By Liang Yangchun & Shan Baoguo, Research Department of Industrial Economy, the DRC

Research Report No 50, 2009

I. Contents of Electrification

Electric energy is a secondary energy with high quality converted from various primary energies. It can be easily converted into driving force, light, heat and other forms of energy. In addition, electric power can be conveniently used and widely controlled. These characteristics of electric energy determine that it is widely used in the national economy and occupies an important position in the energy system. In most phases of China's economic development, electric power consumption has far outpaced the growth of energy consumption and played a more and more important role in energy consumption. During the 1980~2000 period, China posted a 9.9% average annual GDP growth, with a 4.2% average annual growth of energy consumption and a 7.9% average annual growth of electric power consumption. In this period, China's energy elasticity coefficient and electric power elasticity coefficient were respectively 0.43 and 0.8. In the 2000~2006 period, the demand for energy and electric power rose rapidly as a result of accelerated industrialization and urbanization. The average annual growth rate was 10% for energy consumption and 13.2% for electric power consumption, while the average annual GDP growth for the same period was 9.9%. The elasticity coefficient was 1.0 and 1.33 respectively for energy consumption and electric power consumption.

Electrification is a process to convert primary energies into electric energy. It is also a process in which the demand for electric power in substitution of other forms of energy constantly grows. In general, the level of electrification can be measured with two indicators. The first is the ratio of the energy consumed for power generation to the consumption of primary energies, which reflects the position of electric power in the energy system. The second is the ratio of electric energy consumption to the end energy consumption, which is used to measure the levels of electric power consumption by various kinds of users and explains the role of electric power to social and economic development. The calculating formulas for the two indicators measuring the level of electrification are shown in (1) and (2).

According to the above definitions, electrification is an important indicator to measure the relation between energy consumption and electric power consumption. Although the change in the level of electrification is determined by the energy consumed for power generation, the primary energy consumption or electric power consumption, and the end energy consumption, it is in fact a major expression of economic development, industrial structure, energy consumption structure, electric power consumption structure and technological advance.

II. Electrification Development in China

As a result of economic development, industrial restructuring, technological advance and the expansion of power-supply capacity, the level of China's electrification has continued to rise. Due to the impacts of economic structure, energy structure, technological advance and other factors, the change in the level of electrification has born different features in different stages of economic development.

1. Changes related to the level of electrification

(1) The change in the industrial structure is the chief factor causing the change in electric power consumption. Historically, the ratio of coal consumption to end energy consumption in China's primary, secondary and tertiary industries has been on the decline, while that of electric power and oil to end energy consumption has been on the rise. But as the ratios of coal, oil, electric power and other energies have different features in the end energy consumption in these sectors, the change in the structure of these sectors has a considerable impact on the structure of China's end energy consumption. As the energy consumption of the secondary industry claims the largest share of nationwide end energy consumption and coal claims the largest share of energy consumption by the secondary industry, the change in the structure of the secondary industry has a tangible impact on coal consumption. As the oil consumption by the tertiary industry claims a fairly large share of end energy consumption, the change in the structure of the tertiary industry has a tangible impact on oil consumption. Although electric power consumption does not claim an overwhelming share of the energies consumed by the secondary and tertiary industries, the ratio of electric power consumed by the two sectors to end energy consumption has been on the rise due to the continuous rise in the ratio of electric power consumed by the two sectors. And as the ratio of electric power consumed by the tertiary industry has been rising visibly, the ratio of electric power consumption to end energy consumption has risen most tangibly when the proportion of the tertiary industry in the national economy rose.

During the 1980~2006 period, electric power consumption nationwide grew at an average annual rate of 9.1%, reaching 2,824.8 billion kw/h. Specifically, the average annual growth was 7.6% for the 1980~1990 period, 8.2% for the 1991~2000 period, and 8.2% for the 2001~2006 period. The growth of electric power consumption has become faster since the 10th Five-Year Plan period. The structure of electric power consumption indicates that the secondary industry claimed a fairly large share of over 70% and the tertiary industry and the people's life claim a relatively low share of about 10%. The change in the structure of electric power consumption indicates that the ratio of electric power consumed by the primary industry has dropped year after year, at 2.9% in 2006 or 7.8 percentage points lower than in 1980. The ratio of electric power consumed by the secondary industry has been consistent with the change in the ratio of the secondary industry to the national economy. It fell first and rose later, at 81% in 1980, 79.4% in 1990, 72.7% in 2000, and 75.6% in 2006. The ratio of electric power consumed by the tertiary industry has been rising year after year, at 10% in 2006 or 4 percentage points higher than in 1980. The electric power consumed for daily life has been rising rapidly, reaching 11.5% or 8 percentage points higher than in 1980.

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