China's Electricity Generation

For a sense of China's energy problems, travel 1,700 km west of Beijing to where the Jiuquan Wind Power Base is being built. By 2020 the installation is due to pump 20,000 megawatts into the Chinese grid, making it 25 times bigger than the world's largest wind farm today.

The development, just one of six wind power megaprojects underway, will barely make a dent on China's soaring energy demands. As China's population and industrial base continue to expand, the country does not just need more generating power—it needs grid efficiency, too.

Disqus: What can other countries learn from China’s approach to growth?

And for that the grid must be a lot more like a communications network.

According to the United States Energy Information Administration, by 2035 China will need 9.58 trillion kilowatt-hours of electricity generating capacity a year, representing an average growth of four percent a year over current levels.

Most of this will likely come from coal, but China, already the world's biggest renewable energy market, is keen to reduce coal's share of power generation from its current 80 percent level to around 66 percent in 2035. This has two important consequences for the grid.

First, renewable energy sources are not evenly spread out across the country. Projects such as Juiquan Wind Power Base and the Three Gorges Dam tend to be far west of China's main urban centers, needing long transmission lines over which significant power losses can occur.

Second, many sources of renewable energy, including wind and solar photovoltaic, are intermittent and output can rise and fall dramatically in a very short space of time, requiring the grid to rapidly switch to alternatives to even out the electricity supply.

Standard electricity transmission and distribution grids would struggle to cope with either of these issues.

But smart grids, which are essentially equipped with native intelligence similar to today's information and communications networks, can manage far more easily thanks to their ability to monitor and control the distribution of electricity.

On the transmission side, voltage can similarly be adjusted to reduce demand during peak hours.

In the United States, the East Coast utility Progress Energy already reduces its power generating needs by roughly 300 megawatts in this way. China could save a lot, lot more.

And in terms of evening out supply, the smart grid could be used to store excess energy in electric vehicle batteries and other storage systems at times of high supply, then draw power back from them when electricity demand outstrips supply.  

Given its potential, it is no wonder that China is currently investing more in smart grid technologies than any other country on earth, topping US$7.3 billion in 2010, according to the research company Zpryme.

"China is making huge investments in smart grid," says Albert Cheung, lead analyst for energy smart technologies at Bloomberg New Energy Finance. "The decision they have made is to leapfrog the investments that have been made elsewhere in the last 50 years.

He adds: "They have been issuing tenders every quarter for the last couple of years and they have invested hundreds of billions of dollars in long-distance transmission lines. They need to build a lot of new infrastructure to transport a lot of energy to a growing population."

What all this means is that by the time China's energy demand stabilizes, at around 2050, the country will have one of the most advanced power grids in the world. It is a major technological bet—but one nobody on earth can afford the Chinese not to make.

Jason Deign is a freelance writer located in Barcelona, Spain.

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