China's electric network of future on drawing board

President of Alstom Grid has bright outlook on the transmission sector

An old Chinese saying, that "where water flows, a channel is formed", may well describe Alstom Group's grid business in China.

The French multinational conglomerate has invested heavily in China, making it a priority in its global power transmission strategy, and building five factories and an R&D center costing 47 million euro ($65 million) in the past six years.

Capacity of those factories is, in fact, much greater than the domestic orders it has received, and they have also served as a production base for its exports.

Gregoire Poux-Guillaume, president of Alstom Grid, said, however, that the company is "ready to fully load these world-class assets".

Poux-Guillaume's remarks came amid an investment gala for grid businesses in China. The State Grid Corp of China (SGCC), the country's largest utility serving more than 1 billion customers in 88 percent of the territory, said in January that it plans to invest 381.5 billion yuan ($62.6 billion) in grid construction this year, up nearly 20 percent year-on-year. That compares with grid investment with annual growth of less than 5 percent over the past five years.

"High-voltage direct current transmission and the smart grid are the most promising sectors of the world grid market, especially in China," Poux-Guillaume said.

He said such business is fueled by two urgent needs in China: long-distance electricity transmission and integration into the grid of a growing amount of renewable energy.

"In China, the sky is the limit. It is such a big market that if China makes smart grid technology a priority, I'm sure it will be the leading smart grid market very soon," said Poux-Guillaume.

China's energy resources tend to be far from the load centers. Nearly half of its coal reserves are in the north and about 80 percent of hydropower resources are in the west, but its main demand is located in the east and south.

For example, power consumption in Jiangsu province to the east accounts for more than 9 percent of the country's electricity usage, according to Qianzhan.com, a research report provider.

High-voltage direct current transmission or an ultra-high voltage (UHV) grid, which can keep transmission losses at a manageable level, becomes a logical choice.

In fact, a major focus of SGCC's investment this year is building a UHV grid.

The catalyst for growing China's UHV grid network is the country's urgent need to tackle air pollution as the smog problem has spread from major northern cities to eastern and western regions.

One countermeasure is the encouragement of long-distance power transmission in order to reduce coal consumption, which is regarded as a major source of the pollution.

The SGCC proposed developing the Strong & Smart Grid in 2009, based on a UHV backbone. Construction of key elements took place during the 12th Five-Year Plan period (2010-2015).

"Reducing smog has become a national campaign, and that will be a good opportunity for SGCC to get approval for new UHV grid projects," said Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University.

The global electricity demand is forecast to increase by as much as 70 percent by 2030, and 80 percent of that growth will occur in non-OECD (Organization for Economic Development and Cooperation) countries, including 38 percent in China and 13 percent in India, according to the World Health Organization.

According to the International Energy Agency, China is set to become the biggest country in terms of renewable power generation by 2035.

Top 10 trading partners of the Chinese mainland	China's top 10 richest cities