nation Energy Administration (NEA), Hebei, Heilongjiang, Gansu, Ningxia and Xinjiang Province reported their demonstration projects. The total volume is 707,000 kW with the price equal to the local coal power price.
Besides, the Notice of Carrying Out the Pilot Working of Constructing Power Spot Market issued by National Development and Reform Commission (NDRC) and NEA emphasized the willing of realizing peak and valley time price for electricity, with 8 areas, including south of China ( starting from Guangdong), west of Inner Mongolia, Zhejiang, Shanxi, Shandong, Fujian, Sichuan, and Gansu, as the first pilot areas.
In the end of August 2017, NDRC issued the Opinions on Further Strengthening the Price Regulation of Monopoly Industries, where it is put forward that the price should be regulated to promote the sustainable development of monopoly industries. Here the monopoly industries include power transmission and distribution, pipeline transportation of natural gas, railway transportation, residential water gas and heat supply, and so on.
Based on this spirit, NDRC issued the Notice on Approving the Price of Inter – Provincial Pipeline Transportation of Natural Gas to regulate the inter-provincial transportation price of 13 pipeline transportation corporations including PetroChina Beijing Natural Gas Pipeline Co., Ltd. The wastage of gas transportation is included and no extra fees should be charged.
Meanwhile, the price of natural gas for non-residential use reduced 100 RMB per 1,000 cubic meters according to the Notice on the Reduction of the Basis Station Price of Natural Gas for Non – Residential Use issued by NDRC.
Foreign Invested Enterprises
On September 12th, the Ministry of Commerce of the People’s Republic of China (MOFCOM) issued the Notice on Further Promote Workings on Tax Reduction and Exemption for Equipment Imports of Foreign Invested Enterprises in Encouraged Industries.
With the war on pollution in full swing, China lays great emphasis on the renewable and green energy, reform of conventional power industries, electrical and smart vehicle development, power grid construction and so on.
Renewable and Green Energy
China expected to produce 20 percent of its overall energy from renewable sources. Wind and wave power, gas hydrate, solar power, and biofuels are among the most popular and promising technologies. The government and researching institutes are making great efforts to meet this target and have made breakthroughs in some fields.
The National Development and Reform Commission and National Energy Administration (NEA) announced on September 13th that China plans to use bioethanol gasoline nationwide by 2020. According to the plan, China aims to build an advanced liquid biofuel system and put into operation a demonstration facility that will be able to produce 50,000 tonnes of cellulosic ethanol a year by 2020.
- Wind & Wave
Researchers from the United Kingdom and China will collaborate on five projects, to develop the”next generation” of technology in wind and wave power. UK side pledged to provide a total of 4 million pounds ($5.3 million) in funding over the next three years, while the National Natural Science Foundation of China will also provide support. The projects include:
- wind turbine structural design with increased resilience in typhoon conditions
- predicting capabilities that support the design of more economical offshore wind farms
- floating offshore wind platforms with increased resiliency
- virtual prototyping that converts wave energy into usable electricity
- potential synergies in the installation and operation of different offshore energy facilities, aiming lower overall costs.
- Gas Hydrate
China has made a breakthrough to successfully mine gas hydrate, which is commonly known as combustible ice, in the South China Sea and gains the edge for its commercial production.
The Delingha solar thermal power station operated by the China General Nuclear Power Group (CGN) in Qinghai province made its first test run on Aug. 31 with all equipment running normally. This project is approved by the Nation Energy Administration in 2016, with an installed capacity of 50 megawatts of electricity, and is scheduled to send power to the grid by the end of 2017.
Conventional Power Industries
While exploring renewable and green energy alternatives, China is also carrying out adjustment and reform of conventional power industries.
- Coal Industry
Coal is the main energy source in China, accounting for 62 percent of total energy consumption in 2016. China is aiming to reduce the share of coal consumption to less than 58 percent by 2020. On September 11th, China’s State Council made public a guideline to support the economic transformation of coal-rich Shanxi province. The government will support Shanxi in developing its abilities for clean and efficient exploitation and use of coal, and also in replacing coal with clean energy sources, including electricity and natural gas.
- Oil & Gas Industry
China is expected to import 30 million metric tons of crude oil from Russia annually starting from next year through two transmission pipelines between the two countries, in the latest step to guarantee China’s energy diversification. Construction of infrastructure for the major line of China’s second Sino-Russian crude oil transmission pipeline will be completed by the end of September. Repeated tests will be conducted for two months until the pipeline goes into service at the beginning of next year.
Besides, China will take measures to encourage fair and open access to the country’s oil and gas pipelines as part reform to increase efficiency in the sector. Policies will be rolled out to allow third-party access to pipelines operated mainly by the country’s three State-owned oil giants. These measures will be in line with a guideline released in May this year on reforming the oil and gas industry, which listed eight tasks covering the upstream to downstream sectors.
Meanwhile, China is moving swiftly toward the introduction of oil futures. The Shanghai International Energy Trading Center, a subsidiary of the Shanghai Futures Exchange, has completed the fourth trial of the digital platform of the oil futures market in July. Most of the market players concerned tried it out. Launch would follow the regulatory approval, which is awaited, according to industry insiders. The China Securities Regulatory Commission has forwarded the SIETC’s application to the State Council, the country’s Cabinet, for the final green signal.
Electrical and Intelligent Vehicles
China is working on a national strategy on smart cars and mulls banning production and sales of fossil fuel cars, according to policymakers attending a forum on automotive industry development. With the global auto industry leaning toward intelligent and electric vehicles, work has begun on a timetable to ban manufacture and sales of traditional energy cars, according to Xin Guobin, vice minister of industry and information technology.
Meanwhile, China’s electric car industry has seen rapid growth in the past few years, with growing sales and an improved industry ecosystem. Production and sales of electric cars have surpassed 1 million units so far, with an annual growth rate of over 200 percent, said Dong Yang, vice director of China Association of Automobile Manufacturers (CAAM). With more than 50 percent of the world’s electric car production, sales, and ownership in 2016, China is now a global leader in electric car development.
The State Grid Corporation of China (SGCC) will invest 82.6 billion yuan ($12.8 billion) to improve the power grid in the northwestern Xinjiang Uygur autonomous region. According to an agreement signed by the SGCC and the regional government on Friday, power transmission projects featuring extra-high voltage will be built to lift Xinjiang’s outbound power transmitting capacity to 25 million kilowatts by the end of 2020. In addition, 22.4 billion yuan will be used to upgrade power networks in rural areas, so that poverty-stricken areas have access to electricity. By the end of 2019, all poor villages in the region will have improved power networks.