2. Analysis on Electric Power Network in China (Grid/Off-Grid) · Analysis on Electric Power Network in China (Grid/Off-Grid) ... Shaanxi, and Nei Monggol, and others are in provinces

26

2. Analysis on Electric Power Network in China (Grid/Off-Grid)

2.1 Electric Power Policy in China

The result of the China Electric Power Industry the 9th Five-Year Plan, and summary of

Tenth Five-Year Plan are reviewed below as the policy regarding the Chinese power (distribution)

grid.

2.1.1 Result of The 9th Five Year Plan

Since the 9th Five Year Plan, electrical industry has developed quickly. The annual average

increase rate of power generation unit capacity is 8%. This fundamentally eased the severe

electricity shortage which had existed over the long period of time. Therefore, the bottleneck of

national economy of electric power and social development have been solved. National power

generation unit capacity amounts to 319.3GW, among those the water-power generation occupies

24.9% by 79.4GW, thermal power generation occupies 74.4% by 237GW, nuclear power

generation occupies 0.7% by 2.1GW, and alternative energy power generation, such as wind force

and solar energy, is approximately 330,000kW in the end-of-the-year 2000.

The annual amount of power generation is 1.36 trillion kWh, and each of power generation

unit capacity and power generation amount is ranked as the second in the world. In regard to the

power transmission network, the power line over 220kV reaches to 164,000km in entire country,

and 500kV power line is 27,000km among those. The transformation capacity of 220kV and over

is 410 million kVA, among those, the transformation capacity of 500kV is 94 million kVA. The

500kV direct-current power line is 1,045km, and rated conversion capacity was set to 1.2GW

Excluding Hong Kong and the Macao area, seven electric power networks of Inhuabei,

Dongbei, Huadong, Huazhong, Xibei, and Sichuan/Chongqing, the south mutual connection

electric power network over province and the five independent electric power network of

province classes such as Santo, Fuchien, Xinjiang, and Tibet, were already formed. Excluding the

fact that voltage class of chief editor power line of northwest electric power network is 330kV, the

electricity net and the Shandong electricity net which stride the other provinces have already

constructed the chief editor transmission network of 500kV. Unit capacity of the Huadong

electricity net exceeds 50 million kW. Unit capacity of nation’s largest thermal power plant is 22.4

million kW, and 3.3 million kW for hydro-electric power station, 1.8 million kW for nuclear

power plant. Development of electric power network rushed into the new stage of large zone

27

electric power network and mutual connection of autonomous region electric power network with

implementation of Shangxia power transmission transformation project and the electric power

network connection project of a northeast and Huabei. The rate of a power line loss in 2000 was

reduced to 7.7% from 8.8% in 1995.

On the legal side, the framework of the electric power regulation which considers relative

administration electric power rule and district electric power regulation group as a supplement

was fixed on the basis of the People’s Republic of China electric power method enforced since

April 1, 1996 depending primarily on electric power institution protection regulations, the

management regulations of electric power network arrangement adjustment, and electric power

supply and utilization regulations,

However, the 9th Five Year Plan raised subjects in which the bottleneck still existed for

resource assignment in local areas due to poor electric power networks as a result of overdue

construction comparing with power supply construction. Since arrangements of power

transmission and power distribution of electric network, high-pressure and low-pressure, primary

and secondary stage were not cooperated, these have given influenced although the difference of a

grade in the safety and stability, and economical employment of an electric power network exists.

Moreover, it is a subject that the rate of power transmission loss is also 2 to 3 points high

compared with advanced nations.

2.1.2 The 10th Five-Year Plan

■ Outline

The importance of the 10th the Five-Year Plan for 2001 - 2005 is a conversion into an

improvement and efficiency of quality from emphasizing on the amount increase of power

generations and plant scales

A strategy important in the 10th the Five-Year Plan is West-to-East Electricity Transmission

Project. Chinese energy resources are mainly concentrated on the western area. 60% of coal

resources focus on Shanhsi, Shaanxi, and Nei Monggol, and others are in provinces in the

Midwest, such as Henan and Kueichou. Moreover, most of underdeveloped water-power

generation resources are located mainly on southwest, the midstream-upstream area of Yellow

river. However, Chinese economy and the load of population and electric power use are

concentrated on the eastern part coastal region. For this reason, development of western electric

power resources, especially western water-power resources, and implementation of West-to-East

28

Electricity Transmission Project (transmitting western electricity to an eastern part) do not only

promote development of western economy, but also ease the energy shortage, acid rain problems,

and pressure on environmental preservation within SOx/NOx regulation zone.

A remarkable difference exists in the electric power supply-and-demand situation of each

district, as well as a fundamental balance of the total amount. The Dongbei electric power

network, the Fujian electric power network, and the Hainan electric power network have the

remarkable excess of an electric power unit. The Huazhong electric power network, and

Szuchuan and the Chongqing electric power network have the large specific gravity of

water-power generation, furthermore its accommodation capacity is low. And its electric power

excesses during wet season. The electric power supply demand of Huabei electric power network,

Huadong electric power network, the Shandong electric power network, and the Kuanhsi,

Kueichou and the Yunnan electric power network maintain a balance fundamentally. In the

electric power network, the phenomenon of short supply has appeared in the local area, and the

tight condition of an electric power supply has appeared at the peak term of power consumption

with the Kuangtung electric power network since 2000.

It is expected that the difference in the demand-and-supply balance between each electric

power network is reduced one by one, by implementation of mutual connection of 15 periods,

macro adjustment and an electric power network. According to elementary analysis, the

oversupply of the Dongbei electric power network and the Hainan electric power network will

also remain during a fixed period of time from now on, and the problem of the short supply of a

local area such as Kuangtung, Chehiang, and southern Heibei may still be severer in early stages

of 15 periods. For other areas, demand-and-supply balance will be held fundamentally.

The characteristic of electric power load produced a big change with economic development

and improvement in the people’s life standard level in these years. As the air-conditioner

increases, the influence to the power consumption load of temperature becomes larger. In a part of

province, the annual maximum load shifts from winter to a summer gradually. This resulted that

the wave nature of the growth of the annual maximum load increased. The trend shows each of

daily load rate and annual load characteristic values on each electric power network descends

over years. The growth of future load will exceed the growth of power consumption succeedingly,

the problem on peak adjustment will be projected day by day. Then the peak adjustment capacity

which the electric power network needs will increase every year. The problem on 15 periods and

electric power supply and demand mainly appears in the ability of shortage of peak adjustment

capability or the technical means of peak adjustment not to satisfy the safety of an electric power

29

network, and the necessity for stability and economical employment.

■ Targets

The 10th Five-Year Plan sets strengthening of the electric power network construction and

promotion of the cooperation system of the national electric power network as the target. Adjust

power supply structure, fully utilize existing power generation capability, develop water power

generation and large thermal power generation for domestic coal, actively compress small

thermal power plants, develop nuclear power generation moderately and encourage cogeneration

and comprehensive utilization power generation. By developing alternative energy and renewable

energy power generation positively, comprehensive utilization technology is carried out

positively. Also the resources are saved and environment is protected. In order to fully equip with

the formation mechanism of a rational electric power price, reformation of electric power

organization is made to enhance as well as a gradual implementation of the electric network

system by price competition and separation of plant and the electric power.

During 15th period, the national electric power network shows substantial progress. By the

end of 2005, except for Xinjiang, Tibet, and Hainan, each adjoining electric power network will

realize a mutual collaboration system fundamentally, and electric power network structure will

become much more rational. And then it will have prevention ability for power failure accident in

large area. The national exchange direct-current circuit beyond 220kV and over reaches to

230,000km, and transformation capacity reaches 670 million kVA. Cooperation development of a

secondary system and a primary system heightens the capability of the whole communication

network dramatically. The reliability of a city electric power network reaches an average of

99.9%, in a part of important area attains to 99.99%. The rate of comprehensive power

transmission loss of an electric power network is minimized to 7% or less.

Basic policy of farm electrification “reconstruction of an electric power network,

reformation of electric power organization, realization of one prefecture-one company, the same

price” indicates to push the village electric power level into a new stage, and construct a stable

foundation for complete realization of village electrification within ten years. By completing

reformation of farm village electric power organization extensively, one prefecture-one company

will be realized. Power consumption amount per capita and living electric power amount per

capita in the prefecture and below prefecture will greatly grow. By connecting economical

development and wealth level of life, a series of electrified prefecture, electrified city and

electrified village will be established. By 2005, electricity will be widespread through villages

nationwide, and the number of non-electrified farmhouse will be reduced.

30

For the electric power network, unification plan, unification construction, unification

management, and unification employment will be implemented. The resources input to electric

power network construction will be increased continuously. By reviewing the facts that

construction of an electric power network fell behind power supply construction, it implements

the cooperative development of the network and power supply; and then practices West-to-East

Electricity Transmission Project and a cooperative development of mutual system of the electric

power network and demand grid. A plan and construction of the secondary system will be

completed simultaneously.

Place emphasis on power distribution network construction, it is continued to construct and

reconstruct the electric power network. The power distribution network is optimized. City

network development is cooperated with a city construction. Operational monitoring level of the

power distribution network is promoted. Therefore the quality of electric power energy is

improved. The rural electric power network structure is strengthened and optimized. The electric

supply quality and the safety level of a farm village electric power network is raised. The loss is

reduced. Then it will adapt a construction of a small city, and development of farm village

economy and the demand of the people life level improvement.

3 main street of West-to-East Electricity Transmission Projectin a southern part, the central

part, and a northern part are strengthened continuously. Electric network mutual connection

project of seven subjects such as connection network of Dongbei and Huabei, connection network

of Fujian and Huadong, connection network of Xibei and Huazhong, connection network of

Huazhong and Huabei, connection network of Szuchuan and Chongqing and Xibei, connection

network of Shandong and Huabei and power transmission from Shangxia to Canton is completed.

At the same time, initial work of connection network of Shandong and Huadong is implemented.

Furthermore, major line of each power network will be reconstructed and fully equipped.

Assignment of power supply construction of an east-and-west part is adjusted, and the scale

of West-to-East Electricity Transmission Project is expanded further. Construction of the coal

combustion plant in eastern part area is controlled rationally, and West-to-East Electricity

Transmission Project is provided with market-space at the same time it accelerates the resources

development progress of western area.

The importance of south mutual electric power network system is the project which

transmits 10 million kW to Guangdong. Large-sized hydroelectric power stations such as Longtan,

31

Xiaowan and Goupitan are built, and coal combustion plants are built suitably for the abundant

areas of coal resources. Mainly the third line from Tianshengqiaoto Guangdong, from Kunming

to Tianshengqiao through Luoping, three 500kV exchange power transmission transformation

constructions from Guizhou to Guangdong passing Guangxiand and two 500kV direct current

power transmission constructions from Shangxia to Guangdong are built.

The electric power network of the central part is keeping pace with construction of Shangxia

hydroelectric power station and building a series of construction of Shangxia power transmission

transformation significantly. Total scale includes 500kV of alternating current and 6,900km of

power transmission circuits, 500kV of direct current and 2,200km of power transmission circuits,

500kV of alternating current and 24.8GVA of transformation capacity, 12 GW of direct

conversion station total capacity. 60% of Shangxia power transmission transformation

construction completes during the 15th period. Opening of the power transmission passage of the

electric power of Sichuan to outside means that it built conditions for the power transmission to

the eastern part of the Szuchuan electric power.

A northern electric power network strengthens the power transmission to western Nei

Monggol and Beijing tianjin tangshan from Shanxi on the basis of three circuits of 500kV power

transmission circuit from Datong of existing Shanxi to Fangshan of Beijing, from Nei Monggol to

Changping of Beijing through Zhangjiakou. The power transmission capacity sent to the Beijing

tianjin tangshan area from western Nei Monggol by 2005 will exceed 2.7GW. In order to deliver

power transmission to Huabei electric power network, development of the hydroelectric power

station of northwest Yellow River upstream is accelerated and also the construction speed of the

coal mine Shanyuan plant of the north part of Shanxi and the NingXia coal base is accelerated.

As policy against electrification in the rural area, company system restructuring will be

implemented against the electric supply company in the prefecture class. Hydroelectric power is

developed and optimized. The small water-power generation with regulation capability is

supported. The rural electric power network is improved and duplication construction is

prevented. Electric supply quality and the quality of service are raised and a farm village electric

power price level is reduced. Then farmer’s burden is mitigated. The small dispersed electric

supply system is developed and constructed. This will solve non-electricity the power

consumption problem of the non-electrified farmhouse in the area where the electric power

network cannot cover.

Continue to expand foreign opening, the plan which uses foreign funding positively

32

rationally and effectively is maintained firmly. Foreign loan is used positively. Advanced

technology and equipment are introduced, and the level of technical equipment of the whole

electric power industry is improved. Power plant and electric power network is separated.

Generated output is transmitted to the electric power network by price competition. Reformation

of loan investment organization of a country is progressed and linked. Management method of a

foreign funding utilization project is regulated further. Administrative examination ratification

process is reviewed and simplified. The investment environment in a foreign investor’s power

generation field is improved continuously, and entrance into the fair market competition of

foreign project is promoted.

33

2.2 Outline of power network in China

Aiming at breaking down of monopolistic electric power organization with National Electric

Power Corp. at the top and at introduction of a competition market, the electric power

organization reformation centering on company separation of the plant and the electric power

network was advanced. The “State Electric Power Regulatory Commission (SEPRC)” aiming at

decision of the management rule of the electric power market, and the supervisor of market

management and maintenance of a fair competition was newly established as the organization of

State Affairs Administration under the direct control in November, 2002. Furthermore, national

electric power Corp. was reorganized in December in the same year. The new company was

founded and the new system started.

The new system classified the electric power properties under jurisdiction of national

electric power Corp. into an electric power network and power generation, and founded National

Electric Network Corp. and South Electric Network Corp. as electric power networks. Moreover,

five nationwide power generation companies of same scale were founded as a power generation

side while advancing construction of a local electric power market, an electric power dealings

center and an electric power market management rule, etc. At the same time, the power charges

innovation is delivered and competitive power transmission is realized gradually. In addition,

implementation of the direct supply into a large-lot user is taken into account in the area where

conditions will be settled in the future. By the organization reformation, improvement in the

efficiency of each property and reduction of a charge become possible. Furthermore it is supposed

that formation of open and sound electric power market will be progressed by achieving national

cooperation of the electric power network and fair competition. While the organization figure

before and after reorganization is shown below, the outline of the new system which inherits the

electric power property of National Electric Power Corp. is shown below.

34

Figure 2.2-1 Distribution of Power Network Service Areas

SP is an economic entity in charge of nationwide power transmission across regions, with

core business in power grid construction and operation. The length of SP transmission lines at the

voltage of 220 kV and above is 146,200 km, which accounts for 89.5% of China’s total length of

transmission lines at 220 kV and above, and among which lines at 500 kV and 330 kV are 26,700

km and 8,680 km respectively. Its transformation capacity at the voltage of 220 kV and above is

350 GVA, which accounts for 84.8% of China’s total transformation capacity at the same voltage

level. There has formed in China 5 trans-regional grids (Northeast China, North China, East

China, Central China and Northwest China), South China Electric Power Joint-venture Network

among four southern provinces and three independent provincial or municipal networks.

Trans-province grids and Shandong Grid have built 500 kV or 330 kV transmission lines as main

trunks, while East China and Central China grids have been inter-connected through +500 kV DC

transmission lines.

The above networks cover most parts of Chinese rural and urban areas, providing qualified,

reliable electricity and supply services. The layouts of energy resources and productivity in China

require optimal electricity allocation in the nation as a whole. SP is striving for nationwide grids

interconnection and promoting optimal electricity allocation in China. With the full

implementation of West Development strategy, SP will further its efforts in the channel

construction of West-to-east Power Transmission to carry out interconnection across large regions.

SP will strengthen and complete construction on regional trunk frameworks and provincial

35

receiving-side frameworks, with reasonable network structure and high flexibility, in order to

meet competition in power market and prevent black outs in large areas.

Nowadays SP is sparing no efforts to build Three Gorges Transmission and Substation

Project. The world-known Three Gorges Hydro Hub started its official construction in December

1994, which consists of 26.7GW units, with a total installed capacity 18.2 GW. Its annual average

power generation will reach 84.7 TWh with its power supply covering Central China, East China,

Guangdong and Chongqing. Three Gorges Power Station is designed to start generation in 2003

and to totally complete construction in 2009. The Three Gorges grid construction has started

simultaneously with that of generating units. These include: 500 kV DC transmission lines with a

total length of 9100 km, total AC transformation capacity of 24.75 GVA, four +500 kV HVDC

converters with each capacity of 3 GW.

At the same time SP is striving for other work connected with nationwide interconnection.

At present we have basically constructed interconnection between Northeast China and North

China; East China and Fujian interconnection project is ready for construction; the initial

preparations of interconnection between North and Central China, Central and Northwest China,

Northwest China and Sichuan-Chongqing, Shandong and North China are under steady progress.

SP has actively responded to governmental calls in promoting nationwide West-to-east Power

Transmission, West Development and optimal resource allocations.

SP carries out urban and rural power grid construction and upgrading to relieve customers

from suffering the bottleneck in power supply and to exploit power market. Through the key

construction and retrofitting on medium or low voltage distribution network at 10 kV and below,

the speeding up of one-family one-meter reform, and etc, SP has greatly simplified voltage levels,

enhanced power supply reliabilities, resulting in rapid progress in urban grid reliability. SP has

also achieved a lot in construction and upgrading of rural power grid through completing

functions of county-level grids, strengthening supply capacity of town-level grid, and increasing

supply reliability. These efforts have basically eliminated problems such as high rural grid loss,

low supply reliability and poor energy quality, and set a solid foundation for building firm rural

power grid framework with reasonable layout, advanced equipment, scientific management and

high automation.

■ Electric power generation

Chinese electric power network has the large electric power network over several provinces

and the district electric power network by province unit. Five electric power group Corp. were

36

formed in the large electric power network in January, 1993 (power-saving Corp. forms in a

district electric power network). Both the equipment capacity of this major five electric power

networks and annual power generation occupy 70% or more of the whole country.

(amount of power generation equipments owned)

- China Huangeng Group.Co. (38GW)

- China Datang Power Group.Co.(32GW)

- China Huadian Group.Co.(31.1GW)

- China Guodian Power Group.Co(30.4GW)

- China Electricity Investment Group.Co.(29.9GW)

37

2.3 Subjects of electricity field toward a sustainable development

2.3.1 Energy saving and development situation of renewable energy in China

Chinese energy conservation and development of renewable energy has been achieving

remarkable success under the policy of “Putting saving on the top and raising the utilization

efficiency of resources although resources development and saving are satisfied.” And the

important role is played to secure for mitigation of insufficient resources, environmental pollution

curtailment, improvement of quality and influence of economic growth, and quick and healthy

continuous development of national economy.

Energy saving has been raising the remarkable economic effect and the social effect. The

amount of energy consumption (1990 year prices) per 10,000 yuan of the gross domestic product

(GDP) in China decreased for 2.77 ton standard coal in 2000 from the 3.97t standard coal of 1995

during the “9th the 5 year plan.” Thereby, the reduction amount of energy saving and energy

utilization attained 410 million-ton standard coal in the total. Energy consumption amount per

main product has been decreasing in number although grades differ. When the amount of direct

energy saving in the “the 9th Five-Year Plan” period is calculated, energy value is 66 billion.

The amount of saving, and the amount of energy utilization reduction are equivalent to 8 million

ton of sulfur dioxide and 180 million ton of carbon dioxide (calculated with carbon.)

The support for the technical development of a company, new product development and

technical improvement projects which improve traditional industries with high-tech technology,

achieve industrialization and improve product structure, and a government bond technical

improvement project is strengthened for energy saving and reduction of consumption as a point of

technical development and technical improvement. Energy saving technologies, such as the

spatter slug protection furnace developed significantly, a thermal storage formula heating furnace,

dry type fire extinguishing, a large-sized aluminum electrolysis tub, a large-sized circulation flow

floor boiler, conversion into coal water mixture by oil burn, have produced great results and

become wide spread in the related industry.

The company engaged in research of a solar water heater, production, sales and installation

service in the end of 2000 reached approximately 1000 companies in nationwide, and annual

production capacity attained 6,100,000 m2. The amount of solar water heater possessed in

nationwide reached 26,000,000 m2 ranking the top in the world. Moreover annual production

capacity of assembly parts of solar power battery in the country reached 5 TW, and approximately

40 production companies (assembly and sales companied are included) existed. Cumulative

38

utilization amount has exceeded 15 TW. Since large-scale wind power generation also developed

rapidly in China, 26 wind power plants were build in total and equipped with of power generation

capacity of 340GW. Chinese wind power generation stepped into a new stage. Moreover,

small-size wind power generators installed in the country has become approximately 190,000 in

total. It plays the significant role in the western area where has no-electricity in order to supply

domestic use electricity for farmers. The area where the utilization development of geothermal

resources in the country is about 1,300 places, among those 10 million m2 implements geothermal

heating. And equipment capacity of the geothermal power plant is about 30 MW.

For the solar energy technology, the domestic crystal silicone battery efficiency attains 11 to

14 %, and ability of solar water heater technology has been further improved among heat

utilization technology of solar energy. The application formula has been improved from a

seasonal and recess formula to the one with continuous use in all the weathers. Development of

the technology which integrates construction and heat utilization of middle heat collectors and

solar energy is also in progress. For the wind power, the domestic production rate of the wind

power unit of 200-300 kW level developed by China independently already exceeded 90%, and

domestic production rate of sample machine of 600kW unit has also reached approximately 80%.

Moreover, China will have R&D capability of 10 types of small wind generators of 10kW from

what was 100W before. Furthermore, wind and optical energy and wind-diesel joint power

generation system is developed. Application of large-medium size industrial methane project and

domestic methane pool technology of rural area are developed. It becomes the effective

technology to improve life conditions of farmers and cities and quality of environment. The

effective utilization model project of biological matter such as plant stalk has been developed

gradually, and the geothermal heating also has increases further. Therefore, introduction of new

technology such as heat pump makes value of geothermal practical utilization increased.

Although efforts are continued in respect of energy saving and renewable energy in China

and process has been also greatly carried out, the Chinese level is still considerably behind

advanced countries for energy utilization situation. Energy consumption per GDP of 10,000 yuan

in China is 3 times the global average level.

The amount of product unit energy consumption of main energy consumption product is

40% higher than the foreign advanced level, and energy efficiency in China is about 10% below

than the global advanced level. Terminal utilization efficiency is also 10% and below. The

technical equipment is also inferior and overall level is about10-15 years delay compared with the

advanced countries. Furthermore, the importance of energy saving and development of renewable

39

energy is not understood by people, and there is not much immediate consciousness for it. A

regulation policy is also imperfect, and the encouragement policy of company energy saving is

also behind. There is a problem that it has been hard for some areas to well-establish the

preferential treatment policy of comprehensive practical use of resources. Moreover, the prices of

some energy products are operated and the company has not received the competition pressure. In

addition, problems, such as shortage of the inside motivity of energy conservation and the

synthetic technical level of renewable energy, insufficient market training exist. Therefore, there

is still long way for energy saving and development of renewable energy in China.

2.3.2 Target of renewable energy

Annual development utilization amount of alternative energy and renewable energy

(practical use with traditional way of small hydro-power-generation and biological matter energy

is not included) in China will reach 13 million ton standard coal in 2005. This is equal to

discharge reduction of the greenhouse gas by 10 million ton of coal and 600,000 ton of sulfur

dioxide and dust. As a result, the situation of non-electricity frontier areas with 1,300,000 farmer

households will be improved and employment post of 200,000 people will be created.

Annual production capacity of national solar water heater will reach 11 million m2 and

possession amount will be 64 million m2 in 2005. Five to ten leading companies which are

internationally competitive will be built, and the annual productive capacity of national solar

battery will be set to 15 trillion W. Moreover, the solar power industry which handles application

instruments and circumference parts will be created in order to generate total possession amount

of 53 trillion W. Capacity of parallel establishment of wind power equipment is 1.2 million kW

and approximately -200,000 equipment production capacity will be reserved. In this way, the

demand of the domestic market is satisfied. Moreover, the geothermal heating area in 2005 will be

20 million. About 2 billion m3 supply capability is produced by the practical use system with

sufficient efficiency, such as a large-medium size methane project, a biomass project, etc. of

industrial organic waste water and a livestock breeding farm.

2.3.3 Promotion policy for renewable energy

Research settlement for policy to encourage development : By promoting research and

establishment of tax revenue preferential treatment policy for new energy and renewable energy

and encouragement policy for power generation network, demand is generated from a market

through effective policy. In enforcement of a western large development strategy, market

development and industrialization of the alternative energy and renewable energy of the western

area are promoted by the preferential treatment policy etc. taking advantage of the energy.

40

Promotion of technological change, improvement of technology and equipment level :

Cooperation of industry, university and research institution is encouraged and practical use of

technology and new products of new energy and renewable energy with intellectual property is

developed. Moreover, utilization and industrialization of science research result are preceded.

Furthermore, the significant technical model is shown and the technical equipment level and

equipment production capability are raised through introductions by macro adjustment and the

market.

Implementation of model project which proceeds integration of the solar energy and

construction, model plant construction of large wind power, commercialization model project of

VAGUS utilization technology, and commercialization model project of biomass power

generation.

Promotion of establishment and revision of national standard for related products and parts

which include installation and design of system and energy efficiency standard, training of a

positive market, regulation, establishment of standard system of alternative energy and renewable

energy, a product performance, the examination method, an energy efficiency standard, and a

system, a design, etc.

The guarantee-of-quality system of alternative energy and renewable energy is built. The

product quality inspection center and quality control system of a national level are completed

gradually, and the large-sized wind power equipment and parts inspection, and attestation

business are established. Moreover, the solar system and the quality inspection system accepted in

the world will be completed.

By establishing industrialization technology service system, a project bid system, a project

supervision and an examination system are implemented. Moreover, the agency service mainly

concerned with construction, technical consultation, information service, and personnel training

are encouraged.

Wide development of international exchange and cooperation: International exchange and

cooperation are developed positively. Industrialization of alternative energy and renewable

energy is implemented with foreign advanced experiences.

41

2.3.4 Goal of technological development for main renewable energy

Solar heat utilization of solar energy : heat tube type flat concentrator, Glass vacuum heat

collection pipe which metal circulates inside, application software of a vacuum tube steam water

heater and solar water heater system and hardware are mainly developed. Moreover, research and

development of technology which integrates practical use of solar power, heating,

air-conditioning, etc. and construction are implemented. At the same time, a solar bolt power

generation system is promoted.

By developing wind power of 600kW level and the wind power unit beyond that level, a

certain scale of production is implemented. New types of wind power unit such as multiple level

low power generators and variable wind speed and constant frequency with no gear box are

developed. By improving the production technology level of breakaway type wind power

generator of 10 Kw or below, the electric power supply system which integrates wind / diesel, and

the wind / light / diesel, compensating wind/lights together,

Effective utilization of biomass energy : by promoting development with emphasis on the

large-medium size methane project which treats high-concentration industrial-agricultural

organic waste water utilizing the anaerobic digestive technology, the technical level of the leased

facility for methane is raised. Developments of coal molding by the biomass matter and

development utilization of efficient direct combustion equipment are accelerated.

By implementing a research on geothermal power utilization and collection technology, and

production of geothermal utilization equipment and technical development of circumference

equipment, introduction of heat pump technology of geothermal source and the digestive

absorption is accelerated. Hence the domestic production level of equipment is improved.

42

3. Analysis of Solar / Wind Energy Introduction / Development Scenario

This chapter examines the scenario to introduce and develop solar/wind energy in China in

future, on the basis of study result conducted until last year and the findings of former chapter.

3.1 Basic Way of Thinking of Scenario Setting

The report of last year shows that the rapid expansion of the two economic gaps subsisting in

China (the gap between the midland and the coastal areas, and the gap between urban and rural

areas) is becoming a primary problem in future Chinese ‘’Sustainable Development’’.

In addition to these two gaps, this year, “Economic Gap of the Inside of Cities’’ is paid

attention as a new gap. The income groups in the inside of cities are divided into three,

higher-income group consisting of high-ranking officials or owners of big companies, middle-

income group consisting of independent businessmen or technicians, and low-income group such

as people flowing from rural areas. And the gap among income groups has been expanding year

by year since 1990s like the other two economic gaps. In recent year, the central government has

been shifting its policy from the way of thinking that those who become rich first become rich

(first wealth theory) to the way of thinking to construct the economic system that all of the people

can enjoy wealth (equal wealth theory), and has strengthened the redistribution of finance

according to the gaps, and enforced the relaxation policy by the creation of employment, in order

to correct the economic gaps. However, it is expected that the gaps will expand more with the

economic growth around the coast areas in future.

Below are the summaries of “Three Economic Gaps” that this study pays attention to.

3.1.1 Gap between Provinces

The gaps among provinces are represented by the gap between each province in the Midwest,

which mostly consists of farm villages, and each province in coastal area where industrialization

progressed rapidly by the setting of Special Economic Zone. This economic gap among provinces

rapidly expanded in 1990s, and in 2000, the GDP difference between the richest province and the

poorest province became more than ten times. In addition, the rate of the poor to the total

population is 56% in the Midwest, and 35% in central area, which means there is a big gap

compared to 9% in eastern area. In recent years, the provinces in the Midwest have been growing

43

more than 10 % a year, and that acts as a brake on the expansion of the gap, but doesn’t act as a

basic solution.

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000100M Yuan

Beijing

CTian

jin C

Hebei

PSh

anxi

PNei

mengg

u AR

Liaoni

ng P

Jilin

PHe ilo

ngjia

ng P

Shangh

ai C

Jiangs

u P

Zhejia

ng PAnw

hei P

Fujia

n PJia

ngxi P

Shando

ng P

Henan

PHube

i PHun

an P

Guangdo

ng PGua

ngxi A

RHa in

an P

Chongq

ing C

Sichua

n PGuizho

u PYunn

an P

Tibetan

AR

Shan

xi P

Gansu

PQin

hai P

Ningxia

AR

Xinjia

ng AR

Region

GDP (1990)

Primary Secondary Tertiary

1990

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000100M Yuan

Beijing

CT ian

jin C

Hebei

PSha

nxi P

Neimen

ggu A

RLiao

ning

P

Jilin

PHeil

ongjia

ng P

Shang

hai C

Jiang

su P

Zhejia

ng P

Anwhe

i P

Fujia

n PJia

ngxi P

Shan

dong P

Henan

PHub

ei P

Hunan

PGua

ngdon

g PGua

ngxi

ARHain

an P

Chong

qing C

Sichua

n PGuiz

hou P

Yunnan

PTibe

tan A

RSha

nxi P

Gansu

PQinh

ai P

Ningxia

AR

Xinjia

ng A

R

Region

GDP (2000)

Primary Secondary Tertiary

2000

A bigincrease in

10 years

GDP gapbetweenprovinces

10 times

Figure 3.1-1 Example of Economic gap between provinces

3.1.2 Gap within Province

Even in rich provinces in coastal areas which have been rapidly developing, when it comes

to the gap between urban and rural areas in the provinces, there are big economic gaps as shown in

the figure below. Especially, in recent years, in urban areas, the absorption power of employment

has been increasing with the industrial activation, but on the other hand, in rural areas,

employment has been remarkably decreasing because of decline of agriculture, miserable

condition of self-supporting agriculture with industrialization and little development of industries

except agriculture. Especially, concerning the flow situation of labor force in rural areas, after

1997 when “the Big Three Revolutions” occurred, the ratio of people working in the provinces

outside the place of residence has been increasing, and in rural areas, the absorption power of

employment has been decreasing.

44

Shandong

01,0002,0003,0004,0005,0006,0007,0008,000

1990 1995 1997 1998 1999 2002 2003

yuan

Figure 3.1-2 Economic Gap Change of Urban Area-Rural Area in Province

3.1.3 Gap within Urban Area

The economic gap in urban areas is positioned as the economic gap caused by wage gap

among industries. As mentioned above, when the income levels in urban areas are divided into

higher-income, middle-income, and low-income group, low-income group accounts for 50%,

middle-income 10%, and higher-income 10%. And, in 2000, the wage gap among industries

reached about 6 times (the average wage of workers in Beijing city was 19,155 yuan in 2001).

Because the population residing in Chinese urban areas is currently judged to be about 4 hundred

million, the population of high-income group in China is estimated to be about 4 thousand.

In addition, the energy consumption and the spread rate of durable consumer goods such as

household electric appliances rapidly spreading in urban areas, are very different among income

groups, and the lifestyle in urban life is also different.

45

Durable Goods

0

20

40

60

80

100

120

low middle higher

Income Group

%

cellular phone

PC

private car

refrigerator

air-conditioner

washingmachine

Energy Consumption

0

50

100

150

200

250

300

350

400

450

500

low middle higher

Income Group

Water (t)

Electricity(KWh)

Coal (kg)

LPG (kg)

Utility Gas(m3)

Figure 3.1-3 Durable goods and energy consumption by income group

At the same time that the expansion of “the Three Economic Gap” is a big social problem, it

is also a big unstable factor for sustainable development in Asia including Japan. In particular, the

social condition uncertainty with the expansion of gap between the rich and the poor, gives a big

blow to our industries which has been rapidly expanding business to China. On the other hand,

even if Chinese economy develops toward the direction that these economic gaps are corrected,

the current social system doesn’t work well, and in order that, in a country which has 1.3 billion

population, people in rural areas or low-income group obtain the same living standard as people in

higher-income group in urban areas, it is essential to realize innovative social system by energy

utilization in sustainable form, environmental safeguard and social infrastructure improvement.

In particular, concerning energy field, in the Tenth 5-year Plan, the rationalization of energy

improvement, energy-saving and the improvement of generation efficiency as well as the respect

of environmental safeguard are set as important polices. An attempt for sustainable development

has begun, premised on energy security.

On the other hand, in China, the priority in the environmental problem of the Chinese

government is removal of environmental pollution with large influence to a human body. For

example, Air pollution (dust, SO2, yellow sand), water pollution, household-waste (being

especially a city part big problem). On the other hand, China government appealed, “A

developing country has the right to discharges carbon dioxide for development”. It means the

policy priority over a warming problem is low.

46

The study of IGES divides the social Infrastructure improvement by the development of

Asian cities into three development stages, as shown in the figure below, “unprepared stage”,

“preparation reinforced stage”, and “completed stage (repair / eco-friendly technology

development)”. According to this study, each city of China is positioned in the second stage,

“preparation reinforced stage” of social infrastructure, and it is in the period when a big social

investment is needed toward the rapid deterioration of city environment. In such a growth stage,

the earth-scale investment toward environmental problem, such as global warming, is restricted

because policies for environmental problems directly related to human life are given priority. On

the other hand, the rural areas in China are still positioned in the first stage, “unprepared stage”,

and policies toward environment are not given priority and the fund security capacity is low.

Therefore, in order to realize “sustainable development” in China, it is necessary to realize social

investment toward improvement of city / area environment, and to develop business with more

than one benefits to contribute for long-term and earth-scale environmental problem

(multi-benefit).

47

Development of Urban City and Environmental Infrastructure Improvement

• GDP per person: More than US$10000

• Urbanization rate: 80%• Quantity of garbage per

person: 1.1-5.07Kg

• GDP per person: US$1400. In particular, reinforcement tendency is remarkable between $3000 and $5000.

• Urbanization rate: 50%• Quantity of garbage per

person:0.8-1.1Kg

• GDP per person: US$400• Urbanization rate: less than

30%• Quantity of garbage per

person: 0.4-0.7Kg

UE

I standard(sew

age / garbage processing rate)Bangladesh, Nepal, Myanmar, Vietnam, India, Laos, Sri Lanka, Indonesia, The Philippines

• The sewer is not arranged, • Garbage collection is not

arranged. • A hygiene problem • Environment deterioration

Large and medium-sized cities in China, Thailand, Malaysia

1. Water pollution by increase of life drainage.

2. Rapid increase of garbage in urban cities (life system business system)

3. Damage caused by lack of industrial waste processing facility

Japan Korea, China (Hong-Kong, Macao), Singapore

1. Toward mass production / mass consumption / mass waste society

2. Deterioration of existing facilities, shortage of final processing facility and site for processing facility

3. Increase of construction and administration management cost, financial difficulty and fund shortage of government

Fund supply method of each stage

1. Policy priority order: low

2. Not become private business

3. ODA or international development financial institution support project (mostly volunteer)

4. Limited project by foreign capital ( big city only)

5. Small-scale community business by donations

First stage:unprepared stage

1. Necessity of public investment expansion (national / local government debt, income from tax, surcharge and charge), financial policy (low interest financing by government financial institutions)

2. Private company’s entry to make up for government money shortage (BOT)

3. ODA or international development financial institution support project (mostly loan)

4. Financial market (fund supply by city bank, financing, flotation of loan, stock market and industrial loan)

5. Investment and donation by private investors (eco fund)

Second stage: preparation reinforced stage

1. From new construction investment to administration management / maintenance

2. Private company's entry to promote business efficiency (administration trust)

3. Shift of garbage processing business to private companies on the basis of deregulation /expansion producer's responsibility

4. The processing charge collection

Third stage: completed stage (repair / eco-friendly technology development)

year

Figure 3.1-4 Development of Urban City and Environmental Infrastructure Improvement(IGES 2003)

48

The introduction of renewable energy including solar / wind energy contributes to “air

pollution” which is given the first priority in environmental problem in China, and, in addition,

it makes it possible to cope with the global warming problem which is given less priority in

China. In other word, multi- benefit is acquired by contributing to reduction of air pollutant such

as SO2, NOx or smuts, which are necessary for earth-scale sustainable development as well as

reduction of greenhouse effect gas necessary for earth-scale sustainable development. In

addition, it is expected that element technology and mass production technology necessary for

introduction of solar / wind energy are contributed by industrial technology in future economic

development in China.The following is the summary of multi-benefit by solar / wind energy.

3.1.4 Multi-benefit by solar / wind energy

- City environment improvement by reduction of air pollutant such as SO2, NOx or smuts

- Contribution to earth environment by reduction of greenhouse effect gas (CO2) emission

- Contribution to energy security by reduction of fossil fuel use

- Contribution to domestic industry development by acquisition of high energy

technology

This study sets the following basic policies on the basis of the study result of last year, and

examines the scenario for introduction and development of solar / wind energy in China.

- The midland areas without electricity (Kansu, Inner Mongolia and Tibet) are not taken

as objects of this study, supposing that in those areas, solar / wind energy project by the

Tenth Five-year Plan, “Light Manufacturing Process” is continuously carried out.

- It is supposed that, solar / wind energy is preferentially introduced to the areas where the

potentially existing quantity of solar / wind energy was sufficient for its demand in the

study result of last year.

- It is supposed that initial introduction / management cost of solar / wind energy is set on

the basis of its current standard cost, and mass production effects and technical

innovations are promoted by the introduction in China.

- Concerning the forms of project enforcement, more than one forms including traditional

public business, private fund or introduction of foreign capital, are assumed.

* Light Manufacturing Process: Offers 100W of electricity per person (800,000 kW in total)

toward 8,000,000 populations without electricity, by constructing wind and solar power

generation facilities by 2005.

49

3.2 Assumed Scenario Option

In China, business related to environment / energy has progressed with investment by

public budget such as tax and national debt, environment subsidy and investment support from

overseas like Japan as the main source of revenue. However, financial support from the central

government toward the local government (provinces, cities) is limited, and more than 80% of

urban environment measure cost has depended on local government. Therefore, while rich

provinces have rapidly advanced their social infrastructure improvement with their original

source of revenue, poor provinces have been caught in a vicious circle that less tax revenue has

delayed the social infrastructure improvement, and the delay has interfered their tax revenue

increase.

Reference: Financial System Reform in China

Large-scale financial system reform was carried out, and the financial contract system was

abolished. The tax was classified into national tax, local tax and joint tax revenue by country and

provinces, each of country and provinces established each tax organization, and the separated

tax system was introduced to gain revenue separately. Duty or consumption tax for extravagance

was considered national tax, and personal income tax was considered local tax. The increased

value tax (value-added tax) which occupies the most share in national tax revenue is considered

a joint tax, and its 75% was considered national tax, and 25% was considered local tax.

Concerning company income tax, tax revenue from companies managed by the central

government was considered national tax, and that from companies managed by local

government was considered local tax. In addition to the distribution of financial income,

concerning financial outgo, the responsibility for outgo of country and provinces was defined.

In addition to value-added tax or company income tax, tax system such as personal income

tax system was arranged, too.

After this reform, the share the central government occupied in national finance greatly

recovered, and increased from 22% in 1993 to 56% in 1994.

On the other hand, since the later half of 1990’s, the case that businesses related to energy /

environment are carried out by private investment from domestic companies or foreign capital

companies, has increased mainly in urban areas, and fund supply method and project

enforcement form have been diversified. In particular, private capital entry promotion plan

toward investment or management of city environment facilities, introducing PPP (Public

Private Partnership) method, has been positively carried out and it is assumed that businesses

which gain income from use rate or surcharge will be positively carried out.

50

The pollutant discharge rate system in China collects specific amount of money from those

who discharge pollutant into environment, according to the type, amount, and density of

discharged pollutant, on the basis of the related national rules. The system aims to promote

decrease and elimination of pollutant discharge by giving specific economic pressure toward

those who discharge pollutant, using value rule. The rates are generally imposed on waste water,

exhaust (including smoke and dust) and solid waste, but some provinces impose the rate on

noise pollution, too. The rate standard is decided according to type, amount, density and degree

of harm. In addition, the system deals with extra collection or remission method of pollutant

discharge rate, and manages and uses pollutant discharge rate.

As an option of project assumed in future, CDM (Clean Development Mechanism) is

assumed, which is supposed to be regulated in Kyoto Protocol. At present, in Japan, a lot of

feasibility studies are carried out with the aim of examining the possibility of CDM project and

investment environment for China.

In the following, abstract of each project option is described and the problems to introduce

projects are arranged and analyzed.

51

3.3 Scenario in Public Works Type of Project

As mentioned above, In China, business related to environment / energy has progressed

with investment by public budget such as tax and national debt, environment subsidy and

investment support from overseas like Japan as the main source of revenue. However, financial

support from the central government toward the local government (provinces, cities) is limited,

and more than 80% of city environment measure cost has depended on local government.

Therefore, the expansion of economic gap has promoted the gap of the situation of social

infrastructure improvement among areas.

In such a situation like this, Chinese government has attempted to strengthen the source of

revenue of the central finance, by introducing “separated tax system” in 1994, and, with this

source of revenue, attempted to make financial move system from central to local operated, but

that has not corrected the financial gap among areas yet. Concerning “Western Areas

Development” started in 2000, which aims to correct the gap among areas, the project fund of

several trillions of yuan is raised by government construction bond, private investment, foreign

capital and those who make profits in principal.

On the other hand, in China, as showed in the chart below, environment investment

necessary for achievement of environment goal reaches to 700 billion yuan, and furthermore, in

the period between 2006 to 2010, more than 900 billion yuan of investment is expected to be

necessary. The details of investment necessary for the achievement of goal are estimated to be

60 billion yuan from the central government, 334 billion yuan from local governments and 306

billion yuan from private companies, and, in particular, the environment measure investment

from the central government and private companies are big.

52

Table 3.3-1 Environ mental policy and investment for accomplishment

unit: 10,000t, 100m Yuan

current

reduction amt.

new emission

amt.

total reduction

amt.

investment cost

significant investment point

2006-10 investment

forecast

SO2 199 261 460

coal cleaning, electric power generation desulfurization

Dust 298 202 500 2,800 city gasification etc. 3,289

COD etc. 145 355 500 2,700 city sewage / industry sewage treatment

3,587

domestic waste 150,000 t/day hazardous waste 5,000 t/day Solid Waste medical waste 1,650 t/day 900 1,612

Ecological Conservation Policy

eco-model local development 500 700

Fundamental Development of Environment

environmental monitoring, research, technological development, education etc.

100 200

01-05 year environmental investment

total 7,000 total 9388

Source : Fujitsu Research Institute

It is expected that in China, public works related to environment / energy using pure public fund

(including support from overseas) are limited to areas where such a positive investment from

private or foreign capital as “Light Manufacturing Process” which is a solar energy project

targeting poor areas like Hsitsang, Kansu or Inner Mongolia.

53

3.4 Scenario in PPP Type Project Enforcement

In China, foreign capital used to be mainly introduced from investment by foreign loan

until 1980s, but, in reverse, direct investment has been increasing since 1992. On the other hand,

concerning the rate of private fund and public fund in foreign capital, in 1995, the rate of private

direct investment in foreign capital introduction was over 70%, but the rate of public fund was

only 10%. (Matsumoto, 2003) In future, it is expected that with WTO affiliation of China, the

opening of public works toward foreign capital will be promoted, and PPP type project form

using private fund will spread in China.

The following are the cases of PPP project in China.

The cases of PPP project in China. (IGES document)

■The sewage processing facility in Chiangsu

- The collection of sewage processing cost: First 0.2 yuan/ton 0.4 yuan/ton, 0.6

yuan/ton (a little private investment)

At present 1.15 yuan/ton (rush of private investment)

- In future, basically the improvement of sewage processing facility depends on private

capital.

■The sewage processing facility in Beijing economy development ward.

- The collection of 1.1 yuan/ton of sewage processing cost. A sewage processing

facility (BOT) was completed by American investment company on condition of 20

years’ management.

■The city garbage processing generation facility in Wenzhou

- Commitment of government: 1) Voluntary offering of processing site. 2) Payment of

73.8 yuan/ton of processing cost. 3) Purchase of all of the extra electricity at 0.52

yuan/kwh

- The construction of three garbage processing generation facilities by private

companies. (Two of them were completed and started to operate) When all of three

are completed, it will become possible to process 2000 ton a day (It will become

possible to process all garbage of city)

Shenzhen city, which is representative of cities introducing PPP project form, reflecting

WTO affiliation of China, announced their government policy that “ The city will open public

54

works more, and permit social capital or foreign capital to participate in construction and

management of public works in various forms such as independent investment or joint capital.”,

and decided to transfer some shares of 4 public companies engaging in energy, water and gas

supply, to foreign companies in the form of international bid in 2002. In August of the same year,

more than 60 internationally well- known companies, such as a French electric power company

or British water service company, which filled the two conditions for bid, (1) to be a strategic

investor (2) to be a internationally well-known company, or a predominant company in the field,

such as the world best 500 companies, made a bid. Four government companies of Shenzhen

energy group, water group, gas group and public traffic group, made an international bid, and

each of transferred shares is 25%, 45%, 40% and 45% in order. And public works, which

government had monopolized, were opened to foreign capital. In addition the city officially

announced 8 types of public companies, such as water supply, water pipe, gas pipe, community

bus, sewage processing, garbage processing, environmental hygiene service or medical waste

processing.

Shenzhen city is planning to select investment by enforcing an open bid toward

constructions of manageable public works such as water supply, gas supply or sewage

processing, and to encourage domestic and foreign economies to invest construct and manage in

the forms of independent investment or joint capital. The city will take in social capital into

government fund, but it plans not to open the constructions of unmanageable public works.

For the preceding enforcement of opening toward foreign companies in 8 types of

industries, each control organization fixed concrete monitor supervision ordinance. The

regulations in the ordinance are as follows.

The action of any company must accord with the related measures or requirements. Any

company must fulfill the definite promise made on a bid. When prices are raised, or cost is

collected for no reason, the government has the right to cancel and stop the contract.

When companies make price adjustment, they must report the adjustment plan to the

government control organization in advance. The price related organization examines and

authorizes it. The citizens can raise objection to it, too.

Prices are decided by the market. Generally, before a bid, the government makes the cost

assessment about the industry, holds a public hearing for prices and control the profit acquisition

rate of companies.

55

Mainly in big cities like Chingtao, the introduction of PPP project in social capital

improvement is promoted. Concerning the introduction of PPP project, the success of project

depends on whether the payment toward investment is possible or not. In the environment

investment priority areas like 47 environment conservation priority cities or areas whose

income is high because of a lot of foreign capital entry, the project technique by PPP is

considered to be effective, because the payment toward environment investment (charge,

surcharge) is possible, and the demand toward environment technology is high.

56

3.5 Scenario in CDM (Clean Development Mechanism) Project Enforcement

CDM provided in Kyoto Protocol, which is a form of warming prevention project carried

out between advanced countries (Annex I Country) and developing countries, is defined as a

scheme giving “Sustainable Development” to the host country and community, and carbon

credit (CER: Certified Emission Reductions) for usual profits to investors an businessmen

additionally. Also in the generation related project in AIJ (Activities Implemented Jointly)

carried out as a pilot project of JI/CDM from 1998 to 2000, projects toward China account for

16%, and many of them are large-scale. “Renewable Energy Project” accounts for 30% of all

projects (16), which comes after “Forestation, Reforestation and Forest Maintenance”

At present, each country, which ratified the protocol, has started feasibility study and

application of CDM project, and worked actively toward the publication of the protocol. China

as well as Southeast Asia, Central and South America, is important as a target area of projects,

and in Japan and each country in Europe, projects concerning energy conversion / efficiency

have been carried out. In CERUPT (Certified Emission Reduction Units Purchase Tender) by

Dutch government, wind generation project has been carried out as unilateral CDM in Inner

Mongolia, and its generation volume, credit period, assumed price and quantity of CER are

34.5MW, 10 years, 5.40 EUR/t-CO2 and about 670,000 t-CO2 in each. This project was

planned by the research institute under the control of Chinese national development plan

committee itself. Also, in Germany, a wind generation project has been planed.

The following list shows result examples of trial calculation of the economy and reduction

potential, concretely assuming measures technology introduced as CDM, toward Chinese

generation section and 4 industries with much energy consumption (iron and steel industry,

paper manufacture industry, cement industry and chemical industry)

Table 3.5-1 CDM potential in China (10000t-CO2)

Power station 2,788

Iron and steel 574

Paper manufacture 40 - 117

Cement 1,328

Chemical 862

Total 5592 - 5669

(from collaboration research MRI/Keio University)

57

Judging mainly from enforcement of projects to develop foreign investment business, it

seems that direct foreign investments including CDM and PPP make little difference in the

decision making mechanism. However, in CDM, it is possible to secure carbon credit (CER :

Certified Emission Reductions) in reward for additional cost occurring in certification or deal,

various risks with use of Kyoto Mechanism (risk resulting from project, risk resulting from

businessmen, risk resulting from system, risk resulting from price, risk resulting from politics),

and limit of selection toward transferring technology. At present, to make project schemes,

expecting profit on credit sale, involves some risk, because the separation of America from the

protocol, and uncertainty of ratification by Russia, make it impossible to expect high market

price of carbon credit. However, as for areas other than cities whose payment ability toward

investment is low for PPP type project, as a project form contributing to “Sustainable

Development”, renewable energy conversion business is assumed, as a project policy, which can

secure CER to the maximum.

Especially, in Japan, energy-saving device has progressed, limit reduction cost of CO2 is

high, and reduction in foreign countries is highly expected. In measures toward global warming

promotion scheme, 20 million ton is supposed to be reduced, which is 1.6% of emission in

1990(1,233 million ton), by Kyoto Mechanism, and, therefore, it is crucial to make an effort

toward Kyoto Mechanism.

58

3.6 Case Study of Solar Water Heater Introduction / Development

As a success example of solar energy utilization in China, solar water heater is taken,

whose household coverage reaches to about 5%(20 million households) in 2000. In China, with

improvement of life level, a lifestyle to use a shower at home is taking root. It is general to use

electricity as a heat source for hot-water supply, but increase of electricity consumption by use

of hot water is worried. Therefore, in China, at the same time with development of domestic

technology by cooperation among industry, the government and university, utilization of solar

water heater has been promoted, and as a result, the largest solar water heater market in the

world was successfully generated. Chinese government aims to cover 75% of new energy in the

Tenth Five-year Plan with solar energy and increase the household coverage to 25% by 2015.

More than 1,000 companies implement research, production, sales, installation service of a

solar water heater in China. Annual production capability is 6,100,000 m2. Solar water heater

possession amount is 26,000,000 m2 which is a top in the world (2000/e).

As of 2000, the market scale reached to about 6 billion yuan. As for structure of solar water

heater, vacuum tube type accounts for 65%, flat board type for 25%, and light collection type for

10%. While flat board type is popular in Japan, vacuum tube type is main in China. Solar water

heater is mainly installed in multifamily housing like apartment, it is also spreading to

single-family houses.

Figure 3.6-1 Product example of solar power heater

“High Economy” and “High Convenience”, in addition to increase of energy consumption

for hot-water supply by improvement of life level, are taken as reasons of rapid spread of solar

water heater in China. As for economy, in China where electricity / gas rate is high, the initial

cost by installation of solar water heater can be recovered in 2 to 4 years in case of electricity,

59

and in 4 to 6 years in case of gas. The following chart shows the economy comparison of gas

water heater, electric water heater and solar water heater.

Table 3.6-1 Economical efficiency of solar water heater (Shimizu 2001)

Vacuum tube water

heater TPH2.6/70C deg/ 140L

Gas water heater 60yuan/15kg

Electric water heater

0.8yuan/kW

Installation Investment 4275 About 1500 yuan About 1500 yuan

Installation use life More than 15 years 5 or 6 years 5 or 6 years

Water temperature and capacity 40/250L 40/250L 40/250L

Days of daily use 300days 300days 300days

Number of washing 5（wintertime） 5（wintertime） 5（wintertime）

Cost per person and day 0 0.5 yuan 1 yuan

Annual fuel cost 0 750 yuan 1500 yuan

Installation cost of 15 years 4275 yuan 4500 yuan 4500 yuan

Total cost of 15 years 4275 yuan 15750 yuan 27000 yuan

Yearly average cost 285 yuan 1050 yuan 1800 yuan

extinguishment year:(gas)4275/1050=4 years, (electricity)4275/1800=2.4 years

Solar water heater made in China is very convenient, because electric heater is built in it to

add heat after light collection, and to install other hot-water-supply device for backup is not

necessary.

In solar water heater development in China, basic research results were connected to its

production by cooperation among industry, the government and university. Especially, Seika

University, which is considered to be filling the role of traction, is contributing to its

popularization, by establishing an attached factory and company of solar water heater on

campus, making a product directly by the research results in the university, and selling the

production device / production line to the whole country. 50% of solar water heater

manufactured by the company established by Seika University, is exported to Europe, and

attracts attention as an export industry of energy field.

60

Its popularization is supposed to be promoted by the Tenth Five- year plan, as mentioned

above, and various policies for its popularization are being developed in the taxation system or

financing.

The following list shows representative examples of favorable treatment policies for

popularization of renewable energy including solar water heater in China.

Table 3.6-2 Favorable treatment policies such as taxation system, price or financing in

renewable energy introduction

Duties 3% to wind energy plant machine, 6% to wind energy generator, 12 % to PV system, compared with 23% to general consumer goods.

Value added tax 3% to bio gas related, 6% to small waterpower, compared with 17% of general value added tax.

Income tax 33% of company income tax collected by local government is omitted, and special system is introduced in each area.

Price policy Favorable treatment purchase price of renewable energy electricity ( enforced in some provinces)

Low interest financing system

Loan with half interest compared with the market, is accommodated to large/medium-size businesses related to bio gas, solar energy and wind power.

61

4. Construction / Evaluation of Renewable Energy Introduction Model in the Study Area

The application possibility of the scenario option described in the foregoing chapter, is

examined by setting concrete study areas. Taking the basic policies showed in 3.1 section into

consideration, Chingtao, Dalian and Tianjin in the Sea of Bohai and the Yellow Sea coast area

where environment deterioration by rapid urbanization, and increase of energy consumption are

expected, and some options toward investment necessary for social infrastructure improvement

are assumed, are selected as study areas.

The general conditions of each study area are described in the following.

4.1 General Conditions of Study Areas

The area including Dailian and Tianjin called “the Circum- Sea of Bohai Economic Block”

is the capital economic bloc where industries concentrate on surrounding the Sea of Bohai, and

is regarded as one of the Big Three economic blocs along with South China Economic Bloc and

Changchiang Delta Economic Bloc. It includes core cities, such as Dalian (Liaoning Province)

located in the Liaotung Peninsula, Tangshan, Chinhuangtao (Hepei Province), Yantai, Weihai

(Shangdong Province), along with cities under direct control, Beijing and Tianjin. It is

sometimes explained as “Circum- Yellow Sea Economi Bloc”, including Chingtao (Shangdong

Province).

Figure 4.1-1 Location of Study Areas

62

0 200 400 600 800 1000

100M yuan

primary

secondary

tertiary

Industry

Chingtao Tianjin Dalian

Figure 4.1-2 Industry Structure in Study Areas.

The Tianjin new port in Tianjin which is a representative harbor city in China, has the

most-equipped container berth, where the foundation of manufacturing industry has been

established, and industry infrastructure improvement has progressed. In particular, under the

geographic condition, investment from Korean capital concentrates on this area, and

embarkation of Japanese capital also stands out. Especially, in recent years, talent exchange,

technology exchange and investment have been carried out to encourage positive intra-trade,

regarding Kyushu area in Japan, Korea and China as “Circum-Yellow Sea Economic Bloc”.

As for the investment trend of the circum-Yellow Sea area, 191 out of 531 foreign

investments in Kyushu as of 2001, were directed to China. Among investments toward China,

148 were directed to circum-Yellow Sea area, which accounts for 77.5%. As for type of industry,

about 50% is manufacturing industry, and most of the embarkations aim at low production cost

in China or entry to Chinese market. On the other hand, the number of investments from Kyushu

to Korea is 33, which is not large with 6.2% of the whole investment numbers, but the number

combined with investments toward China accounts for 42.2%, which shows a close economic

relation between Kyushu and China / Korea. Korean market has been attracting attention again,

on the backgrounds of the positive invitation of foreign capital by economic structure reform or

deregulation, or the new relation between Japan and Korea with the joint World Cup as a start.

The investments of Korea toward China, such as the establishment of production position by

financial combine companies, have been favorably progressing. China occupies 41.9% of the

63

total of investments of Korea, and 75.6% of it concentrates in circum-Yellow sea area. It is

because the area, which is geographically close and has regular lines in Shantung Province and

Shanghai, is very convenient.

According to the result of last year, while Chingtao is considered an area suitable for solar

power generation, Tianjin and Dalian are considered an area in which hybridization of solar

energy and wind energy is effective.

0

5

10

15

20

1 2 3 4 5 6 7 8 9 10 11 12

Tianjin

0

0.5

1

1.5

2

2.5

3

1 2 3 4 5 6 7 8 9 10 11 12

Liaoning

0

0.5

1

1.5

2

2.5

3

1 2 3 4 5 6 7 8 9 10 11 12

Shandong

1

Solar advantage

Wind advantage

Figure 4.1-3 Solar / Wind Energy Potential in Study Area

4.1.1 Chingtao

located in the southernmost of Shantung Peninsula, is one of the Big Five trade port in

China, with 7,020 thousands of population (as of the end of 2000) and 10,654 km2 of area, and it

is also one of 15 economic center cities.

In the past, Chingtao underwent the occupation by Germany and Japan, and has been doing a lot

of trade with foreign countries since early times. The city was appointed to one of 14 coast open

cities of China in April, 1984, and gained province level of economic management authority as

an independent city in the national economy plan in October, 1986.

The city is one of the important production bases in spinning industry, light industry and

chemical industry. From 1980’s, new industries, such as electronics or bio, rapidly progressed,

and the city became a very important production base of China, especially in the field of

64

household appliances and information communication. In particular, the city has a lot of world

famous domestic companies, such as Chingtao Beer (beer, beverage), Haier (household

appliance) and Hisense (household appliance).

Gross domestic product (GDP) of 2002 is 151,820 million yuan, with 14.6% increase

compared with the preceding year. The details are 14,590 million yuan for the primary

industries (4.2% increase), 76,500 million yuan for the second industries (16.9% increase), and

60,700 million yuan for the third industries (14.7% increase), and the rate is 9.6%, 50.4% and

40% in each. The growth rate exceeds the goal by 12%, and the total economic power of the city,

which is in the eleventh place in the whole country, maintains a high standard.

GDP

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1987 1990 1995 1999

Shangdong Chingtao

Electrical Consumption

0

100

200

300

400

500

600

1991 1995 1999

Shangdong(Total) Chingtao(Total)

Shangdong(/capita) Chingtao(capita)

Figure 4.1-4 GDP and Electrical Consumption of Shangdong and Chingtao

Investment Situation of Foreign Capital

Chingtao has important investment wards like Chingtao bonded ward (Matsushita

Electronic Components went into), Chingtao high technology industry garden, Chingtao

ocean-bound economy and technology development ward, and Chingtao ocean technology

development ward, other than Chingtao economy and technology development ward, which

have a lot of investment projects from overseas. By the end of 2002, 13,183 cases of the

investment projects from overseas of all cities were admitted in total, and the total sum of

investments reached to 12,200 million US dollars.

65

Chingtao economy and technology development ward, which was approved and

established in 1984, is the first coastal economy and technology development ward in the whole

country, and aims to preferentially develop and preponderantly support leading industries, such

as petroleum chemical, electronic household appliances, harbor business, manufacture and

repair of ship, steel industry, automobile, biotic pharmacy, new type of building material,

sightseeing service.

In addition, preferential policies toward value-added tax, income tax, duty or import and export

duty, are applied to the companies which improve infrastructure facilities, such as water,

electricity, heat power, gas, traffic, communication or public business, and inject foreign capital.

From Japan, spinning, agricultural and marine processing, electron, transport and trading

concern companies have mainly gone into, and Mitsubishi Materials, Denso, Nichirei,

Katokichi, Mitsubishi Heavy Industries or Ebara Cooperation are taken as representative

companies.

Among countries, Korea is making the most amount of investment, and Hong Kong, Japan

and America follow it. It is because Chingtao is geographically close to China and Hong Kong.

0 50000 100000 150000 200000 250000 300000 350000

USD (10,000)

Korea

Hong Kong

Japan

USA

Taiwan

Singapore

Countries and Region of the investors

Figure 4.1-5 Investment Amount by Country

Present Situation and Problem of Energy Use

In Chingtao, electricity demand shows a tendency to increase by the rapid economic

development, and the coal consumption by power generation reached to 4 million ton / year, as

66

of 2002. 90 % of energy for heating depends on coal use ( 9 million ton / year) and coal is also

used as main energy at home and in factories. Therefore, air pollution often becomes a problem

in wintertime. For that reason, Chingtao is promoting to lower the dependence on coal to

prevent air pollution, by strengthening the regulation about sulfur content rate in coal,

improving the central pipe for heat supply, promoting energy conversion to natural gas, and

reducing coal boiler sharply.

On the other hand, as for the introduction situation of renewable energy, independent type

of solar water heater system is popularized in both urban and rural areas, and its popularization

rate is very high in China. However, it is pointed out that the system, which mars the beauty of

the scenery, is not appropriate for a sightseeing city, Chingtao, and installation of device taking

scenery into consideration has been examined. And wind power plant is installed in the

development ward by the joint venture contract among Chingtao High-Tech Park company and

German companies. This equipment, to which 25 million US dollars were injected, is a wind

power plant with 20,000 KWh of generation capability, and BOT system, 70% of whose fund is

invested by foreign capital, is adopted in it.

On the other hand, solar power generation equipment has not yet reached to the stage of

introduction. In addition, in rural area, a technology has been progressing, which makes

primitive biomass energy, such as firewood or feces and urine of domestic animal, the

mainstream gas.

Trend of Environment Policy

Environment policies in China adopt a system, in which the central government sets a goal, and

each autonomy achieves the goal by taking concrete measures. Especially, Chingtao has an

authority to make original laws or systems as a city under the direct control of the central

government.

The city was designated as one of “the Big Ten Large Environment Problem Cities” in

China in 1998, because of the terrible air pollution by the rapid economic development.

However, owing to the environment policies and action of the city, it was designated as

“Environment Model City” in 2000. The amount of investments related to environment

conservation was 3,213 million yuan, which accounted for 2.12% of GDP. 2,452 million yuan

was used for city environment infrastructure improvement, and 362 million yuan for prevention

/ measures of industrial pollution. The priority policies for environment measures are those for

sewage caused by life drainage or industrial waste water with the rapid industrialization, and for

air pollution such as sulfur dioxide or smuts by coal use (especially, the heating use in winter is

67

a problem.) In recent years, the problem of the disposal and recycling of construction waste

has been becoming big by building construction rush with economic development. In Chingtao,

yacht competitions are supposed to be held in the Beijing Olympics of 2008, and environment

improvement is an urgent matter for Olympics success, too. On the other hand, at present, the

city considers that the global warming is a problem not in urban areas but in rural areas where

methane gas is emitted by farm products or domestic animals, (the environment conservation

agency), and, therefore, measures for global warming are not taken as priority policies. It

accords with the policies in the whole country of China, as mentioned above, and concerning

measures for global warming of China, the necessity of business development combined with

area environment measures, such as those for sewage or air pollution, is pointed out. In

Chingtao, there is a case that improvement was carried out by BOT method, which uses foreign

capital, in the development and management of sewage processing facility, and the environment

for private fund use in social infrastructure improvement, is on the way to be arranged.

4.1.2 Dailian

Dailian is located in the southernmost of the Liaotung Peninsula in the northeastern China,

and surrounded by the Yellow Sea in the east, the Sea of Bohai in the west, and the Shangdong

Peninsula in the south. Dailian has had province level of economy management authority since

Dailian was ratified as a coast opening city by the central government in 1984, and appointed to

an ordinance-designated city in 1985. As of the end of 2002, the Gross Domestic Product of

Dailian was 140.6 billion yuan by estimate, which increased 14.1% compared with the

preceding year. The product of the primary industries reached to 11.84 billion yuan with 6.2%

increase, the second industries to 66.11 billion yuan with 15.1% increase, and the third

industries to 62.65 billion yuan with 14.8% increase. The ratio of the primary industries, the

second industries and the third industries in the Gross Domestic Product is 8.4 : 47 : 44.6. The

Gross Domestic Product per person is 25,276 yuan, which is equivalent to about 3,056 dollars.

Investment Situation of Foreign Capital

The number of newly admitted foreign capital companies in the city was 832, which

increased 15.1% compared with the preceding year. The amount of foreign capital of contract

base was 3,017 million US dollars with 20.6% increase, and the amount of foreign merchant

direct investment of actual use base was 1,603 million US dollars with 10.3% increase. 88 of the

investment projects by the newly admitted foreign capital companies are big projects with more

than 10 million dollars of investment. The production of foreign capital companies of the city

was 68,020 million yuan, which increased 15.9% compared with the preceding year, and the

main business income was 72,960 million yuan with 17.9% increase, and the total profit was

68

2,850 million yuan with 51.5% increase. Of the foreign capital companies, which have already

started business, the companies whose total profit exceeded 5 million yuan, was 136, which

increased by 30 companies compared with the preceding year.

Prevention of Environment Pollution

The city is recognized as a synthetic model city of city water environment quality and

quantity improvement technology by the national technology department. Therefore, the city

has sequentially strengthened the management toward old industrial pollution sources,

especially as reinforcement of water pollution measures, and is making management plans

toward 517 of pollution items. The total of investments has reached to 100 million yuan. In

addition, the city has thoroughly carried out the “Blue Sea, Blue Sky and Green Land” project,

and generally improved environment of neighborhood of airway and railway or boundaries

between urban and rural areas

4.1.3 Tianjin

One of the Big Four cities under the direct control of the Chinese central government,

Tianjin is the fifteenth largest city, and has an international port in the coastal area of China. The

city became a center of economy and trade in the north of China, because of its special

geographical location. The city has excellent cultures as well as the beautiful scenery and

abundant products. It is not only a sightseeing city with historical remains but also a modern

international port city.

The economy and social environment of Tianjin have rapidly progressed since the People’s

Republic of China was established in 1949. After the reform opening of 1980’s Tianjin was

designated as a coastal opening city by the central government and fastened the speed of reform

opening. Its economic power increased more, and the development of national economy made

a new step forward. The Gross National Product of Tianjin in 1992 was 41,120 million yuan,

which increased to 1.36 times compared with 1980, and by about 7.4% a year on average, and

GNP per person was 4,695 yuan on average. In Tianjin, 296,800 people are engaging in the

primary industries, 430,200 in the second industries, and 273,000 in the third industries.

Tianjin, which is a synthetic industrial base, forms 36 major industries, and has a industry

system with 180 departments. In 1992, there were 7,418 industry companies in all cities size and

over, and the cost price of fixed assets of industries is 45,850 million yuan, which increased by

3.3 times compared with 1980. Tianjin is the center of commerce and trade in the north of

China, and has a function to raise the effect of the distribution of products and supplies. In 1992,

69

the amount of product shipment toward the country was 22,540 million yuan, and the total sales

was 23,990 million yuan. The former increased to 1.61 times, and the latter to 3 times, compared

with 1980. In recent years, in Tianjin, international or regional wholesale markets of steel raw

material, petrochemical, steel material, spinning, automobile, coal, or pork, were constructed

one after another. The function centering commerce progressed more, and the lively prosperous

Tianjin markets became convenient for shopping. There are a lot of retail shops in addition to

domestically and internationally well-known department stores. There are six shops per 1 km2

on average, and a convenient shopping environment has been arranged.

Investment Situation of Foreign Capital

Tianjin has been making exchanges on the side of economy and culture with various

countries in the world since the reform opening. In 1993, the total of import and export reached

to 2,755 million dollars, and export occupies 1,928 collars. Recently, Tianjin carried out an

opening policy toward foreign countries, and formed economy and technology development

ward, new technology industry garden ward, and 12 small ward and prefecture economy

development ward, in succession. Furthermore, Tianjin became the center of modern and

synthetic Tianjin international economy and trade exhibition. The city offered a good place by

cooperation of international trade and economy. In addition, companies of joint venture,

cooperation management, and foreign capital management, made contracts with 6,136

companies from 1979 to 1993, and the city is forming friendly relations with 16 cities of 14

countries. It is also introducing foreign capital positively in improvements of infrastructure

facilities, such as city construction, traffic, energy or environmental preservation, and, therefore,

preferential policies are adopted mainly in development wards.

Prevention of Environmental Pollution

In Tianjin, from 2002 to 2004, the Big Six projects aiming at environmental preservation,

has been promoted, such as “Blue Sky Project”, “Blue Water Project”, “Noise Exclusion

Project”, “Eco Project”, “Industrial Pollution Prevention / Improvement Project” and “Cell

Culture Modeling Project”, and serious problems, such as the quality of air and water

environment, or garbage processing, are planned to be solved immediately. The city is

planning to be a environmental preservation model city of the nation, spending 3 years, by

bringing the amount of industrial pollutant discharge of the whole city to the national standard,

reducing more than 20% of sulfur dioxide (SO2) emission, bringing the quality of air and water

environment to the national standard, increasing the days when the air quality of the city reaches

to the second grade standard to 90%, bringing the ground water quality of the towns to the city

standard, and raising the rate of harmless processing to 80%. Grasping the chance of Beijing

70

Olympics, the city is making efforts to adjust the layout of industrial structure and city, develop

industries with high technology, high value-added and less pollution, increase natural gas use

vastly to 3 billion cubic meters, arrange power plants by coal and other coal boiler to remove

sulfur, construct 150 gas supplement station newly, use compressed natural gas for all of public

buses and hygiene environment improvement special cars, control air pollution effectively,

improve the national-class natural preservation ward 3 and the city-class natural preservation

ward 2, put emphasis on recovery and improvement of damp ground of beach and sea and city

ecology bloc, raise the quality of city environment, and form Beijing / Tianjin ecology bloc, by

2005 to 2010.

71

4.2 Influence Factor in Introduction / Development in City Area

As described above, it is an urgent matter for each Chinese city to tackle deterioration of

city environment with the rapid economic development, and environment measures projects

have been carried out on the basis of plans by the central government (five-year plans) and the

national goals. These environment measures put emphasis on the fields concerning area-level of

“sustainable development”, such as “air pollution”, “water pollution”, or “waste / recycling”,

and projects have been carried out according to the development stage of each city since 1990’s.

Many of the projects obtained good results, and, in particular, achieved the national goals or the

goals of each city toward “air pollution” and “water pollution.

However, the amount of investment necessary for environment projects is expected to

increase in future, too, and it seems difficult to cope only by public fund including expected tax

revenue and foreign support, and, therefore, the project form by PPP system, which uses private

fund by foreign capital and domestic companies, is demanded. As described in the case of

Shenzhen, the increase of chances of foreign capital entry by WTO affiliation of China,

increases foreign capital entry toward social infrastructure improvement in urban areas, and,

therefore, it is expected that project formations toward infrastructure improvement by

“commercial activity” will be positively carried out in urban area, which can obtain income such

as surcharge or charge. However, in the project fields or areas / cities which have difficulty

obtaining income, positive injection of private fund can not be expected, and, therefore, it is

crucial to carry out traditional type of projects by introduction of public find, or to give tax

preferential treatment to invite public fund, or incentive such as legal protection.

On the other hand, in China, there are only a few project incentives toward the reduction of

greenhouse effect gas to realize global “sustainable development”, because the present

environment measures put emphasis on “environmental pollution having a direct influence on

human bodies”. Actually, the projects to reduce greenhouse effect gas have not been carried out

positively, except some projects whose purpose is to appeal to the world. Therefore, at present,

in China, it is difficult to form projects putting emphasis only on reduction of greenhouse effect

gas, and it is demanded to form projects possible to secure “multi-benefit” including some

effects, such as living environment improvement, or contribution to economic development.

That can be confirmed from the truth that, in the pilot projects of CDM project by Kyoto

Protocol, which have been carried out for China in Japan and each country, many of them have

emphasized the effects by reduction of discharge of Sox or smuts, and reduction of project cost,

as well as security of carbon credit, as project benefits. Therefore, in introduction and

72

development of solar and wind energy power generation, it is necessary to establish technique to

introduce after evaluation of what kind of benefits are expected toward China, along with the

reduction of greenhouse effect gas, according to the area character.

The following shows the benefits assumed in introducing solar and wind energy to cities of

China.

- Reduction of air pollution substances (SOx, NOx, smuts)

- Reduction effect of greenhouse effect gas (CO2) (security of carbon credit)

- Opportunity loss by electricity shortage

- Improvement of living environment of citizens

- Maintenance of natural environment

- Revitalization of energy / environment industry

- Introduction / management cost

- Geographical condition

- Increase of opportunities to introduce foreign / private fund

- Reduction of energy transfer cost by reduction of fossil fuel use

These benefits are assumed to be directed to the whole world (global), the Chinese government,

areas / cities (and citizens), and businessmen.

The influence degree of influence factor by object in introduction of solar / wind energy, is

arranged as matrix in the following list.

73

Table 4.2-1 The influence degree of influence factor by object in introduction of solar / wind

energy

Global

Chinese

government

Areas /

cities Businessmen

Air pollution substances

(Sox,NOx,smuts) medium high high high

Greenhouse effect gas (CO2) high low low high

Electricity shortage low high high high

Living environment of citizen low high high low

Maintenance of

natural environment high medium medium medium

Revitalization of industry medium high high high

Introduction / management cost low medium medium high

Geographical condition low medium medium high

Increase of opportunities to

introduce fund medium medium medium high

Reduction of

energy transfer cost medium low low medium

*companies receive different influences according to project targets

74

4.3 Examination of Renewable Energy Introduction Model Targeting Chingtao

Targeting one of the study areas, Chingtao in Shantung Peninsula, the approach toward

introduction of renewable energy of solar / wind energy is examined, taking the foregoing

discussion into consideration, in the following.

Coal occupied 90% in the energy structure of Chingtao before. Therefore, air pollution

caused by mass discharge of SO2, NOX or TSP (Total Suspended Particles), was serious.

Chingtao government set air pollution improvement policies in 1996, and has wrestled with

them. The following policies have been taken concretely.

1) Reduce small coal boilers in the city.

2) Place an discharge limitation of pollutant toward companies which discharge

substance causing air pollution

3) Ban the use of more than 1% of high sulfur coal.

4) Ban the coal use in boiler fireplaces in the existing companies or buildings in each

ward of the city.

5) Promote concentrated heating supply, and switch to the use of city gas.

6) Arrange the coal market and plan to switch to the energy structure, in which high

quality coal supply is secured.

As a result, SO2 discharge of the city in 1999 decreased by 59%, and TSP discharge

decreased by 45.8%, compared with 1990, as well as NOx discharge.

Furthermore, as a long-term plan, the city is to limit the coal use in the primary energy, introduce

natural gas pipeline, and make efforts to improve energy structure more. On the other hand, in

order to reduce electricity use by warm water use, such as warm water shower, independent type

of solar warmer heaters are promoted, and the spread rate has reached to the top class in the

whole country. That the area gets a lot of sunshine, and is suitable for solar energy use, is taken

as that reason. On the other hand, the city is not positive toward discharge reduction of

greenhouse effect gas, and incentive toward discharge reduction does not work.

As for fund, the amount of investment related to environmental preservation by the city in

2003 was 3,213 million yuan, which accounts for 2.12% of GDP. The details are 2,452 million

yuan for environment infrastructure improvement, and 362 million yuan for prevention /

measures of industrial pollution. On the other hand, ODA of Japan toward China was 134,200

million yen in 2002, and it has amounted to 3 trillion yen in total.

Japanese government is taking a basic attitude for ODA that the support toward the self-help

75

effort by Chinese government, contributes to the sustainable development of the whole world,

which is very important. Of ODA toward China, the total sum of yen loan enforcement of

development support, targeting Shantung Peninsula including Chigtao, reached to 271,414

million yen in 2001, which was mainly used for infrastructure improvement of energy and

transport.

Table 4.3-1 Development Support of Japan toward China, targeting Shantung Peninsula

Item Sum (hundred million yen)

Enforced year

Completed year Support aim

Pumping-up power plant construction project

180.00 2000 Energy infrastructure

Yellow river Delta agriculture general development project 89.04 1999

Agriculture, forestry and fisheries infrastructure

Electricity transformation project

176.29 1998 Energy infrastructure

Waterworks / flood control facility improvement project 60.08 1998 Public welfare

infrastructure Thermal power plant construction project 570.82 1997 Energy

infrastructure Chingtao port front bay the second stage of construction project

27.00 1996 1999 Transport infrastructure

Chingtao development plan (waterworks / sewer) 25.13 1993 1995 Public welfare

infrastructure Port the second stage of construction project

60.89 1991 1995 Transport infrastructure

Chaingtao development plan (road) 88.00 1990 1996 Transport

infrastructure Chingtao development plan (communication) 40.34 1990 1995 Communication

infrastructure Chingtao port expansion project 570.00 1984 1994 Transport

infrastructure

Railroad construction project 397.10 1979 1985 Transport infrastructure

Port construction project 429.45 1979 1985 Transport infrastructure

On the other hand, the total of investment by foreign capital toward Chingtao, targeting

special economic zones, reached to US$85,585M in the period from 1995 to 2001, which shows

a rising tendency year by year. Particularly, as for energy concern, a joint venture contract to

construct a wind power plant with 20,000 KWh of power capacity, was recently concluded

76

among Chingtao high-tech park company and German companies and there are some cases of

investments from foreign capital toward renewable energy. In addition, French company is

developing a city water supply / sewage processing project, and “water business has been also

developed. Particularly, Chingtao is a sightseeing city where Beijing Olympics will be held in

2008 (yacht competition), and has been making developments in order to be a “circulating type

of city with arranged ecology environment”. Therefore, in the present situation, development

projects toward Olympics induce environment investment by foreign capital.

Judging from this situation, in introduction of solar / wind energy in Chingtao, adoption of

PPP type of project by foreign capital, which takes several benefits (multi-benefit) examined in

4.2 section into consideration as well as an economic viewpoint, is expected. As for concrete

locations, it is assumed that solar power generation will be introduced mainly to multi-family

housing and single-family housing, as a spread type of small-scale power supply, taking the

present spread form of solar water heater as a model, but it is difficult to establish a large-scale

of solar power plant for geographical environment in the city. On the other hand, as for wind

power generation, as seen in the aforesaid project case in the special economic zone, technique

to establish a large-scale wind power facility on the place where big demanders in coast

industrial areas and commercial areas gather, is assumed. In Chingtao, there is a potential that a

wind power plant is established on the ocean, and it is expected that it will be established in

consideration of the scenery, referring to the case in Denmark.

In the following chapter, a benefit analysis in an introduction / development of solar / wind

energy, is conducted, assuming a concrete energy introduction.

77

5. Benefit Analysis in Solar / Wind Energy Introduction / Development

This chapter examines benefits, possibility of cost reduction, and effects in introduction /

development of solar / wind energy toward China as renewable energy.

5.1 Way of Thinking of Benefit Analysis

As benefits of introducing solar / wind energy into China, the following items, which are

described in “4.2. Influence Factor in Introduction / Development in City Area”, are assumed.

- Reduction of air pollution substances (SOx, NOx, smuts)

- Reduction effect of greenhouse effect gas (CO2)

- Opportunity loss by electricity shortage

- Improvement of living environment of citizens

- Maintenance of natural environment

- Revitalization of energy / environment industry

- Introduction / management cost

- Geographical condition

- Increase of opportunities to introduce foreign / private fund

- Reduction of import cost of energy, such as oil

In the following, conversion of these benefits into monetary value is attempted.

(1) Reduction of air pollution substances (SOx, NOx, smuts)

As a direct method to measure benefits by reduction of air pollution substances such as

SOx or NOx, it is general to investigate how much money citizens intend to pay for reduction of

air pollution substances by CVM. However, it is impossible to find such data, and, therefore,

the amount of the government budget for reduction of air pollution substances is regarded as the

benefits.

As described in “3.3. Scenario in Public Works Type of Project”, Chinese government has

invested 280 billion yuan in five years, to reduce 4.6 million tons of SOx and 5 million tons of

smuts / dust. Therefore, benefit per ton of reducing air pollution substances is assumed to be

5,800 yuan / year.

78

(2) Reduction of Greenhouse Effect Gas (CO2)

Chinese government is not enthusiastic about reducing greenhouse effect gas. From this

viewpoint, benefit of reducing greenhouse effect gas is nothing. However, it is planned to

introduce CDM into the power generation department and the energy poly-consumption

department in China, as described in “3.5. Scenario in CDM Project Enforcement”.

Judging from the case of wind power generation in Inner Mongolia, the benefit of reducing

greenhouse effect gas is assumed to be 5.40 EUR/t-CO2.

(3) Opportunity loss by electricity shortage

China Electricity Power Co, which is the biggest power company in China, announced that

electricity shortage mainly resulted from increase of electricity consumption and large-scale

consumption type of industries by the high economic growth, and decrease of water-power

generation by drought.

In the north of China, electricity shortage has expanded by increase of consumption since winter

season began. According to China DatangPower Group Co., electricity has already been

running short, and in the peak hours of electricity consumption, even reserve electricity has been

running short. The company forecasts that this situation will continue until the end of winter,

and the shortage volume in winter might exceed that in summer, 19,610 thousand kW.

Coal, which the company uses for power generation, is also tending to run short because of

increase of the consumption, and the power generation capability itself is weakening. In some

fuel power plants, which have a reserve of coal only for 5 or 6 days, the stable supply of

electricity is becoming difficult.

Such electricity shortage causes not only opportunity losses by the decline of productivity, but

also direct economic losses by the raise of electricity rate.

The following are taken as steps toward electricity shortage in China, at present.

Steps by the administration

- Inspect equipment of enterprises with a big electricity contract.

- Change and adjust holidays of Saturday and Sunday into weekdays.

- Limit electricity supply to enterprises with a big electricity contract, which have no urgent

need.

- Request enterprises with big electricity consumption to stop their production equipment.

Rate adjustment

- Set the ratio of the rate in the peak hours from July to September to the rate in other hours

79

at 4:1.

- Limit the maximum supply from 13:00 to 15:00 to less than 90% of the normal maximum

supply.

- Charge the double of basic rate to the part of more than 90% mentioned above.

(4) Improvement of living environment of citizens

Improvement of living environment of citizens is included in the benefits showed in (1), if

it is considered to be a reduction of air pollution substances. To be able to use electricity freely

and secure a comfortable living environment by using air-cooling in summer and heating in

winter, are taken as other benefits. The newspapers say that in the north of China, electricity

shortage has expanded because of the increase of electricity use since winter season began, and

the shortage volume might exceed that of summer season. In addition, coal for power generation,

is tending to run short because of the increase of consumption, and the power generation

capability itself is weakening.

It is also necessary to measure how much money citizens intend to pay or receive by CVM,

in order to investigate the negative benefits, from which citizens suffer because of such

electricity shortage. However, it is also impossible to find such data, and therefore, fines for

illegal use of electricity are assumed as benefits.

The ordinance enforced in Beijing in September 1, 2003, is taken as a law against illegal use of

electricity in China. According to this law, a fine less than 5times of electricity rate is imposed,

in addition to the supplementary collection when illegal use is made. Because the electricity rate

(for business) is 0.83 yuan/kWh in Beijing, the negative benefit, from which citizens suffer

because of electricity shortage, is assumed to be 4.1 yuan/kWh.

(5) Maintenance of natural environment

In order to investigate benefits concerning maintenance of natural environment directly, it

is also necessary to measure how much money citizens intend to pay or receive by CVM.

However, here, maintenance of natural environment is assumed to be one of benefits by

reduction of air pollution substances.

(6) Revitalization of energy / environment industry

Revitalization of energy / environment industry is designed by introduction of solar / wind

energy.

The efficiency of crystal silicon battery made in China has reached to 11~14%, which is 2

80

points higher compared with the time of the eighth five-year plan (1991~1995). Although the

efficiency is a little lower compared with the world level, it has attained a pretty high level.

As for wind power generation, China Electricity Power Co. positively introduced it as a

main player. So far, as for capacity, wind power generation facilities with more than 405

thousand kW (China Electricity Power Co. 300 thousand kW) (the dispersive type 2,000kW),

have been provided, and as for technique, about 90% home production has started on a

200kW~300kW scale. The home production rate of sample machines with 600kW has attained

about 80%, too.

It is expected that the annual development use of new energy and renewable energy in

China (do not include the use in traditional ways of small-scale water-power generation and

living thing energy), will attain 13 million tons standard coal in 2005. This is equivalent to

reduction of discharge of almost 10 million tons greenhouse effect gas by coal and over 0.6

million tons sulfur dioxide and dust. Hereby, the situation that electricity is not provided for

farmers and herders of 1.3 million families in remote regions (about 5 or 6 million people) will

be improved, and jobs for 200 thousand people will be created.

Furthermore, the annual production capability of solar water heater in the whole country

will attain 11 million m2 in 2005, and its holdings will be about 64 million m2. The annual

production capability of solar battery will be 15TW in 2005, solar industry with applied

apparatus and peripheral parts will be created and the total of holdings will attain 53TW. The

capacity of wind power generation facilities will be 1.2GW in 2005, and manufacture capability

of facilities of about 150~200 MW will be secured.

The settlement of environmental preservation industry will attain 200 billion yuan in 2005.

It is predicted that environmental preservation facilities will account for 27.5 % of the total,

which is 55 billion yuan, synthetic use of resources for47.5%, 95 billion yuan, and

environmental service for 25%, 50 billion yuan.

(7) Introduction / Management Cost

In 2001, the average wholesale electricity rate with tax included of the former China

Electricity Power Co.-affiliated power plants was 0.281 yuan/kWh, and the average selling

electricity rate with tax included was 0.396 yuan/kWh. As for the wholesale electricity rate, it

was on the order of 0.399 yuan/kWh of East China, 0.292 yuan/kWh of North China, 0.284

yuan/kWh of Northeast, 0.259 yuan/kWh of Central China, 0.206 yuan/kWh of Northwest and

81

0.186 yuan/kWh of South. The level of Kuangtung Province, 0.44 yuan/kWh is higher

compared with other areas. On the other hand, as for the selling electricity rate, it was on the

order of 0.459 yuan/kWh of East China, 0.418 yuan/kWh of Northeast, 0.398 yuan/kWh of

North China, 0.380 yuan/kWh of Central China, 0.316 yuan/kWh of Northwest and 0.273

yuan/kWh of South. The level of Kuangtung Province, 0.72 yuan/kWh is higher compared with

other areas. The selling electricity rates classified by objects of supply, are 0.69 yuan/kWh for

commerce, 0.59 yuan/kWh for lightings for non-citizens, 0.52 yuan/kWh for non-industry /

normal industry, 0.38 yuan/kWh for large industry, 0.38 yuan /kWh for citizens and 0.33

yuan/kWh for agriculture.

On the other hand, the unit rate of solar power generation is 4.3 yuan /kWh in Japan. The

average level of the rate of wind power generation connecting to the power transmission

network is 0.60~0.70 yuan/kWh. Therefore, by introducing solar power generation, a negative

benefit of 3.6~3.9yuan/kWh is assumed. In addition, as for wind power generation, a negative

benefit of –0.09 ~0.37 yuan/kWh is assumed.

(8) Increase of Opportunities to Introduce Foreign / Private Fund

Since 1980’s, China has been gradually advancing the opening of energy field toward

foreign countries, and attracting a lot of foreign investors. Electricity industry, which is an

energy department that China has been introducing the most foreign capital, and in which the

total of investment by foreign capital has reached to 17.2 billion dollars, has been advancing

various power supply developments, such as thermal power generation, water power generation

heat multiple benefit generation or nuclear power generation. In addition, as for solar / wind

energy, technologies have been actively introduced from overseas.

(9) Reduction of Import Cost of Energy, such as Oil

China has entirely converted to an oil import country since 1993, and the import has been

increasing year by year. Especially, in 1999, the entire oil import increased to 28,580 thousand

tons from 13.5M tons of 1996, and furthermore, in 2000, it exceeded 60,000 tons.

According to the people concerned with the government, it is predicted that in 5 years

hence, Chinese national economy will continue the development of about 7 %, and the demand

for crude oil will show increase of about 4 %, but the production of crude oil in the country will

show increase of only 2%, and therefore, the tendency of shortage of crude oil supply will

become more and more conspicuous. According to another test calculation, it is predicted that,

in the period 2010 - 2015, annual oil import will reach to 180~250 million tons, and,

82

furthermore, in around 2020, China will be the leading oil products import country in the world.

It is necessary to consume a large quantity of fossil fuel in order to generate electricity.

However, it discharge a large quantity of greenhouse effect gas, and, therefore, to accelerate the

development of new energy power generation applies to the need of future sustainable

development. Technologies substituting for oil, such as new energy, which decrease oil import

as well as environmental pollution, are very important in energy security. New energy and

renewable energy will meet the social energy demand in the aspect of social sustainable

development in future.

83

5.2 Cost Reduction Effect by Introduction / Development of Solar / Wind Energy

Cost reduction effect by introduction / development of solar / wind energy in China, is

examined in this section. The following are taken as influence factors toward cost reduction.

- Mass production effect

- Technical innovation

- Reduction by production in China

Mass Production Effect

Cost reduction by economy is found in any kind of technology. This phenomenon is

represented by the experience curve in general. The experience curve represents the relation

between price and cumulative production or technology use, and it is given by the following

equation.

The experience curve equation; Pt = P0*X-E

Pt; Price at year t

P0; a constant equal to the price at one unit of cumulative production

X; cumulative production

E; experience parameter

Progress ration; PR = 2-E

Figure 5.2-1shows the experience curve for photovoltaic modules on the world market for the

period 1976-1992. The data indicate a steady, progressive decrease in prices through cumulative

sales, which are used as the measure of the experience accumulated within the industry. The

relationship remains the same over three orders of magnitude.

From this relationship, the experience curve is represented as follows.

Pt = 32 * X-0.29

84

Figure 5.2-1 The relationship between the cumulative sales and prices of solar battery

module

Wind power is an example of a technology, which relies on technical components that have

reached maturity in other technological fields. The experience curve for wind turbines in Figure

5.2-2 shows a modest progress ratio of 96%, corresponding to a learning rate of 4%.Neij (1999)

suggests that most of the progress is due to progressive increase in turbine size.

From this relationship, the experience curve is represented as follows.

Pt = 1170 * (X/10)-0.041

Figure 5.2-2 Experience curve for Danish Wind Turbines, 1982-1997

85

Technical Innovation

Pigment sensitization solar battery, spherical silicon solar battery and high condensing

solar battery are taken as technical innovations in solar battery.

Pigment sensitization solar battery is an electrochemical solar battery using titanium dioxide as

electrode material, and is attracting attention as solar battery, which can supply electricity more

cheaply than silicon solar battery. Electrochemical solar battery has a theory to put electrolyte

solution dissolving substances, which are easy to suffer oxidation-reduction, such as iodine,

between electrodes, and change hole and electrons occurring in titanium dioxide electrode, into

the current cycle, using the oxidation-reduction power of iodine. It is also called wet solar

battery because it uses electrolyte solution, and, in contrast, pn joining type of solar battery, such

as silicon solar battery, is called dry solar battery.

Although the light energy conversion efficiency of electrochemical solar battery was about

one-tenth as high as that of silicon solar battery at first, transparent electrode, which fixed light

sensitizer (Ru complex)in titanium dioxide madreporite using minute particles, was developed

by Krechel of Switzerland in 1991, and the light energy conversion efficiency of the pigment

sensitization solar battery using this, became 10%.

Furthermore, pigment sensitization solar battery is easily made compared with silicon solar

battery, and, therefore, it is possible to set a low price. In addition, it is also possible to make it

light or various shapes or colors, and, therefore, it can be placed anywhere. At present, the

efficiency of pigment sensitization solar battery is reported to be 11 % at most, but the efficiency

of the theory limit solar battery energy is said to be 33%. As for production cost, amorphous Si

solar battery is estimated to be 100 yen/W, and single crystal Si solar battery is estimated to be

360-1000 yen/W, but, in contrast, pigment sensitization solar battery is estimated to be 74

yen/W (10MW/year, n: 11%, calculated by Ishihara Sangyo), or 60-100 yen/W (10MW/year, n:

11%, calculated by Gregg of American NREL).

Spherical silicon solar battery was developed by Clean Venture 21 Inc. Poly-crystal Si

series solar battery is currently the most popular from the viewpoint of conversion efficiency

and durability, but it has a big problem in the aspect of cost. Low cost will be requested in future.

On the other hand, film solar battery, which has been developed for the purpose of reducing

material cost, has a lot of problems especially in the aspect of durability, and has not reached to

the level to substitute for poly-crystal Si series solar battery. In this situation, as a result of

86

establishing technology to produce spherical poly-crystal Si 1 mm in diameter at a low cost and

high speed, and developing solar battery cell structure which carries this poly-crystal Si ball in

the center of bowl type of basic plate serving as a reflecting mirror, it becomes possible to

realize poly-crystal Si series solar battery with a low cost, which reduces Si use to about 1/10.

Poly-crystal Si balls are obtained at a ratio of 10,000 particles per second, by spurting Si heated

to 1,600 degree C and melted, into inert gas from a nozzle about 0.5 mm in diameter of crucible

bottom end, and causing recrystallization in the process of natural fall. Furthermore, pn

jointing is continually formed by making n+diffusion treatment at a high speed on the surface of

Si ball in the process of natural fall. As for bowl type of fixed micro condensing reflecting

mirror, the most suitable design has been developed so that annual power generation will come

to the biggest, and it is planned to develop technology mounting 100 pieces of poly-crystal Si

balls simultaneously toward 20 cm width seat type of basic plate serving as a reflecting mirror,

and finally make solar battery module.

According to the test calculation, it has a possibility to attain about half as much as the

production cost of poly-crystal Si series solar battery, and it is expected to be widely applied as

solar battery with low cost.

Figure 5.2-3 Image of fixed micro condensing type of spherical silicon solar battery

Research of high condensing solar battery, combining super high efficiency joining

condensing cell supplied by Sharp, with non-contact Fresnel condensing lens parts supplied by

Daido Metal, has been carried out by the fund of NEDO. Non-contact Fresnel condensing lens

has a secondary optical system of structure to correct lens color aberration, and irradiate

uniformly square condensing light matching to the shape of cells, to cells, and control color

87

aberration and irregular condensing strength by solar battery side. It makes it possible to cool

down naturally without heat sink by applying mounting by epoxy conducting heat.

Research has been carried out, aiming at 40% of cell conversion efficiency in 500 times

condensing, 100 yen/W of module cost, and 100 MW of annual production.

As for wind power generation, basic technology innovation can not be seen, but to make

windmills bigger or place them on the ocean or mountains has been examined.

Reduction by producing in China

When solar battery is produced in China, how much the cost decrease is examined. The

following chart shows the breakdown in the end cost of manufacturing a solar cell. As this chart

shows, silicon wafers account for three-fourths of solar battery cell price. The biggest advantage

of producing in China is the low wages. However, according to this chart, wages accounts only

for 8.3% in the cost of manufacturing a solar cell, and, therefore, even if wages decrease to

one-tenth, the decline of price will not reach to 10%.

Labour8.3%

ElectricalEnergy2.7%

Sillicon Wafers75.1%

Silk Paste10.8%

ChemicalProducts

3.1%

Figure 5.2-4 Percentage breakdown in the end cost of manufacturing a solar cell

Next, an installed solar battery module is examined. The following chart shows percentage

breakdown in the final cost of an installed PV module. It is module price that accounts for about

50% of an installed PV module, but installer’s margin and manufacturer’s margin account for

36.4% in total. It might be able to reduce installed PV module price by reducing these margins.

88

Installer'sMargin30.6%

Manufacturer'sMargin5.8%

Transport1.9%Installation

10.0%

Engineering5.0%

Module Price46.7%

Figure 5.2-5 Percentage breakdown in the final cost of an installed PV module

89

6. Conclusion

In this report, the scenario development for introduction of potential solar and wind power

energy in China discussed last year and the benefit analysis of these energies introduction were

performed. The results are shown below.

In order to introduce solar and wind power energy, it costs 3.6 yuan/kWh -3.9 yuan kWh

for solar power generation and -0.09 yuan/kWh- 0.37 yuan/kWh for wind power generation. In

the case of wind power, this is less than 1.5 times of the average electricity charges in China, on

the other hand, it means 5 to 10 times by solar power generation..

This shows that solar power and wind power do not have cost competitiveness as compared with

the power generation equipment by the fossil fuel consisting mainly of coal and oil, when only

introductory cost is evaluated.

On the other hand, in the whole country, especially a city part, electric power shortage is serious

by rapid economic development, and residents' negative benefit to this electric power shortage

can be estimated at 4.1 yuan /kWh at maximum.

As a result, when the cost by the electric power shortage risk is taken into consideration,

supplying electric power by solar and wind power will be enough realized on benefit analysis.

Thus, introduction of the solar and wind power in order to compensate the electric power

shortage risk of a city part contributes also to reduction of the air pollution substance. This is

nearly equivalent to 5800 yuan / year per ton of air pollution substances, as estimated in Chapter

5. It is estimated that the air pollution substance of 600kt is cut down by the introduction of

alternative energy including solar and wind power energy and renewable energy in 2005. This is

equivalent to 3,480 million yuan. Moreover, it contributes also to reduction of the global

warming gases. The benefit of greenhouse gas reduction is 5.1 EUR/t-CO2. Since it is assumed

that reduction amount in above 2005 is 10 million ton, the effect is estimated to be 54 million

EUR.

Since the fund from Chinese government for air pollution substances and foreign

investment for the greenhouse gas reduction are expected, volume efficiency of solar and wind

energy is demonstrated, and reduction cost is further aimed. Moreover there is possibility of 1/2

-1/10 reduction of current value of solar power generation by various technical innovation

shown in Chapter 5. For these reasons, the solar and wind power energy are consider to be

introduced in China.

90

Reference

Takanobu Kozugi : Quantitative Study on Cost-effectiveness of Technology Introduction of

New Energy in China, Ritsumeikan University, policy studies, 2002

Shen Zhongyuan et al:Potentiality of Energy Saving in China, IEEJ, 2003

Miao CHANG : Study on Financial Mechanisms for Urban Environmental

Infrastructure in Asi, IGES, 2003

Jyusen Asuka : Economical Evaluation of International Cooperation for Global Warming and

Concept of Japanese policy response, Tohoku University, 1999

Jin Jianmin : Marketability of Chinese Environmental Business and Japanese-affiliated firms,

Fujitsu Research Institute Research Report, 2004

Cabinet Office : “Research on Public-Private Partnership for Efficiency of International

Economy cooperation” Report, 2000

The Institute of Developing Economies : Machine Industry in Japan and Asia, IDE Study Report,

2002

International Energy Agency : Experience Curves for Energy Technology Policy, OECD/IEA,

2000

International Energy Agency : China's Worldwide Quest for Energy Security, OECD/IEA, 2000

Kosuke Kurokawa : Energy from the Desert, OECD/IEA, 2003

http://www.cv21.co.jp/

http://www.cjcci.biz/sansi_pdf_2003/pdf/2-1-4.pdf