China Thermal Power Efficiency China Thermal Power Efficiency ProjectProject

WB support to the improvement of coal-WB support to the improvement of coal-firedfired

power generation efficiency in Chinapower generation efficiency in China

Jie TangJie Tang

Energy SpecialistEnergy Specialist

East Asia and Pacific RegionEast Asia and Pacific Region

Energy Supply to Sustain Economic Energy Supply to Sustain Economic Growth Growth

Increased demand on energy supply, less energy intensive, and sustainability

1. The 11th Five-Year Plan (2006-2010) doubling the GDP (2000 - 2010) Improving efficiency

reducing energy consumption per unit GDP by 20% (2005 to 2010)

Power sector: installation of large-sized, high-efficiency thermal generators and scale up efficiency improvement

2. The medium and Long Term Energy Conservation Plan reducing energy consumption per unit GDP by 2.2%

power sector highlighted for efficiency improvement

Coal as a Dominant Energy SourceCoal as a Dominant Energy Source

Coal accounts for about 65% primary energy supply in China, and will remain dominated until 2020.

CHALLENGES:

1. Long-term Energy Security Providing affordable and reliable energy supply - 40% oil imported

2. Local Environmental Impacts acid rains impact on agriculture and food security

SO2 emissions will double and NOx emission will triple from 2000 to 2020

particulates impact on population health cost of exposure to particulates for urban residents expected to rise

from $32 billion in 1995 to $98 billion in 2020 (WB: China 2020)

3. Global Environment Impacts – Climate Change High coal consumption is leading to increased GHG

emission

High fossil fuel consumption is leading to increasing Greenhouse Gas emissions

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1

2

3

4

5

6

719

9019

9119

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9419

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9619

9719

9819

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0020

0120

02

Billio

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m fo

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fuel

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China

Indonesia, Vietnam& Philippines

S. Korea, Thailand,Malaysia

USA

CO2 emission from fossil fuel consumption(Billion tons)

GHG EmissionGHG Emission

China’s CO2 emissions are expected to increase from 3.3 billion tons in 2000 to 5.7 billion tons in 2020 (IEA 2004)

World Bank SupportWorld Bank Support

Challenges

Energy Security

Local Env Impacts

Climate Change

Advices on legislation,

policies and sector regulation

Support technology transfer &

development – clean coal & EE

Support renewable energy

developmentSupport EE improveme

nt

Thermal Power

Efficiency Project

The Power IndustryThe Power Industry - Capacity - Capacity

Total installed capacity reached 442.4 GW by 2004, 12.6% increase Total installed capacity reached 442.4 GW by 2004, 12.6% increase from 2003from 2003

105.24 GW

329.48 GW

6.84 GW 0.82 GW

0

50

100

150

200

250

300

350

hydro thermal nuclear other

74.5%

23.8%

- 329.5 GW329.5 GW in in thermal, thermal, produced about produced about 82% of the total 82% of the total electricity output electricity output in 2004in 2004

- about about 50%50% of the of the total coal total coal consumption of consumption of 1400 Mtce in 1400 Mtce in 2004, was for 2004, was for power power generation.generation.

The overall efficiency of coal-fired generation is The overall efficiency of coal-fired generation is about 20% lower than best international practiceabout 20% lower than best international practice

Coal-fired Power GenerationCoal-fired Power Generation- efficiency- efficiency

199519901985

Mix of thermal power units in 2004Mix of thermal power units in 2004Unit Number of sets Average Gross

Efficiency (gce/kWh)

± 600 MW 53 328

± 300 MW 341 355

200 - 300 MW 218 340

100 - 200 MW 389 365

below 100 MW > 4000 > 390

Overall Efficiency ~ 352

Coal-fired Power GenerationCoal-fired Power Generation- Way to improved efficiency- Way to improved efficiency

Sector-wide approach toSector-wide approach to• Applying stringent efficiency standard on new capacity Applying stringent efficiency standard on new capacity

additionaddition• Phasing out small unitsPhasing out small units• RehabilitationRehabilitation

Barriers to Efficiency ImprovementBarriers to Efficiency Improvement - barriers to efficiency improvement of existing units - barriers to efficiency improvement of existing units

Regulatory barriersRegulatory barriers – Lack of adequate policies, incentives mechanisms & enforceable Lack of adequate policies, incentives mechanisms & enforceable

standards for efficiency managementstandards for efficiency management

– Lack of detailed regulatory provisions supporting implementation of the Lack of detailed regulatory provisions supporting implementation of the Medium and Long Term Energy Conservation Plan Medium and Long Term Energy Conservation Plan in the power in the power

sectorsector

Institutional barriersInstitutional barriers – Weak enforcement of government policies Weak enforcement of government policies – Weak supporting systems for efficiency managementWeak supporting systems for efficiency management– Lack of obligations or incentives to invest energy efficiency Lack of obligations or incentives to invest energy efficiency

improvements improvements

Technical barriersTechnical barriers– Lack of advanced technologies for rehabilitation of medium an large- Lack of advanced technologies for rehabilitation of medium an large-

sized unitssized units– Lack of advanced technologies for rehabilitation of plant auxiliary Lack of advanced technologies for rehabilitation of plant auxiliary

equipment to improve overall plant efficiencyequipment to improve overall plant efficiency

China Thermal Power Efficiency ProjectChina Thermal Power Efficiency Project- proposed for GEF Grant (US$19.7 million)- proposed for GEF Grant (US$19.7 million)

The project is designed to offer a systematic The project is designed to offer a systematic program to increase the overall efficiency of China’s program to increase the overall efficiency of China’s coal-fired power plantscoal-fired power plants

– Phase-out small-sizedPhase-out small-sized– Facilitate investment in rehabilitation / retrofitting of in-Facilitate investment in rehabilitation / retrofitting of in-

efficient thermal units through technical capacity building and efficient thermal units through technical capacity building and demonstrationdemonstration

There are three components: There are three components: – Enhancement and Enforcement of Sector Regulation on Enhancement and Enforcement of Sector Regulation on

EE EE A mandatory and incentive approachA mandatory and incentive approach

– Efficiency Improvement Demonstration Project Efficiency Improvement Demonstration Project (Rehabilitation)(Rehabilitation)

– Technical Capacity BuildingTechnical Capacity Building

China Thermal Power Efficiency ProjectChina Thermal Power Efficiency Project - Rehabilitation and technical capacity building - Rehabilitation and technical capacity building

Efficiency Improvement Demonstration Project -- Rehab.Efficiency Improvement Demonstration Project -- Rehab. Identify about 10 sets of potential units in different categories of unit size Identify about 10 sets of potential units in different categories of unit size

Technical auditing and justification (economic, financial, reliability)Technical auditing and justification (economic, financial, reliability)– Packaged solutions to unit / plant efficiency improvementPackaged solutions to unit / plant efficiency improvement– Financial justification / cost-effectiveness of individual as well as packaged solutionsFinancial justification / cost-effectiveness of individual as well as packaged solutions– Including environment project when possible – regulation requirements on emissions, financial Including environment project when possible – regulation requirements on emissions, financial

implication to plant ownerimplication to plant owner– Market demand and implementation scheduleMarket demand and implementation schedule

Development of new business and financing models for rehabilitationDevelopment of new business and financing models for rehabilitation– Competing with other initiatives on plant own working capital (annual budget for Technical Renovation Competing with other initiatives on plant own working capital (annual budget for Technical Renovation

Funds)Funds)

Rehabilitation of units & plants for demonstrationRehabilitation of units & plants for demonstration– about 57 units of 200MW and 57 units of 300 MW have similar type of technologies/design (double-flow about 57 units of 200MW and 57 units of 300 MW have similar type of technologies/design (double-flow

turbines)turbines)

Technical Capacity buildingTechnical Capacity building

TA to technology development and/or transfer to lower down cost of TA to technology development and/or transfer to lower down cost of rehabilitation and to explore further efficiency increase potentialrehabilitation and to explore further efficiency increase potential

Creation of awareness and dissemination of knowledgeCreation of awareness and dissemination of knowledge

Project Components Local Financing

GEF Grant

Estimated Total

  (US$m) (US$m) (US$m)

1. Enhancement of Regulation on Energy Efficiency

1.5 3.6 5.1

2. Efficiency Improvement Demonstration Project

85.5(79)

8.5 94

3. Technical Capacity Building 6.6 7.6 14.2

Total Project Costs 93.6 19.7 113.3

China Thermal Power Efficiency ProjectChina Thermal Power Efficiency Project - project cost and financing - project cost and financing

• Total cost estimation: $113.3 million

• US$93.6 million in counterpart funds, covering 100% of the capital investment in demonstration (US$79 million) and partial cost of technical assistance activities

• US$19.7 million GEF Grant, contributing to the cost of technical assistance activities

China Thermal Power Efficiency ProjectChina Thermal Power Efficiency Project - - GEF financing, carbon financingGEF financing, carbon financing

Carbon financing for rehabilitation – in considerations• Baseline: unit or plant itself - coal consumption rate and output (kWh)

before rehabilitation

• ERs – reduced coal consumption for same amount of output (kWh) after rehabilitation

• Methodologies – to be developed

GEF financing – contributing partially to the cost of

• Policy and regulation enhancement

• Technical auditing (bring international best practices when possible)

• Technical capacity building – rehabilitation technology, plant service efficiency

• Knowledge dissemination for replication

Thank you !Thank you !