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Investment Market of China Smart Grid Industry

In 11, smart grid was officially included in the 12th Five Year Plan, it was stated in the outline “to promote smart grid construction, strength city and rural electricity grid modification, improve efficiency and reliability of the grids”.

This is the second year of the SGCC smart grid construction project and it’s the year of importance. Under the conduction of the 12th Five Year Plan, SGCC focused on pilot projects to get great achievements in HVDC, EV station, rural grid intelligence. China Southern PowerGrid introduced its development strategy that build an intelligent, efficient and reliable green grid, initiated pilot projects in several fields like new energy grid connection and control, distribution automation and intelligence, storage and EV charging, etc.

Why developing smart grid?

1. To transfer economic development mode

Smart grid is the most important and efficient way for energy-conservation and environment-protection; it’s necessary for developing new energy vehicles, it’s the base for the integration of information technology and high-end manufacturing, it’s the engine of China economic development.

2. To reduce fossil energy consumption- for energy-saving andemission-reduction

Smart grid could improve efficiency in the use of fossil energy and reduce energy loss in operation.

3. To reduce fossil energy dependence- for energy safety

Smart grid could develop new energy and improve the energy structure, provide more energy sources.

4. It is necessary for the development of electricity grid

Smart grid could increase efficiency of the whole grid by improving electricity safety and reliability, increasing efficiency of resources and equipments, promoting technology, equipment, operation and management

5. It is necessary for economic development

With the developing of economic, the needs for electricity would be increasing; smart grid could solve the problem of uneven distribution of energy resources.

The development of China smart grid.

China was standing at the same scratch line with developed countries in the construction of smart grid, lots of the leading companies and research institutions have been

1. Put emphasis on the combination of transmission, distribution and the users.

Compared with the US, the electricity environment in China is so different, the distribution of energy resources and consumption as well as the monopoly electricity market decided that China would put more emphasis on the development of long-distance transmission, which means to give priority to transmission network, but on the customer side, in the short run, the utilities just need to develop the collection system.

2. Less distributed generation because of the concentrated distribution of energy resources

Energy resources are concentrated distributed in China, 49.25% of the coal is in the North, and 30.39% is in the Northwest; nearly 80%hydroelectricity is in the South and the Southwest; wind resource was mostly concentrated in the Northeast and Northwest. The concentration of resources decides that China have to develop large scale generation.

3. Electricity consumption is mainly concentrated in the Southeast

43% of the consumption is concentrated in the Southeast, which is far away from the resources in the Southwest and the Northwest, it means China need to develop long distance transmission network with higher capacity and lower loss.

4. The monopoly electricity market of China reduce the needs for intelligence on customer side

China electricity industry is not open to the market, the price was set by the government, SGCC and China Southern Power Grid monopolized the transmission, distribution and sale sectors. Customers have no opportunities to select electricity suppliers but accept the services provided by the 2 companies.

5. Difference in natural environment also decides the development of long distance transmission

According to the research, in several years, the market would benefit from ultra high voltage projects, smart transformer substation, distribution automation, smart meter, storage equipment and EV charging equipment.