China Readies to Support Renewable Energy

More news about China’s current 5 year plan, pardon the pun, the State Grid Corp of China will spend the equivalent of $314 billion between now and 2015, to upgrade the power transmission grid, with a quarter of it allocated to a network of ultra-high-voltage power transmission lines, able to distribute green renewable energy power from where it is generated to where it’s consumed.  Much of the rest will be used to hook up China’s rapidly growing onshore wind farms into the grid.

Below coverage of last week’s developments.

China to invest US$314bn in power grids to 2015
April 26th, 2011

The State Grid Corp of China intends to increase investment in the country’s power grids to CNY2.05tn (US$313.99bn) in the coming five-year plan, a 68% rise from the preceding period, reports the China Securities Journal.

Of the total amount, CNY500bn is earmarked for the construction of ultra-high-voltage power transmission lines and supporting distribution networks. A further CNY1.55bn will fund the building of conventional power lines and networks.

The state grid said it plans to build a network of ultra-high-voltage transmission lines by 2020 to connect major energy production plants in the northern and western regions with key power consuming areas, concentrated in the eastern and southern provinces.

Local companies that produce ultra-high-voltage networks include TBEA Co Ltd , China Xd Electric Corp and Chongqing ABB Ltd.

From our RMB perspective, this all adds to the debate about when China will have to turn importer of some of the REEs. After the disastrous events a Fukushima Japan, China has indicated greater emphasis is to be placed on non nuclear, non coal power generation, specifically accelerated interest in offshore wind farm systems of which China lags far behind the west. It’s unlikely that China will import more that the first few turbines. China will expect western firms to set up in China to meet China’s offshore demand. In March it was suggested that China might be an importer of some heavy REEs as early as 2014. There was a lot of skepticism around at the time. To me, this grid development plan suggests if not 2014 probably 2015. But it also suggests that between now and 2015, China will first cease to be an exporter at all. Stockpiling REEs ahead of anticipated needs 2015-2020 makes more sense than acquiring yet more US dollars that China doesn’t need.