Out-Law / Your Daily Need-To-Know
China's largest power transmission company is building a cross-border energy grid that it says will allow it to export energy as far as Europe, according to reports.
The State Grid Corp of China plans to invest in long-distance, ultra-high voltage power transmission lines, the Financial Times has reported.
State Grid chairman Liu Zhenya told reporters at a conference in Houston that wind and thermal power produced in China could reach Germany and be sold at half the cost of current electricity supplies, the Financial Times said.
“There are so many resources, but no market. We need to find it externally," Liu said, according to the newspaper.
Other potential markets include Pakistan, India and Myanmar, Liu said.
State Grid also announced that it has signed agreements with Korea’s power utility, SoftBank of Japan and Russian power firm Rosseti to promote an interconnected grid across Asia by 2030 and globally by 2050, Reuters said.
State Grid has also expressed interest in buying a stake in Australian electricity distributor Ausgrid, Liu said, according to Reuters. "Our previous investment in Australia has been successful. We will bid for more projects, and it will bring Australia more tax income and job opportunities," he said.
Energy expert John Yeap of Pinsent Masons, the law firm behind Out-Law.com said: "China has a rich history of successfully implementing grand projects, and this ambition to build a global grid, described as the power grid equivalent of the worldwide web, is perhaps the grandest of them all. Putting aside technical considerations, there will no doubt be other considerations including political. Energy security is a top agenda item for most countries, which suggests most countries will be cautious in allowing too much reliance on imported power, especially if the power has to traverse continents."
"There is also the question of how the cost of such a network will be funded given the multitude of users of such a network. There are therefore undoubtedly some major challenges to be addressed at an international level, but if it can be implemented, it will transform how the planet will meet its energy needs, with possible positive benefits including the possibility of increased efficiencies and reduced global carbon emissions," Yeap said.
State Grid said last year that it planned to spend 420.2 billion yuan ($64.7 billion) on grid infrastructure in 2015, representing a year-on-year increase of 24%.
The Chinese government recently announced that it will expand a reform programme intended to open up the power market to 12 more provincial power grids and one regional network. The programme aims to separate the power transmission and distribution price from the sales price, allowing the market have a bigger say in deciding the final price of electricity.
Under the reform the power grid companies will no longer profit from the difference between costs and sales prices. Instead, they will charge a service fee decided by the government based on the cost of transmitting and generating power.
Power grids in regions including Beijing, Tianjin, Chongqing and Guangdong will be included in the pilot power transmission and distribution pricing reform, joining Inner Mongolia, Anhui, Hubei, Yunnan and Guizhou where the reform was brought in in 2015.
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