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OVERVIEW 3 CHAPTER I. INTRODUCTION. 3 I. Background 3 II. Why Renewable Energy China’s Energy Challenges. 4 A. Energy Security. 4 B. International Competitive Pressure 4 C. Health and Environmental Impacts of the Fossil-Fueled Economy. 6 D. Economic Impacts 7 III. Today’s Renewable Energy Industry in China 8 PART II. ELECTRICITY GENERATION TECHNOLOGIES 10 CHAPTER 2 WIND POWER. 10 I. Introduction. 10 II. The Resource Potential 10 III. Small-Scale Wind Turbines Development for Rural Area 11 IV. Grid-connected Wind Power Development. 13 V. Obstacles to Further Wind Power Development. 17 A. Price Barriers. 17 B. Other Pricing Issues 18 C. Government Policy and Development of an Indigenous Industry . 19 D. Quality of the Electric Grid. 20 E. Weak Resources Assessment Capability. 21 F. Lack of Financing. 21 CHAPTER 3 PHOTOVOLTAICS . 22 I. Photovoltaic Technology . 22 A. Market Overview 22 B. Domestic Manufacturing. 23 II. Photovoltaic Products. 24 CHAPTER 4 HYDROPOWER. 26 I. Medium- and Large-sized Hydropower 26 II. Small hydropower 27 III. Mini-hydropower 28 IV. Role of Hydro in Renewable Energy Policy. 28 CHAPTER 5 BIOMASS . 30 I. Introduction. 30 II. Gasification and power generation 30 III. The Biomass Technologies 31 A. Gasification Technology 31 B. Urban organic waste treatment technologies 31 IV. The Obstacles To Greater Commercialization. 32 A. Urban Wastes 32 B. Opportunities for Medium and Large Methane Projects from Organic Waste 33 C. Constraints to the Development of Animal Waste Methane Projects. 34 CHAPTER 6 GEOTHERMAL AND TIDAL ELECTRICITY GENERATION 37 I. Geothermal . 37 II. Marine Energy Technologies 38 PART III NON-ELECTRIC RENEWABLE ENERGY TECHNOLOGIES 41 CHAPTER 7 SOLAR WATER HEATING . 44 I. The Growing Industry. 41 II. The Technologies. 42 III. The Economics of Solar Water Heating 44 IV. Energy Displacement 46 V. Special obstacles and problems . 46 CHAPTER 8 SPACE HEATING. 48 I. Passive Solar Design in Housing. 48 2 II. Geothermal Space Heating and Other Direct Utilization 48 III. Biogas for Cooking and Lighting. 49 IV. Other Rural Methane Uses . 49 CHAPTER 9 ALTERNATIVE COOKING S. 50 I. Solar Stoves. 50 II. Biomass Cooking Stoves. 50 III. Stalk Gasification 51 PART IV. TOWARDS A SUSTAINABLE ENERGY PATH POLICY TOOLS 53 CHAPTER 10 RENEWABLE ENERGY POLICIES AND CHALLENGES . 53 I. Background 53 II. Phases of Renewable Energy Development . 54 III. Major Obstacles to Renewable Energy in China 56 A. Grid-Connected Renewable Electricity Generation Bulk Power 56 B. On-Site, Grid Connected Renewable Generating Technologies . 58 C. Non-Grid Connected Renewable Generating Technologies 58 D. Non-Generating Renewable Energy Technologies 58 E. Renewable Energy Cost Issues 59 CHAPTER 11 RENEWABLE ENERGY POLICIES ADOPTED IN OTHER COUNTRIES60 I. Mandatory Purchases With Set Percentages 61 II. Mandatory Purchases With Set Prices. 62 III. Open Tenders and Reverse Auctions 62 IV. Special Revenue Sources. 64 V. Economic Incentives 64 VI. Special Tariffs Net Metering. 65 CHAPTER 12 CHINAS CURRENT POLICIES ON RENEWABLE ENERGY . 66 I. Chinas Current Renewable Energy Policies 66 II. Chinas Legislative System and Law Making Procedures 72 III. Chinas Technical Progress and Environmental Policy. 73 IV. Chinas Anti-Poverty Program and Renewable Energy. 73 V. Police Implications and Recommendations for China 75 VI. Overall Goals75 A. Cost Reduction.75 B.Price Reductions..76 Recommendations76 A. Development of an IPP Industry and Active Wholesale Market for Their Power.76 B. Create a Strong Governmental Department to rcise Unified Management.77 C. Codify Laws and Strengthen Legislation77 D. Transmission/Interconnection Policies.78 E. Incentive Policies/Supporting a Domestic Renewable Energy Industry.79 F. Adjust Pricing Policies.80 G. Carry Out Additional Resources Assessment and Increase R IEA, Coal Ination, 1999 edition. C. Health and Environmental Impacts of the Fossil-Fueled Economy The harm done by China’s energy sector is perhaps the country’s most serious environmental problem. The impacts range from indoor air pollution through solid fuel stoves to massive air pollution in the cities to acid rain and forest and crop destruction. Rural areas still derive 57 percent of their energy used from firewood or crop stalks.v Firewood consumption is leading to forest destruction, greater water loss and soil erosion. In 1998, 78 percent of China’s residents burned coal or firewood. The harm caused by indoor air pollution is similar to that of smoking. In the rural areas, respiratory disease is one of the leading causes of death, claiming 1.46 million lives in 1995. It is the third cause of death in cities, taking more than 330,000 lives annually. Relative to other Asian cities, China does not fare nearly as well, as the table below shows. China’s Rising Carbon Emissions Million Metric Tons of Carbon 1989 610.24 1990 610.30 1991 638.74 1992 659.26 1993 711.86 1994 768.01 1995 787.62 1996 793.96 1997 785.49 1998 740.38 Source Energy Ination Administration 7 Table 1.2 Health Impacts of Air Pollution – China and Other Cities Error No bookmark name given.City Pop. -- millions Premature Deaths x1000 Chronic Bronchitis cases x1000 Respiratory Symptoms x1000 Beijing 7.0 10.3 81 270 Chongqing 4.0 6.3 44 172 Harbin 3.1 4.0 34 102 Jinan 2.5 5.0 38 135 Shanghai 9.0 3.8 28 105 Shenyang 4.0 4.9 38 129 Tianjin 5.0 5.7 43 151 Xian 3.0 4.1 35 106 Jakarta 9.7 6.3 47 142 Seoul 11.3 2.4 24 72 Kuala Lumpur 1.5 0.3 4 11 Manila 9.7 3.8 33 98 Bangkok 7.5 2.8 28 82 PRC Air Pollution How Bad Is It A June 1998 Report by the U.S. Embassy; “Air Pollution and its Effects.” World Resources Institute http//www.igc.org/wri/wr-98-99/prc-air.htm About 85 percent of China’s carbon emissions – ranking second in the world – were released by coal burning. Acid rain has affected more than one-third of the land in China, and the economic losses approach two percent of the entire country’s gross domestic product. A study estimated that China could eliminate its need to import grain if the haze and soot over grain producing areas was reduced. Researchers believe that haze may be depressing Chinas farm yields by 5 to 30 percent. In 1990-1996, the increased CO2 discharge in China accounted for over 90 percent of the increases in the world, and the result has been mounting international pressure to bring these emissions under control.vi Another impact of fossil-fuel use is the heavy water requirement, an issue of particular concern in Northern China. Today, about half of China’s cities face moderate to acute water shortages, and power generation is a major consumer of water. Water tables are declining and factories in the Shanxi Province have had to shut down for weeks at a time due to the lack of water, exacerbating unemployment. According to one World Bank estimate, water shortages in cities cause a loss of an estimated 120 billion yuan US11.2 billion in industrial output each year. Meanwhile, a 1,000 MW coal-fired plant in Shanxi Province consumes 4.3 liters per kWh. Since coal accounts for most electricity generation in China, the water requirements and the implications of water supply are serious. Top Carbon Emitters – 1998 Million metric tons of carbon U.S. 1,494.60 China 740.38 Russia 405.04 Japan 288.48 India 252.55 Germany 227.51 Britain 147.37 Canada 138.46 Source Energy Ination Administration 8 D. Economic Impacts The expansion of China’s renewable energy industry has created new employment opportunities for thousands of people. According to one estimate, the existing Rmb 10 billion US1.2 billion renewable energy industry provides more than 1 million jobs. Further development of the renewables industry will provide comparatively greater economic benefit than the fossil fuel industry. Evidence from the United States suggests that renewable energy generation is more labor intensive than traditional generation. Despite this fact, the overall costs of renewable generation are rapidly declining. According to one report from the U.S. Worldwatch Institute, generating one billion kilowatt-hours of electricity from coal or nuclear fuels requires only 100 to 116 workers, while a solar thermal facility provides 248 jobs and a wind farm provides 542 jobs. Given the lower labor costs in China than in the U.S., renewable energy will be more competitive than in developed countries. In addition, while more labor is needed to run a renewable facility, these costs are countered by the fact that no fuels like coal or oil are required. III. Today’s Renewable Energy Industry in China With advances in science and technology, China’s renewable energy industry has witnessed steady growth. In some technologies, notably solar water heating, China has a well-established industry with decent-sized export markets. Other technologies are rapidly moving towards commercialization. Chinese advances in some renewable energy technologies include * development of practical and commercialized units * basic design/manufacturing capacity for modern and large-scale units * establishment of national testing centers * training of technical personnel * new innovative technologies for development and application * continuous improvement of equipment perance, which is approaching international standards for many technologies. The table below summarizes where China’s renewable energy technologies are today. Jobs Provided by Generating 1 Billion kWh of Electricity 110 116248542Coal Nuclear SolarThermalWindfarm9 Table 1.3 Phased Assessment of China’s Renewable Energy Technology Development Types of Technologies Maturity and Development Phase R and 1, 2, 3, 6, 10, and 20-kW machines. Small wind power generators are composed of blades, turbine, gyro-rotor, tail wing, supporting pillar, batteries and a supporting pad. The blades turn the turbine and the electricity is then saved in batteries. The direct current stored in the battery can be converted into alternative current through a DC to AC converter and then transmitted to users. Such systems may provide power at different voltages such as 12 V, 24 V, 36 V, 110 V and 220 V as required. Of the 26 provinces, municipalities and autonomous regions with wind power applications, seven possess more than 1,000 small wind generator units. They are Inner Mongolia 140,000, Gansu 3,120, Henan 2,710, Ningxia 1,720, Xinjiang 1,680, Shandong 1,330 and Anhui 1,080. Twenty-five manufacturers produce small household wind power units. . China’s current assembly capacity for small wind power generator is 30,000 units per year. Major manufacturers are Shangdu Husbandry Machinery, Power Factory in Inner Mongolia and Shangxi Taiyuan 884 Factory . Recent years have seen exports of small wind power generators in limited quantity to Southeast Asian countries, Japan, Germany and Cuba. To meet the power needs of remote areas, experts have developed wind-photovoltaic and wind-diesel generation systems, though they remain at the experimental and demonstration stage. Sixteen sets of off-grid wind power and photovoltaic power generation systems are installed in Inner Mongolia. Experiments have shown that these technologies improve the security and reliability of power supply in remote areas. China’s wind development could reach as high as 100,000 MW. Total capacity in China today is 277,000 MW. 12 Small-Scale Technologies for Off-Grid Applications It is actually more advantageous to use small wind power technology than conventional energy supply in off-grid areas such as Inner Mongolia. Take the following example from a four-person family. Before the introduction of wind power, the family used kerosene lamps or candles for lighting, batteries for a small radio and a flashlight or Lantern for outdoor lighting – all for an average annual cost of Rmb 261. After installation of a 100-watt wind generator, annual expenditures declined to Rmb 222 under the same conditions. The new energy has not only saved herdsmen money but has improved the quality of energy supply. Table 2.1 Energy Consumption and Expenditures of Herdsmen Item Annual consumption Unit price Total Expenditures Yuan Illumination Kerosene 18 kg Rmb 1.60/kg 28.8 Illumination Candle 730 pieces Rmb 0.275/piece 200.75 Radio Dry battery 18 pairs Rmb 1.05/pair 18.9 Illumination for lamb birth Dry battery 12 pairs Rmb1.05/pair 12.6 Total 261.05 Consolidated data from ’ surveys. Table 2.2 Power Supply Costs of Mini Power Generator 100W wind power generator Battery Maintenance Subtotal Number unit 1 2 -- -- Price Yuan/unit 700 360 - -- Life span year 10 3 -- -- Average annual costs Yuan 70 120 30 222 Power output kWh/year -- -- -- 260 Power generation costs Yuan/kWh -- -- -- 0.85 Consolidated from surveys. Bank interest is not taken into account. The Obstacles Facing Small-Scale Wind Power Development In China, the sale of smaller wind power units has slowed. Some of the reasons include * Weak purchasing power and market demand Despite the strong need for power in rural areas and the constraints o