CHINA 1 1 ALTERNATIVE ENERGY SUPPLY OPTIONS TO SUBSTITUTE FOR CARBON INTENSIVE FUELS I~~~~ S a IS S S Report of a Joint Team of Chinese and International Experts December 1994 ALTERNATIVE ~ ~_ ENRG UPLYOTIN CHINA Issues and Options in Greenhouse Gas Emissions Control ALTERNATIVE ENERGY SUPPLY OPTIONS TO SUBSTITUTE FOR CARBON INTENSIVE FUELS SUBREPORT NUMBER 5 Report of a Joint Team of Chinese and International Experts Editors, Wu Changlun, Todd M. Johnson, Zhang Zhengmin, Robert M. Wirtshafter, Li Junfeng, and Li Jingjing December 1994 Supported by the Global Environment Facility The views expressed herein are those of the authors and do not necessarily represent those of the World Bank. Copyright 1994 Additional copies of this report may be obtained from The World Bank Industry and Energy Division China and Mongolia Department East Asian and Pacific Regional Office 1818 H Street, NW Washington, DC 20433 OTHER SUBREPORTS IN THIS SERIES: Estimation of Greenhouse Gas Emissions and Sinks in China, 1990, August 1994. Report 1 Energy Demand in China: Overview Report, February 1995, forthcoming. Report 2. Energy Efficiency in China: Technical and Sectoral Analysis, August 1994, Report 3. Energy Efficiency in China: Case Studies and Economic Analysis, December 1994. Report 4. Greenhouse Gas Emissions Control in the Forestry Sector, November 1994. Report 6. Greenhouse Gas Control in the Agricultural Sector, September 1994. Report 7. Valuing the Health Effects of Air Pollution: Application to Industrial Energy Efficiency Projects in China, October 1994. Report 8. Potential Impacts of Climate Change on China, September 1994. Report 9. Residential and Commercial Energy Efficiency Opportunities: Taiyuan Case Study, September 1994, Report 10. Pre-Feasibility Study on High Efficiency Industrial Boilers, August 1994. Report 11. Currency Equivalents 1 US$ = 4.7 Chinese Yuan (1990) Weights and Measures 1 ton of coal = 0.7143 tce (average) = 20.934 GJ 1 ton of crude oil = 1.43 tce = 41.816 GJ 1,000 m3 of natural gas = 1.33 tce = 38.931 GJ 1 ton fuelwood (air dry) = 0.54 tce Kilo(Watt) = 103 (Watts), Mega = 106, Giga = 1097 Tera = 1012 All CO2 weights expressed as molecular weight of carbon (C) Abbreviations and Acronyms bcm - billion cubic meters C - carbon CO2 - carbon dioxide EIRR - economic internal rate of return FIRR - financial internal rate of return GDP - gross domestic product GEF - Global Environment Facility GHG - greenhouse gas GJ - gigajoule GW - gigawatt kgce - kilogram of coal equivalent kW - kilowatt kWh - kilowatt-hour LNG - liquified natural gas LPG - liquified petroleum gas mcfd - million cubic feet per day MMbtu - million British thermal units mtce - million tons of coal equivalent MW - megawatt NOx - oxides of nitrogen NPV - net present value PV - photo-voltaic SO2 - sulfur dioxide SPC - State Planning Commission of China t - metric ton tce - ton of coal equivalent TSP - total suspended particulate TW - terawatt TWh - terawatt-hour ii FOREWORD This report is one of eleven subreports prepared as part of the United Nations Development Program (UNDP) technical assistance project, China: Issues and Options in Greenhouse Gas Emissions Control, funded by the Global Environment Facility, and executed by the Industry and Energy Division, China and Mongolia Department, of the World Bank. On the Chinese side, overall coordination for the project was handled by the National Environmental Protection Agency (NEPA), while the State Planning Commission (SPC) was responsible for work on energy efficiency and, alternative energy, the subject of this subreport. This subreport is the product of a joint Chinese-international study team,** comprised of representatives from the SPC and the World Bank. The first international mission visited China in May of 1992 during which time the scope of the study and the methodology for calculating the cost of greenhouse gas (GHG) reduction were agreed upon. A number of background reports were commissioned at that time to be used as inputs to the study. Researchers on the international and Chinese sides prepared background reports on wind, solar, and nu lear technologies, and on natural gas development. A major effort was also undertaken by the SPC and the Energy Research Institute (ERI) to develop future scenarios of alternative energy supply in the years 2000, 2010, and 2050. This work was later modified and integrated with the macroeconomic and energy demand modeling effort undertaken as part of the overall China Greenhouse Gas Study. Given the different modeling frameworks, not all of the scenarios presented in this subreport are included in the final Summary Report for the overall China Greenhouse Gas Study. This final subreport makes extensive use of the background reports and alternative energy modeling work done by the Chinese side. This report was drafted and edited by Todd M. Johnson, Robert M. Wirtshafter, Wu Changlun, Zhang Zhengmin, Li Jingjing, and Li Junfeng. **Joint Chinese-International Study Team Chinese Experts Shen Longhai, Senior Advisor, Director, Department of Spatial Planning and Regional Economy, State Planning Commission (SPC) Zhu Liangdong, Advisor and Senior Engineer, SPC Zhou Fengqi, Director, Energy Research Institute (ERI) Wu Changlun, Team Leader, Chief, Division of Renewable Energy, Department Resource Comprehensive Utilization and Energy Conservation, SPC Zhang Zhengmin, Team Leader, Chief, Rural Energy and Regional Planning Division, ERI Liu Di, Deputy Chief, Renewable Energy Division, Department of Resource Comprehensive Utilization and Energy Conservation, SPC Li Jingjing, Associate Professor, ERI Huang Zhijie, Professor, ERI Qu Shiyuan, Deputy Director, ERI Gu Shuhua, Professor, Tsinghua University Su Zhengming, Assistant Professor, ERI Wang Yietao (wind), Professor Tsinghua University Shi Pengfei (wind), Associate Professor, Wind Energy Center of China iii Lin Anzhong (solar PV), Professor, Institute of Nonferrous Metal Li Anding (solar PV), Associate Professor, Academia Sinica Kong Zhiping (natural gas), Senior Engineer, Natural Gas Development Company Bao Yunqiao (nuclear), Professor, Science and Technology Information Institute, Ministry of Nuclear Industry Lu Weide, Professor, Solar Energy Institute Zhang Jiguo, Associate Professor, Geothernal Center International Experts Ramesh Bhatia, The World Bank Nikhil Desai, (nuclear), World Bank Consultant Mac Cosgrove-Davies (solar thermal), The World Bank Todd M. Johnson, Energy and Enviromnental Economist, The World Bank Li Junfeng, World Bank Consultant Kay McKeough, Oiquified natural gas), World Bank Consultant Robert P. Taylor (task manager), Senior Energy Economist, The World Bank Robert M Wirtshafter, World Bank Consultant Zhang Zhihong (wind), World Bank Consultant iv Table of Contents 1. INTRODUCTION ...........................................................l1 A. ENERGY USE IN CHINA .2 (1) Low-carbon substitutes for coalfor electric power generation .3 (2) Low-carbon substitutes for the direct use of coal .4 (3) Environmental impacts of coal use .5 B. METHODOLOGY .6 2. ALTERNATIVE ENERGY OPTIONS FOR CHINA: TECHNICAL AND ECONOMIC ASSESSMENT . A. INTRODUCTION .8 B. ALTERNATIVES TO COAL FOR ELECTRICITY GENERATION .8 (1) Coal-based Power Generation .9 (2) Hydroelectric Power .10 (3) Natural Gas-based Power Generation .13 (4) Nlruclear Power .16 (5) Wind Turbine Power .19 (6) Biomass .21 (7) Solar photovoltaic (P) .22 (8) Solar Thermal Power .24 (9) Geothermal .25 C. ALTERNATIVES AS A DIRECT SUBSTITUTE FOR COAL .26 (1) Biomass .26 (2) Natural gas .27 (3) Other: solar, wind, and geothermal .28 3. FUTURE ROLE OF ALTERNATIVES IN CHINA .29 A. How MUCH ALTERNATiVE ENERGY CAN BE SUPPLIED? .30 (1) Electric Power Alternatives .31 (2) Non-powerAlternatives .34 (3) GHG Reduction Potential .35 B. THE COST OF EXPANDING ALTERNATIVE ENERGY SUPPLIES .36 (1) Electric power .37 (2) Comparison of Levelized Costs .38 4. CONCLUSIONS AND RECOMMENDATIONS .39 A. SUMMARY OFFINDINGS .39 B. POLICY RECOMMENDATIONS ................................................................................................................. 39 5. REFERENCES .42 List of Tables TABLE 1.1 ENERGY CONSUMPTION AND ELECTRICITY GENERATION BY FUEL, 1990 .2 TABLE 1.2 ELECTRICITY GENERATION AND INSTALLED POWER CAPACITY: CURRENT LEVELS AND FUTURE SCENARIOS A ..3 TABLE 1.3 POTENTIAL AND CURRENT DEVELOPMENT OF LOW-CARBON POWER GENERATION TECHNOLOGIES IN CHINA .4 TABLE 1.4 THE DIRECT USE OF COAL IN CHINA .5 TABLE 2. 1: COST ESTIMATES FOR CJAL-BASED POWER GENERATION .10 v TABLE 2.2: HYDROELECTRIC GENERATION .......................................................................... 11 TABLE 2.3: MIN-HYDROELECTRIC GENERATION .......................................................................... 12 TABLE 2.4: LNG RECEIVING TERMINAL COSTS (MILLION US$ (1992)) ...................................................... 14 TABLE 2.5: IMPORTED LIQUID NATURAL GAS .......................................................................... 15 TABLE 2.6: NUCLEARPOWERDEVELOPMENT ........................................................................................... 18 TABLE 2.7: GRID-CONNECTED WIND TURBINE GENERATORS .................................................................... 20 TABLE 2.8: BATTERY-CHARGER WIND TURBINES .......................................................................... 21 TABLE 2.9 COSTS FOR BIOGAS POWER STATIONS .......................................................................... 22 TABLE 2.10 COSTS FOR PHOTOVOLTAICS POWER STATIONS ...................................................................... 23 TABLE 2.11 CosTs FOR SOLAR THERMAL POWER STATIONS ..................................................................... 25 TABLE 2.12 COSTS FOR GEOTHERMAL POWER STATIONS .......................................................................... 26 TABLE 3.1 BASELINE COMMERCIAL ENERGY USE SCENARIO, 1990-2020 ...................................................... 29 TABL E 3.2 ALTERNATIVE ELECTRIC POWER SCENARIOS, 2010 ................................................................... 31 TABLE 3.3 ALTERNATIVE ELECTRIC POWER SCENARIOS, 2020 .................................................................. 32 TABLE 3.4: NUCLEAR POWER SCENARIOS FOR CHiNA (GW) ...................................................................... 33 TABLE 3.5 CHINESE ESTIMATES OF BIOMASS USAGE (MTCE) ..................................................................... 34 TABLE 3.6 GREENHOUSE GAS REDUCTION POTENTIAL FOR LOW-CARBON ENERGY TECHNOLOGIES, 2020..36 TABLE 3.7 CHINA: ESTIMATES OF CAPITAL AND LEVELIZED COSTS OF ELECTRIC POWER UNDER CURRENT TRENDS, 2020 .......................................................................... 37 TABLE 3.8 THE COSTS OF CO2 REDUCTION, 2010 .......................................................................... 38 TABLE 3.9 THE COST OF CO2 REDUCTION, 2020 .38 I 1. INTRODUCTION 1.1 This report is part of a larger study to assess the range of options in China for reducing greenhouse gas (GHG) emissions. Other study reports address the following mitigation issues: (i) reducing CO2 emissions through improvements in energy efficiency, (ii) sequestering carbon in plants and soil through afforestation and forestry management practices, and (iii) reducing GHG emissions, primarily methane, in the agricultural sector, through changes in rice cultivation and animal husbandry practices. In the next 10-15 years, the most significant reductions in GHG emissions in China can be achieved by increasing the efficiency of energy use, particularly in the industrial, commercial, and residential sectors. In addition, because many of the energy efficiency projects that can be undertaken in China have fairly large financial and economic benefits,I they can provide GHG reduction at low cost. While there is significant potential for reducing GHG emissions through the adoption of low-carbon energy technologies, most are not yet commercially viable, and thus pose significant net costs in terms of GHG reduction. Nonetheless, over the long-term, the only option for stabilizing or reducing GHG emissions in China is by switching to non carbon-intensive energy sources. 1.2 The purpose of this report is to assess how much energy could be supplied by low carbon energy technologies in China over the coming decades, and how much an expanded alternative energy program would cost. Alternative energy supply scenarios have been prepared for China according to the following general principles: (i) from a technical standpoint, how much energy could be supplied by various technologies by a given date, and (ii) how much would it cost to supply various quantities of low carbon energy compared to the least-cost energy expansion plan. Because many alternative energy technologies are developing rapidly, there is a great deal of uncertainty in the estimates made in this report, which should be kept in mind when evaluating specific technologies and their costs. Nonetheless, it is clear that coal will continue to provide the majority of China's energy needs well into the 21st century. Therefore, this report focuses on the low carbon energy technologies that could be substituted for coal. Two broad types of technologies have been analyzed: (1) technologies that can substitute for coal for the generation of electric power and, (2) technologies that can substitute for coal for direct energy applications, such as industrial process heat, residential cooking, and space heating.2 Both the CO2 reduction potential and the costs of CO2 reduction from alternative energy development have been analyzed. Financial and economic analyses of energy efficiency projects have been undertaken as part of the China greenhouse gas study (see Subreport Number 4, Energy Efficiency in China: Case Studies and Economic Analysis, December 1994.) The majority of the projects reviewed in the case studies had positive net benefits when the financial and economic costs and benefits during the life of the project were considered, In addition, most all energy efficiency projects were found to have positive local environmental benefits in terms of reduced human health impacts from particulate and sulfur dioxide emissions. 2 The direct use of energy in the transportation sector has not been addressed in this study due to the limited amount of coel that is used in the sector (for rail and ship) and the current lack of alternatives to petroleum products for internal combustion engines. In 195 , the transport sector accounted for about 5 percent of commercial energy use in China. 2 A. Energy Use In China 1.3 China is presently the largest coal producing country in the world with production in 1990 at over I billion tons of raw coal. Coal currently accounts for more than three- quarters of total primary commnercial energy consumption. Unlike developed countries, where coal is used mainly in power generation, in China the power sector accounts for only about a quarter of total coal consumption. Most coal in China is consumed by industry for steam generation and by the residential sector for cooking and heating. In 1990, non-power sector industrial boilers consumed more than 350 million tons of coal, accounting for about 35 percent of China's total coal use, while the residential sector consumed about 167 million tons of coal in 1990, or about 16 percent of total coal use. Table 1.1 Primary Energy Consumption and Electricity Generation by Fuel, 1990 Total Primary Electricity Commercial Energy % Generation by Fuel % Consumption Source (mtce) (TWh) Coal 752 76% 432 70% Oil and Gas 184 19% 62 10% Hydro 51 5% 127 20% Nuclear 0 0% 0 0% Other 0 0% Q 0% Total 987 100% 621 100% Source: China Statistical Yearbook (1990). 1.4 If present economic trends continue, energy use and GHG emissions in China could double or triple between 1990 and the year 2020.3 This estimate is based on a 'baseline scenario" that assumes continued economic growth (an average of 8 percent per year), continued improvements in energy efficiency, and, aside from imports of oil for the transport sector, a continued reliance on domestic energy resources, principally coal. Under the baseline scenario, commercial energy consumption in China rises from around 1,000 mtce in 1990 to 3,300 mtce in 2020, with nearly 70 percent of energy in 2020 supplied by coal. In addition to potentially serious local environmental impacts, consumption of this much coal would result in roughly a tripling of China's GHG emissions compared to 1990. Without lowering economic growth, China's GHG 3 Scenarios of economic growth and energy consumption have been generated in other parts of the overall China GHG Study. See the macroeconom..; analysis in Chapter 2, China: Issues and Options in Greenhouse Gas Emissions Control, Summary Report, December 1994. 3 emissions could be limited to a doubling between 1990 and 2020 if additional measures were taken to limit GHG emissions, including the rapid adoption of alternative energy technologies.4 Details of the potential for alternative energy technologies and their costs are the subject of Chapters 2 and 3 of this report. (1) Low-carbon substitutes for coal for electric power generation 1.5 The amount of electricity needed for the economy under the baseline scenario is estimated to be 1,300 TWh in the year 2000, and 3,850 TWh by the year 2020 (Table 1.2). In the year 2020, approximately one third of total commercial energy use, and around 40 percent of total coal use would be required to generate electricity under the baseline scenario. To meet the electricity demand of the baseline scenario would require the addition of around 700 GW of generating capacity between 1990 and 2020, or over 23 GW each year, requiring the annual completion of about 39 new 600 MW units. Table 1.2 Electricity Generation and Installed Power Capacity: Current Levels and Future Scenarios a Year 1990 1993 2000 2010 2020 actual actual Electricity generation (TWh) 621 836 1300 2430 3850 InstalledcKa aci GW 138 183 290-295 525-540 825-870 a Electricity generation scenarios for 2000, 2010, and 2020 were estimated by the China GHG Model. See Ch. 2, Issues and Options in Greenhouse Gas Emissions Control, Summary Report, December 1994. 1.6 There are a number of low-carbon technologies that can be further developed in China to substitute for coal in the production of electric power. Chinese energy experts generally regard hydroelectric and nuclear power as the most promising low-carbon technologies for large-scale development in China in the near to medium-term. * Hydroelectric power. China ranks number one in the world in hydroelectric resources, only a small portion of which has already been developed. In total, China's hydroelectric potential has been estimated at 380 GW, of which 70 percent is currently economic. In addition, there are 70 GW of mini-hydro sites available. * Nuclear power. China has an active nuclear power program. The first nuclear plant in China, which was domestically designed and constructed, began operation in 1991. The first large-scale commercial nuclear facility began operation in 1994 in Guangdong Province. Including nuclear facilities under construction and planned, will 4 The reduction potential and costs of options for reducing GHG emissions in China are given in the Summary Report, December 1994. 4 amount to about 4,500 MW by 2000 and 9,100 MW by 2005. * Renewables. Other non-carbon technologies that can substitute for coal in electric power generation include wind, solar photovoltaic (PV), solar thermal, geothermal, and biomass (when grown on a sustainable basis). Table 1.3 shows current capacity and power production from alternative energy technologies in China. Table 1.3 Potential and Current Development of Low-carbon Power Generation Technologies in China Resources Installed Power (GW) Capacity Generation (MW) (TWh) Hydroelectric Large (>25MW) 380 44,600 (1993)a 169 (1994) Small (< 25MW) 70 11,790 (1989)b 31.6 (1989)b Nuclear -- 2,100 (1994)a 13.5 (1994)a Wind 200 17 (1993)a -- Battery chargers Grid-connected 13.4 (1993)a -- Solar-PV -- 2.6 (1991)c; 3.3 (1993)a -- Geothermal 1,000MW b 30 a -- Tidal power -- 11 a -- Biogas power -- 6 (1990)d Biomass gasification -- 100 sets d -- Sources: a Ministry of Electric Power, "Electric Power," 1994; b"The Development of New and Renewable Energy Resources in China," China Science and Technology Press; ' Lin and Lee, "Report on Photovoltaic Generation," April 1993; d Energy Research Institute. (2) Low-carbon substitutes for the direct use of coal 1.7 The direct use of energy currently accounts for about 80 percent of the energy consumed in China. Direct coal consumption can be divided into three types as shown in Table 1.4. Of the total energy currently consumed directly, 55 percent is coal, 16 percent is oil, and 27 percent is biomass. While the amount of energy used for power generation is expected to grow rapidly during the coming decades, non-power uses are likely to still account for the largest use of energy in China for the foreseeable future. According to the baseline scenario, the direct use of energy, mainly for industrial process heat, residential cooking and heating, and transport, will still account for two-thirds of primary commercial energy consumption in 2020. By 2020, the direct use of coal is estimated to be 1,800 million tons of raw coal. In the near term, the most promising energy sources in China for large-scale substitution of coal for direct use are natural gas (including gas from coal mines) and biomass.5 5 While the net release of CO2 from' iomass burning will be zero if the biomass has been produced on a sustainable basis, there will generally be a release of other GHGs, such as CH4, N20, NOx, and CO. S Table 1.4 The Direct Use of Coal in China Type of Direct Use Purposes Served Potential Fuel Substitutes ......................................................................................................................................................................................................................... High temperature heat High temperature steam for Natural gas, oil, biomass industrial processes, and for kilns to produce cement and bricks Low temperature heat Space and other heating for Solar water heating, passive industry, commerce and solar, geothermal, biomass households Cooking fuel Cooking Biomass, solar cooker, natural gas, and biogas * Natural gas. There is significant potential in China for finding and developing low- cost sources of natural gas. In addition to oil and gas fields, natural gas from coal mines is also an economic energy resource in China; current reserves of coal-bed methane are large, however, only a small amount of the gas is currently being captured and used. * Biomass. The direct consumption of biomass is a major fuel source in China, providing the majority of energy for rural households. Non-commercial biomass fuels, including fuelwood, crop residues and some animal dung, amounted to approximately 300 million tons of coal equivalent (mtce) in 1990. More efficient use of existing biomass resources, limitations on the overcutting of natural forests for fuelwood, and an expansion of fuelwood plantations under good growing conditions, could result in both a significant contribution to China's energy supply and a reduction in net CO2 emissions. * Other renewables. Other non-GHG emitting technologies that can substitute for coal in direct use include passive solar and solar thermal, wind, and geothermal energy. Though relatively small in comparison to total energy use, these renewable energy sources could be important for residential and comnercial water and space heating, light industrial process heat, and water pumping, crop drying and crop processing in agriculture. (3) Environmental impacts of coal use 1.8 The environmental effects of expanded use of coal in China will be severe unless measures are taken to switch fuels or mitigate emissions. While technologies exist to control the emissions of local pollutants, such as particulates (TSP), sulfur dioxide (SO2), and nitrous oxides (NOx), there currently is no practical means of reducing CO2 from coal 6 consumption. CO2 emissions, which may be contributing to global climate change through the "greenhouse effect," are the largest source of GHG emissions worldwide. According to the baseline scenario, China's CO2 emnissions would roughly triple between 1990 and 2020, making China the largest source of anthropogenic CO2 worldwide. Mining, transporting, and burning additional quantities of coal will also have enormous consequences for air, water, and land quality. For instance, according to the baseline scenario, if there were no changes in pollution control technologies from 1990, TSP emissions would increase from 14 million tons in 1990 to 48 mt in 2020 and SO2 emissions from 16 mt in 1990 to 55 mt in 2020. The reduction in TSP and S02 emissions by switching from coal to alternative energy sources will result in significant benefits by reducing impacts on human health, croplands, forests, and buildings and structures. While it is often difficult to quantify such benefits, they can and should be considered when assessing alternative energy projects.6 B. Methodology 1.9 In order to compare alternative energy projects with other GHG reduction options, a common method for calculating the net cost of reducing GHG emissions has been developed and used in the China greenhouse gas study.' In the case of alternative energy technologies, investment and per unit energy supply costs are compared to similar costs for coal. For instance, the investment cost (Y,$/MW) for a megawatt (MW) of wind- generated electric power capacity is compared to the investment cost for one MW of coal- fired capacity. Likewise, the levelized costs of wind-generated power (Y,$/KWh) are compared to the levelized costs of coal-generated power. It is also important to compare cost in terms of equal reliability and the time of delivery. For instance, the value of electricity varies during different times of the day and seasons of the year. To account for differences in reliability and time of service, additional capacity charges are added to alternative energy technologies, such as solar, wind and small-scale hydro, which exhibit intermittent availability. Assumptions regarding the operating efficiency, operating costs, investment costs, and CO2 reduction potential of these technologies have been collected from both Chinese and international sources. 1.10 Background reports have been prepared on the current development of several low-carbon technologies that have particular potential for China, including wind, solar photovoltaic (PV), natural gas, and nuclear power. Since the development experience for these technologies has been considerably different in China and abroad, reports were prepared by both Chinese and international experts. International expert reports focused on recent commercial developments and the current and projected future costs 6The human health benefits of reducing particulate and S02 emissions by improving energy efficiency were quantified in the cost-benefit analysis done in another component of the China GHG study. See subreport 8, Valuing the Health Effects ofAirPollution: Application to Industial EnergyEfficiency Projects in China, and subreport 4, Energy Efficiency in China: Case Studies and Economic Analysis. 7 See Chapter 3, China: Issues and C>tions in Greenhouse Gas Emissions Control, Summary Report, December 1994. of these technologies internationally, while the Chinese expert reports evaluated the current stage of development of these energy technologies in China. 1.11 Based on the background reports, Chinese experts prepared supply and cost scenarios for these and other alternative energy technologies in China for the years 2000, 2010, and 2050. This information was incorporated into an alternative energy model that calculates the incremental investment costs, and the CO2 reduction associated with the alternative energy scenarios. Coal is assumed to be the swing fuel in the model. The amount of coal required is calculated by summing all other sources of energy supply, and then subtracting that sum from the total energy requirements as estimated in Table 1.2. In addition to a baseline, three other scenarios of alternative energy supply (AE-Min, AE- Mid, AE-Max) which reduce progressively more carbon, were also prepared for the years 2000, 2010, and 2050. To be consistent with the energy demand estimates from the overall China GHG study, alternative energy supply scenarios for the year 2020 were interpolated by using the average growth rate between 2010 and 2050. 1.12 Given the dominance of coal in China's economy, coal has been used as the reference for comparing the costs of alternative energy sources. In the analysis, the price of coal and the installed cost of coal-fired power plants have been raised to account for some of the negative environmental impacts associated with coal use. A premium has been added to the market price of Chinese coal and to the cost of coal- fired power generation equipment to allow for the removal, to international standards, of TSP and waste gases. 1.13 As noted above, most alternatives to coal that reduce C02 emissions also reduce other local air pollutants (e.g. TSP, SO2, NOx). However, despite the local and global air pollution reduction benefits from low-carbon energy technologies, there can be negative environmental impacts associated with some of these technologies, costs which have not been explicitly calculated in this analysis. Therefore, prior to adopting low-carbon energy technologies for their global benefits, the environmental costs should also be assessed, such as resettlement and ecosystem damage associated with construction of hydroelectric projects; the hazards of LNG transport/distribution; local air pollution associated with biomass combustion; and the costs and risks of securing, storing, processing, or disposing of nuclear fuel. 8 2. ALTERNATIVE ENERGY OPTIONS FOR CHINA: TECHNICAL AND ECONOMIC ASSESSMENT A. Introduction 2.1 For low-carbon alternative energy technologies to play a larger role in China's energy balance in the future, they must be able to substitute for coal both in the production of electric power and for direct use. For significant substitution to occur, not only must the technologies be proven, but their costs must be competitive with coal. China has an abundance of proven domestic coal reserves and relatively little proven oil and gas reserves; this is the primary reason coal is the least-cost option for many energy applications. Much of China's current energy-consuming capital stock, such as power plants, industrial boilers, and cooking stoves, have been designed to bum coal. While the continued growth of China's economy will result in a rapid tumover in capital stock in the future, the coal-specific infrastructure and technical expertise that China possesses will not be as easy to replace. 2.2 This section reviews China's experience in the use of low-carbon energy technologies. The discussion focuses on both technical and economic issues, with estimates made of current and projected future supply costs for low-carbon alternative energy technologies. The discussion begins with a review of coal. While China has considerable experience with the use of coal and hydroelectric power, and therefore both the technologies and the costs are well known, this is not the case for most all other low-carbon energy sources. Projecting future technology developments and future costs is an exercise fret with uncertainty. For comparison, intemational technical experience and international cost projections have been presented as well. The estimates of future supply costs in this chapter have been used in Chapter 3 to project estimates of the potential for low-carbon energy supplies in China and to estimate the overall cost of supplying a given amount of low-carbon energy. B. Alternatives to Coal for Electricity Generation 2.3 Under all scenarios of future power generation undertaken for this study, the absolute amount of thermal power capacity in China will increase over the next 25 years. The extent to which low carbon-intensive fuels can be substituted for coal for power generation is related to upfront capital investment and capacity cost, and to the average cost of generating electricity for each of the altematives. 9 (1) Coal-based Power Generation 2.4 Technical Feasibility. China has considerable experience in the production of coal-fired power plants, and until recently, relied entirely on domestic equipment for these plants. The existence of an extensive industrial infrastructure for producing coal- fired power generation equipment has implications for the cost of such facilities. Future plants are likely to be larger than the current facilities which are in the 200 to 300 MW range. China's current production of large coal-fired generating units, that is those over 600 MW, is limited. While China is able to produce much of the equipment for modern 600 MW plants domestically, high-temperature and high-pressure boilers and turbines are still largely imported. 2.5 Current operating efficiencies for domestically-built coal plants in China are low relative to rates achieved by modern international plants. Coal consumption for Chinese power plants averaged 427 gce/kWh in 1990. Because there are significant economies of scale in coal-fired power plants, coal consumption per kWh will be reduced in the future as China's stock of larger power plants increases. Chinese experts estimate future efficiencies of 350 gce/kWh in 2000, 340 gce/kWh in 2010, and 300 gce/kWh in 2050. By contrast, California assumes a heat rate of 9,800 to 10,500 Btu/kWh, which is equivalent to about 290 to 315 gce/kWh, signifying that the fuel efficiency estimates for China for future years are conservative. 2.6 Economic Assumptions. China has built and purchased numerous coal-fired generation plants, and therefore the uncertainty surrounding the costs of coal plants is low relative to other energy technologies. Because much of the equipment and engineering can be manufactured domestically, China is able to construct coal-based facilities at a considerable cost advantage compared to plants in other countries. According to Chinese estimates, investment costs for domestic coal-fired plants are around 2,600 yuan/kW (1990 yuan). In the future, an additional 15 percent will be required to meet stricter environmental regulations so that total investment is thus estimated at about 3,000 yuan/kW. Costs for coal-fired power plants in China with some foreign equipment and advanced environmental controls are in the range of 4,500 yuan/kW.8 Based on these capital investment costs, and long-run costs for coal, the levelized generation costs for a coal-fired plant in China have been estimated in the range of 0.18-0.25 yuan/kWh (1990 constant prices) in 2020. 2.7 The Yangzhou power station includes state-of-the-art environmental controls, including electrostatic precipitators for particulate control (99 + percent removal efficiency) and low-NOx burners. Although there are no special SO2 controls, the Yangzhou plant will burn low sulfur (0.3-0.4 percent) coal. Given the cost advantages 8 This estimates is based on the Yat -zhou thermal power project in Jiangsu, financed in part by the World Bank. The coal plant at Yangzhou includes both domestic and foreign-produced equipment. 10 of Chinese domestic construction costs and components, the cost of the Yangzhou plant is still considerably below the investment cost figures assumed in the California Energy Commission. Table 2.1: Cost Estimates for Coal-based Power Generation Joint Study Joint Study California Energy Team Team Commission Estimates Estimates $/kW (1990 prices) (1990 prices) Yuan/kW $/kW Power Generation 2600 $553 Transmission 700 Environmental Equipment 350 Coal Transportation 100 Coal Mine Construction 750 Total Investment Cost 4500 $957 $1237- $1636 (1989 prices) Annualized Investment 610 202.5 -269.5 $/kW Levelized Cost 0.2039 Y/kWh 0.0434 $/kWh 0.047 - 0.0742 $/kWh Assumptions Annual Operating Hours 5000 5256-6570 Construction Period 3 years 5 years Economic Life 25 years 30 years Maintenance Ratio 3.5 % 20.2 - 24.5 $/kW Fuel Cost (1990 prices) 146.5 Y/lW 0.0125 - 0.0176 $/kWh Labor Ratio 1 % .00058 - .00067 $/kWh Sources: Joint Study Team; California Energy Commission (1993). (2) Hydroelectric Power 2.8 Technical Feasibility. As is the case with coal-fired generation, China currently produces its own hydroelectric generating equipment and has a proven capability in the design and engineering of large and small hydro projects. Hydroelectricity currently accounts for about 24 percent of China's installed capacity and less than 20 percent of total kilowatt-hours produced. China is a world leader in the production of mini hydro equipment, defined here as those units less than 25 MW. China has already constructed more than 12,000 MW of mini hydro capacity. 2.9 Economic Feasibility. Hydroelectric cost estimates for China are based on considerable domestic experience. As with coal-fired units, investment costs in China for hydro are considerably below those in other countries. The joint Chinese- international expert team for this study estimates that on average the levelized cost of hydroelectric generation will rise to at least 0.30-0.35 yuan/kWh by the year 2020 for large-scale projects under the baseline alternative scenario. Since more than 70 percent of China's hydro resources are concentrated in remote regions of southwest China, where both construction and distribution costs will be higher, it is likely that an expansion of hydro capacity beyond the baseline will result in levelized costs at or above 0.35 yuan/kWh. While a number of these new hydro schemes may still be economically attractive due to system regulation and peaking capabilities, their costs are still substantially above the estimated levelized costs for coal for baseload generation. Table 2.2 and Table 2.3 show current cost estimates for hydro and mini- hydro projects. Table 2.2: Hydroelectric Generation Joint Study Joint Study California Energy Team Estimates Team Estimates Commission (1990 prices) (1990 prices) $/kW Yuan/kW $/kW Power Generation Year 2000 4360 928 Year 2010 5230 1113 Year 2020 6300 1340 Transmission 1000 213 Total Investment Cost $1777 to $3442 (1989 Year 2000 5360 1140 prices) Year 2010 6230 1326 Year 2020 7300 1553 Annualized Investment Cost (Y/kW/yr) 271.9-526.6 $IkWlyr Year 2000 873 Year 2010 1015 Year 2020 1189 Levelized Cost (1990 prices) (Y/kWh) Year 2000 0.276 0.0586 $/kWh 0.0845 - 0.297 $/kWh Year 2010 0.320 0.0681 $/kWh Year 2020 0.375 0.0798 $/kWh Assumptions Annual Operating Hours 3800 3504 to 2190 Construction Period 6 years 5 years Economic Life 50 years 50 years Maintenance Ratio 2.0 % 53.8 - 58.4 $/kW/yr Fuel Cost 0 0 Labor Ratio 0.4 % 0 Sources: Joint Study Team; California Energy Commnission (1993). 12 Table 2.3: Mini-Hydroelectric Generation Joint Study Team Joint Study Team Estimates Estimates (1990 prices) (1990 prices) Yuan/KW $/kW Power Generation Year 2000 4500 957 Year 2010 5000 1064 Year 2020 5500 1170 Transmission 0 0 Total Investment Cost Year 2000 4500 957 Year 2010 5000 1064 Year 2020 5500 1170 Annualized Investment Cost (Y/kWJyr) Year 2000 628 Year 2010 698 Year 2020 768 Levelized Cost (Y/kWh) Year 2000 0.278 0.0591 $/kWh Year 2010 0.304 0.0648 $/kWh Year 2020 0.331 0.0704 S/kWh Assumptions Annual Operating Hours 2700 Construction Period 3 years Economic Life 30 years Maintenance Ratio 2.0 % Fuel Cost 0 Labor Ratio 0.4 % Sources: Joint Study Team; California Energy Commission (1993). I -3 (3) Natural Gas-based Power Generation 2.10 Technical Feasibility. Electricity generation using natural gas is a proven technology that is simpler and cleaner than coal-based options. Natural gas contains about 40 percent less carbon than coal on an energy equivalent basis; even less carbon can be emitted given the higher efficiencies that can be achieved by natural gas power plants. Electricity generation by natural gas can be done using a single gas turbine or by combining a gas turbine followed by a steam turbine. This latter method, termed a combined-cycle facility, can achieve an overall efficienry above 45 percent. This higher efficiency, along with short lead times for plant construction, plant modularity, modest capital investment, plant reliability, relatively low cost sources of natural gas, and lower air pollution emissions, have madle gas-fired combined-cycle plants the preferred choice for new baseload and peaking power facilities in the U.S., Canada, and other countries with abundant gas supplies. 2.11 Unfortunately, proven natural gas reserves in China are modest, and natural gas production in China is insufficient to meet current industrial and residential demand. Therefore, if natural gas is to replace coal-based electric power generation in China, vast new domestic reserves must be found or the gas associated with coal mines must be recovered and used to a much larger extent than it is now. Sonie additional gas may become available through importation. The most likely scenarios for importation would be liquefied natural gas (LNG) by sea or the construction of long-distance overland gas pipelines from Russia or central Asia. Even if long-distance pipelines are built, in the short term, the highest-valued use of the gas will probably not be the electric power sector. The analysis here assumes that LNG would be the primary source of gas for power generation. 2.12 LNG is natural gas that has been cooled to -260 °F to reduce its volume to 1/600th, thus allowing for storage and transport in relatively small containers. The technology for producing and transporting LNG is capital-intensive and characterized by economies of scale. Modem LNG projects are never less than 250-300 MMcf/d, equivalent to about 2.8 bcm per year. For comparison, China's current annual production of natural gas is about 15 bcm. 2.13 Presently, Japan and other Asian countries are the primary consumers of LNG worldwide; in 1990, Japan alone accounted for 66 percent of world LNG consumption; 5,425 million cubic feet per day (MMcf/d) or about 56 billion cubic meters (bcm) per year. To become an importer of LNG, China would have to compete with Japan, South Korea and Taiwan for any new LNG contracts. While the demand for LNG has been growing in the Asia region, production from the region's largest LNG producer, Indonesia, has been declining. 14 2.14 Economic Assumptions. The costs of generating electricity with natural gas in China are highly dependent on the source of the gas. The cheapest source of gas will be domestic on-land reserves close to consumption centers. However, proven gas resources in China are very limited compared to both coal and petroleum. For both domestic and imported gas, there is the issue of whether electric power generation is the highest-valued use of natural gas in China. Levelized costs for LNG-generated electric power in other Asian countries are currently as low as 0.05 $/kWh, which would make it one of the lower-cost alternative sources of energy for power generation in China, particularly in areas of the country far from coal reserves such as the southeast coast. 2.15 To produce and deliver LNG requires a liquefaction facility, loading terminals, tankers, unloading port facilities, regasification plant, gas pipeline, and gas-fired electric generating plant. The liquefaction facility and loading port facilities would generally be built and owned by the gas producer. Ownership of the tankers and even the unloading port facilities may be owned by China or the supplier. In the latter case, a higher fuel cost would be required, though China would not have to raise as much capital. Because of the large fixed capital assets that are required for LNG for both the producer and consumer, contracts tend to be long-term and guaranteed by governments. 2.16 The Chinese team based their cost estimates for LNG on a facility built in Taiwan, which has high costs per KW for the receiving station and the pipeline. The international expert report estimates that the costs for a receiving station could be considerably less (see Table 2.5). The site and size of the facility are critical for the cost of the receiving station, as shown in Table 2.4. At the low end, small European terminals have recently been built for $240 million. A new port facility and accompanying infrastructure may cost at least $700 million. Table 2.4: LNG Receiving Terminal Costs (Mllion US$ (1992)) Terminal Size Low Range Medium High Range BCM/Y Range 1.3-1.50 220-260 340-350 500-7000 2.5 240-270 350-360 700-800 5 270-300 350-370 700-800 2.17 The largest costs for LNG are the costs of liquefaction, which are assumed here to be borne by the producer. A 500 MMcf/day facility is likely to cost upwards of $2 billion. To minimize capital costs for China, the LNG project might be structured so that the liquefaction capital costs are absorbed by the gas producer or the project consortium and the Chinese would only pay a charge, based on volume throughput, for liquefying the gas. If this is the case, the capital costs to China would be for the regasification plant, storage, and the pipeline connecting the plant to the main transmission line or to a pou er plant. 15 2.18 A 500 MW combined-cycle plant would consume approximately 0.5 bcm/year, or put another way, a 5 bcm/yr LNG facility would be adequate to support 5,000 MW of baseload electric capacity. The capital costs of the receiving facility are around $70 KW in the medium cost case, and $140 KW in the high case. The cost of the combined-cycle generation facilities now being installed in the developed countries are in the neighborhood of $600 to $750/KW ($1990). The Califomia Energy Commission assumes costs for a similar combined cycle facility at $525 - 800/KW ($1989). Pipeline costs would also vary by terrain, cost of the right-of-way, size of line, number of river crossings, cathodic protection, safety requirements, source of steel, access to the route, and compression. 2.19 The price of LNG, which is related to crude prices, has dropped from the high prices of the early 1980s. In 1981, the price of LNG imported by Japan averaged $5.83/Mmbtu, while in 1991 the price was only $3.98/MMbtu. The price that China pays for LNG depends on whether China buys it own transport ship or whether China contracts others to ship for them. For this analysis, it is assumed that China is buying LNG delivered at the spot market price. The current price is around $3.50 to $4.00 per MMbtu ($1990). Table 2.5: Imported Liquid Natural Gas Chinese Experts International International California (1990 prices) Expert Report Expert Report Energy Yuan/KW Yuan/KW $/KW Conimissioni $/kW Power Generation 1900 2800 $600-$750 $525-800 (1989 prices) Transmission 500 500 $106 Receiving Station 4950 330 $70-140 Gas Pipeline 550 550 $60-120 Total Investment 7900 4180 $836-1116 $525-800 Annualized Investment 1007 645-855 $137-182 $86-131 Levelized Cost 0.4129 Y/kWh 0.27-0.32 0.058-0.068 0.043-0.049 (0.088 $/kWh) YJkWh $/kWh $/kWh Assumptions Annual Operating 6000 6000 6570 6570 Hours Construction Period 5 years 5 years 5 years 5 years Economic Life 25 30 years 30 years 30 years Maintenance Ratio 1.5 % 0.07 YlkWh 0.015 $/kWh 3.88 $/kW Fuel Cost 1320 Y/kW 0.11 YlkWh 0.023-0.026 0.025 $/kWh $/kWh Labor Ratio 0.4 .0039 $/kWh a Costs are without an LNG receiving station. Sources: Joint Study Team; California Energy Commission. 16 (4) Nuclear Power 2.20 Many Chinese energy experts conclude that the development of nuclear power is the best option for power generation in some parts of China given the lack of other large-scale alternatives and the difficulties and costs of transporting coal from inland mines to high-demand coastal areas such as the Southeast. 2.21 Technical Feasibility. The development of nuclear power, once thought to be the path to inexpensive electricity, has slowed considerably around the world. Orders for new nuclear plants worldwide, which reached 30-40 GW per year in the 1970s, dropped to around 4-5 GW per year as of the late 1980s. Today only a few countries outside the former Soviet block, specifically Japan, France, South Korea, China, and India, have active nuclear construction programs. Collectively there is very little experience with nuclear generation in developing countries; only China, India, and South Korea have ordered new plants since 1982. 2.22 China has an active nuclear power program and is likely to have a capacity of around 4,500 MW by the end of the century. The 300 MW Qinshan nuclear plant, near Shanghai, was domestically designed and constructed and began operation in December 1991. The two 900 MW units at Daya Bay in Guangdong Province began operation in 1994. The Daya Bay plant is the first large-scale commercial nuclear plant built in China. Additional units with a combined capacity of 2,400 MW are planned to begin construction soon at these two sites and an additional 4,000 MW nuclear power facility is planned for Yangjiang, Guangdong Province, to be completed by the year 2005. 2.23 Economic growth and the impending shortage of electric power capacity at the end of the decade in the United States and other countries may portend a reemergence of the nuclear power industry. Restrictions in the use of coal, combined with stricter environmental requirements for air pollution, may lead some electric utilities to reconsider the nuclear option. It is hoped that new, safer, and less costly nuclear-based technologies will emerge. However, investment in research and development of these new technologies has been reduced in many of the same countries that are reconsidering their nuclear programs. 2.24 Economic Assumptions. There are vast differences of opinion surrounding the costs and expansion capabilities of the nuclear power industry in China. Chinese nuclear proponents anticipate that capital costs will fall to 6,500 yuan/kW (US$1,180/kW in US$1990) by the year 2020 as China develops its own nuclear production industry. However, even with such low estimates, the levelized costs of nuclear power are 40 percent above the high estimates for modem coal-fired baseload generation in 2020. If the cost estimates of the international experts participating in this study (US$1,900-2,700/kW) prove more accurate, nuclear power would be too expensive to be competitive with coal in China. 17 2.25 The key variables affecting nuclear power costs are: capital costs, fuel and operation and maintenance (O&M), and plant availability. Cost and operating efficiency figures provided by the various sources are shown in Table 2.6. * Capital Costs. The Chinese expert report used the experience of China's two recently completed nuclear plants and contract prices for a plant to be built by the Chinese in Pakistan to estimate costs. Given the variation in nuclear costs worldwide, the Chinese expert group modified this cost estimate. The Chinese estimate used in Table 2.6 is half-way between the cost estimates provided in the Chinese expert report and the estimate provided by the international expert. The capital cost estimate is lowered to a value of 5,800 Yuan/kW by 2050, which is equivalent to the estimated cost of the Qinshan plant. The estimates by Desai combine actual United States plant costs, which are the only source of reliable statistics, with projected future costs for the US and other countries. * Fuel, Operation and Maintenance Costs. Fuel costs for nuclear plants are lower than for fossil-fuel based plants. The price of uranium has varied considerably over the last 25 years and lends a degree of uncertainty to future cost projections. The spot-market price for yellow-cake has dropped from over $110/kg in 1978 to less than $20/kg in mid-1992. This 90 percent decrease in the real price of uranium is the result of the development of new sources of uranium and a slower than expected demand. While the price of uranium is expected to increase by the turn of the century, the security of uranium supply is no longer considered a major concern (Desai, 1992). Figures for China's reserves of uranium are not well documented. However, the low scenario of nuclear capacity in China in the year 2050 would require over one-quarter of proven worldwide reserves of uranium that could be extracted at a cost of $130/kg or less. The high scenario of nuclear capacity in China in the year 2050 would require most of the world's proven reserves, even excluding similar increases in nuclear programs elsewhere. * Plant Availability. The cost-effectiveness of nuclear plants is affected by the plant availability. As in the capital cost values, data for plant performance varies by reactor type, reactor size, suppliers, vintage, age, country or region, prior nuclear operating experience, and calendar year-to-year variations due to refueling outages, unusual inspections, and/or major retrofits. The 6000 hours assumption listed in Table 2.6 represents a 68 percent capacity factor, which is similar to the average level achieved by pressurized light-water reactors worldwide. 18 Table 2.6: Nuclear Power Development Joint Study Joint Study International California Energy Team Team Expert Report Commission Estimate Estimate (1992 prices) (1990 prices) $/kW $/kW $/kW Yuan/KW a Power Generation 7800 1660 Unit 1 $700-2600 $2635 (in 1989 5800 (2050) 1234 Unit 2 $360-2080 prices) Unit 3 $190-1820 Transmission 700 Total Investment Cost 8500 $1809 $2635 $2635 6500 (2050) $1383 Annualized Investment 1732 582.23 $/kW 1325 (2050) Levelized Cost .4249 .0904 0.09- 0.14 0.110-0.136 (Y/kWh) .3422 (2050) .0728 $/kWh $/kWh Assumptions Annual Operating 6000 5256 - 6570 Hours Construction Period 9 years 10 years Economic Life 30 years 40 years Maintenance Ratio 2.3 % 0.015-0.03 $/kWh 20.86 $/kW Fuel Cost 440 Yuan/kW 0.007-0.01 $/kWh 0.0053-0.00787 $/kWh Back-end fuel cycle 0.003-0.006 and decommissioning $/kWh Labor Ratio 0.4 % .01334 $/kWh a Value used is 50 percent of Chinese nuclear team estimate of 5500 Yuan/MW and 50 percent of international estimate of 2150 $/kW. (5) Wind Turbine Power 2.26 Technical Feasibility. Wind power is a very attractive substitute for carbon- based fuels, since there are few negative externalities associated with its use. Wind turbine power generation is one of the most proven renewable energy technologies worldwide and is developing rapidly. Its technical feasibility has already been demonstrated in China and throughout the world. There is currently over 2,000 MW of wind-generated capacity worldwide, and in some situations, wind is the least-cost option for electricity production. China currently has 9 MW of installed grid- connected wind power, 5 MW of which are Chinese built wind farmns using domestic technology. 2.27 China has been developing and installing a large number of small (100W- 7.5kW) wind turbines for individual use in certain rural areas, most notably in Inner Mongolia. Small wind turbine technology is proven in China and the reliability is increasing. China is also improving the technical support network necessary to improve sales and maintenance. China has not been as successful in producing its own medium to large-scale wind turbines. China has produced a number of units which are currently on-line, which range in power from 20 to 350 kW. These units are generally more expensive and less reliable than advanced imported equipment. China has imported a variety of turbines, as well as produced some turbines using European technology. These units have not only contributed to China's electric supply, but have assisted China along the learning curve in producing their own turbines with better quality and in greater quantities. 2.28 Economic Assumptions. Table 2.7 and Table 2.8 show the economic calculations for grid connected wind turbines and battery charger wind turbines in China. Grid-connected systems are most useful in remote areas with current electricity shortfalls. Many of these areas also have good wind resources. Wind energy for power generation is generally more expensive than grid-based electricity generation, but in remote areas is less costly than many other options, such as diesel generators. The cost of transmission lines will preclude connection of many rural areas in China in the near term, making small wind generators an important technology for rural electrification. The current cost needed to recoup investment for wind-generated electricity in China is about 0.3 Yuan/kWh. However, it is assumed by Chinese energy experts that grid connected wind would require 92 percent of additional firm capacity to meet peak demands, which raises the levelized cost to more than 0.5 Yuan/kWVh. Even with the additional charge for back-up capacity, the cost of wind-generated power is estimated to fall to around 0.3 Y/kWh by the year 2010, which makes it one of the least cost non-carbon alternatives for power generation in China. 20 2.29 Wind farms in the U.S. in the 50 to 100 MW scale are being installed for as low as $700/kW. At this cost, wind generated electricity would be in the range of 0.04 $/kWh, which could be competitive with coal under conditions of equal reliability. Chinese experts estimate that wind-powered electricity generation would cost in the range of Y7,000-10,000/kW (US$1,490-2,1301kW). Factors raising the current cost of wind farms in China are that the scale of wind farms is smaller and that Chinese- manufactured wind turbines (20-350 kW) are not as big as foreign designs. The key to lowering the installed costs of wind turbines in China in the future is to improve domestic turbine designs to make them larger and more reliable, to capture scale economies by establishing larger wind farms, and to select sites where wind regimes and power system characteristics minimize requirements for back-up capacity. At the low end of the range for installed costs, wind power is likely to be competitive with coal-fired power generation. Table 2.7: Grid-Connected Wind Turbine Generators Joint Study Joint Study California Energy Team Estimate Team Commission (1990 prices) Estimate $/kW Yuan/KW $/kW Power Generation Year 2000 6660 1417 Year 2010 5500 1170 Year 2020 5000 1064 Transmission 500 106 Total Investment Cost $787 (1989 prices) Year 2000 7160 $1523 Year 2010 6000 $1277 Year 2020 5500 $1170 Annualized Investment (YlkWlyr) 101.40 $/kW Year 2000 959 Year 2010 803 Year 2010 736 Levelized Cost (1990 prices) (Y/kWh) 0.0556-0.0593 $/kWh Year 2000 0.408 0.0868 $/kWh Year 2010 0.318 0.0677 $/kWh Year 2020 0.273 0.0581 $/kWh Assumptions Annual Operating Hours 2190 Year 2000 2700 Year 2010 2900 Year 2020 3100 Construction Period 1 year 1 year Economic Life 20 years 30 years Maintenance Ratio 1.5 % 0 Fuel Cost 0 0 Labor Ratio 0.5 % .00926-.013 $/kWh 21 Table 2.8: Battery-Charger Wind Turbines Joint Study Team Joint Study Team Estimate Estimate (1990 prices) $/kW Yuan/KW Power Generation Year 2000 10000 $2128 Year 2010 10000 $2128 Year 2050 8000 $1702 Transmission 0 0 Total Investment Cost Year 2000 10000 $2128 Year 2010 10000 $2128 Year 2050 8000 $1702 Annualized Investment Cost (Y/kW/year) Year 2000 1770 Year 2010 1770 Year 2020 1416 Levelized Cost (1990 prices) (Y/kWh) Year 2000 0.6838 0.1455 $/kWh Year 2010 0.6838 0.1455 $/kWh Year 2020 0.5300 0.1128 $/kWh Assumptions Annual Operating Hours Year 2000 3100 Year 2010 3100 Year 2020 3200 Construction Period 1 year Economic Life 10 years Maintenance Ratio 3.0 % Fuel Cost 0 Labor Ratio 0.5 % (6) Biomass 2.30 The direct combustion of biomass materials for energy is common and widespread in China. The major forms of biomass burned are agricultural crop residues (stalks, husks, leaves) and firewood; only a small portion of animal wastes (dung) are currently used for fuel. Biomass is used by rural households primarily for cooking and heating. A small amount of biomass is currently being liquified in China on an experimental basis for use in electricity generation. Chinese energy experts estimate that direct combustion of biomass will decline as liquefied natural gas and 22 gasified biomass use becomes more popular. Larger scale usage of gasified biomass is also expected to increase for uses such as central heating districts and hot water supply systems. Table 2.9 identifies cost estimates for construction and operation of a biomass gasification power station. Table 2.9 Costs for Biogas Power Stations Joint Study Team Joint Study California Energy Estimate Team Estimate Commission (1990 prices) $/kW $/kW Yuan/KW Power Generation 1000 $213 Biogas Production 4000 $851 Total Investment Cost 5000 $1064 $1140 - $2280 (1989 prices) Annualized Investment Cost 620.72 146.97 -293.81 $/kW Levelized Cost 0.3604 Y/kWh 0.0767 $/kWh 0.0627 - 0.0963 $/kWh Assumptions Economic Life 30 years 30 years Maintenance Ratio 1.50 % 0.00 % Fuel Cost 0 0.0339 $/kWh Labor Ratio 0.5 % .00645 $/kWh Source: Chinese study team and California Energy Commission. (7) Solar photovoltaic (PV) 2.31 Technical Feasibility. Photovoltaic cells are made from a semiconductor material which converts sunlight to electricity by separating negatively-charged electrons from positively charged holes. Numerous semiconductor materials have been tested. Conversion efficiencies and production costs vary. The individual cells are joined together into a module and the modules are joined to form a larger array. Worldwide, over 200 firms produce PVs. Worldwide shipments of PVs reached 55.3 MW in 1991 (California Energy Commission, 1992). 2.32 Widescale commercialization of PV will require that cell production and assembly move from small batch, manual production to fully automated manufacturing. It is assumed that increased orders for PV cells will allow the industry to develop newer production techniques. Several countries have developed programs to promote development by creating a market for the cells. 2.33 Effort is also concentrated on improving the efficiency of cells; ie., the rate at which they convert sunlight into electricity. Laboratory tests have created cells that achieve efficiencies of 23 percent and 32 percent using concentrators to increase available sunlight. In comn ercial production, efficiencies have reached 13 percent for flat plat modules and 17 percent for concentrators. The California Energy 23 Commission projects that commercial efficiencies could reach 18 percent for flat plate and 25 percent for concentrators by 2010 to 2030. The Chinese expert team assumes that China's PVs will also reach a 18 percent efficiency for crystalline silicon cells by the year 2050. They also project that thin film cells of either amorphous silicon or CuInSe2 (CIS) and CdTe will reach 15 percent. Table 2.10 Costs for Photovoltaics Power Stations Joint Study Team Joint Study California Energy Estimate Team Estimate Commission (1990 prices) $/kW $/kW Yuan/KW Power Generation (1989) 1989 3650 to 4860 2000 20,000 to 28,400 $3636 to 5164 1940 to 3650 2010 10,500 to 19,800 $1909 to 3600 1200 to 2190 2020 6540 to 8350 $1391 to 1777 -- Annualized Investment Cost 1989 507 to 675 $/kW 2000 2483-3526 270 to 507 $/kW 2010 1304-2458 167 to 304 $/kW 2020 812-1037 -- Levelized Cost (Y/kWh) ($/kWh) 1989 0.233 to 0.310 2000 1.23 to 1.74 0.261 to 0.371 0.124 to 0.233 2010 .645 to 1.22 0.137 to 0.259 0.077 to 0.140 2020 .402 to .513 0.086 to 0.109 -- Assumptions Annual Operating Hours 2200 2190 Construction Period 1 year 1 year Economic Life 30 years 20 years Maintenance Ratio 1.00 % 0.00 % Fuel Cost 0 0 Labor Ratio 0.1 % .0008-0.0016 $/kWh 2.34 Economic assumptions. Technical improvements in photovoltaic electric generation over the past 20 years have resulted in a steady decrease in installed costs. As a result, solar photovoltaics have become economic in remote locations in developed and developing countries. The whole future of PVs depends on the reduction in the capital costs associated with their production. There have been significant reductions in costs over the last ten years. For example, the module price for crystalline silicon has dropped from 120 Yuan/W in 1978 to around 20 Yuan/W in 1992. These improvements in the efficiency of solar cells and the costs of assembly and associated equipment have lowered installed costs to $0.25 to $0.50/kWh. Still, the cost of electricity from solar PV is more than four times current average US and Chinese 24 conventional power generation cost levels. The prospects for the future depend on a 5 to 10-fold reduction in costs. Such reductions will require that cell production and assembly move from small batch, manual production to fully automated manufacturing. Even with the most optimistic of assumptions for the next century, experts expect PV- generated electricity in China to be twice the cost of coal-generated electricity. (8) Solar Thermal Power 2.35 Technical Feasibility. Test facilities of solar thermal power generation are now operating in the US and Europe. System sizes have increased from 13.8 MW to 80 MW, and installed cost per kW have dropped from $4,500 to $2,875 kW. A report by the US Department of Energy (1990) suggests several key steps to improve the efficiency and cost of central receiver power plants. Short-term improvement for the first 100 MWe central receiver plant, including low-cost membrane heliostats and reduced receiver cost for an advanced nitrate salt receiver should lower costs by 24 percent. Medium term improvements associated with the fifth central receiver plant, the first 200 MWe power plant would lower costs by 45 percent. This plant would use an advanced salt-in-tube receiver. The ultimate central station, assumed to be the sixth power plant in this development scheme, would use a direct absorption receiver and mass-produced stretched membrane heliostat concentrator, and achieve a cost reduction of 60 percent over current technologies. 2.36 Similar projections are made for parabolic-dish power plants. These systems are 25 kWe modules that will hopefully be mass-produced. The chief technological improvements will be the development of large area, single facet, stretched membrane dishes, 25 to 30 kWe advanced Stirling engines, and a reflux boiler or heat pipe receiver. 2.37 Economic Feasibility. As was the case with PVs, the key requirement for the significant reductions in solar thermal system costs will be the rapid increase in the number of units produced. Mass production of the heliostats or the parabolic dishes will only result if substantial demand for these products exist. The projected reductions assume aggressive government support and utility sponsorship. Table 2.11 presents the various cost estimates. 25 Table 2.11 Costs for Solar Thermal Power Stations Joint Study Team Joint Study California Energy Estimate Team Estimate Commission (1990 prices) $/kW $/kW Yuan/KW Power Generation 1989 2,670 - 2,860 2000 13,200 $2400 -- 2010 10,000 $1818 2,445 - 2,595 2020 7600 $1381 -- Annualized Investment Cost 1989 387 -415 2000 1,988 2010 1,506 354 -376 2020 1,144 Levelized Cost (Y,$/kWh) 1989 0.122 - 0.131 2000 0.927 0.197 -- 2010 0.702 0.149 0.069 - 0.073 2020 0.534 0.114 -- Assumptions Annual Operating Hours 2500 3,513 - 5,519 Construction Period 3 year 3 years Economic Life 20 years 30 years Maintenance Ratio 2.00 % 26 - 47 $/kW Fuel Cost 0 0 Labor Ratio 0.5 % 0 (9) Geothermal 2.38 High-temperatures (above 150°C) are generally needed for geothermal power generation. High-temperature geothermal resources in China occur ptimarily along the southeast coast (Fujian, Guangdong, Taiwan) and in the southwest plateau (southern Tibet, western Yunnan and western Sichuan). A number of experimental geothermal power facilities have been built in China utilizing low temperatures (< 100°C), including plants in Guangdong, Jiangxi, Hebei and Hunan. Two high-temperature geothermal power stations have been built in Tibet: Yangbajing, with an installed capacity of 19 MW, and Langjiu with a capacity of 1 MW. Shallow well temperatures at Yangbajing have been measured at 145-172°C, while a temperature of 202°C was measured at a depth of 1000 meters in 1988. Other potential areas for geothermal power development in China are in Yunnan, and in the East Taiwan geothermal zone. 2.39 Although geotherma -based electricity generation may play an important role in power generation in some parts of China, such as Tibet, geothermal power will not 26 provide significant amounts of power for the country as a whole. If all potential resources were developed, geothermal power would amount to about one-half of one percent of China's current installed power capacity. The cost assumptions for geothermnal are presented in Table 2.12. Table 2.12 Costs for Geothermal Power Stations Joint Study Team Joint Study California Energy Estimate Team Estimate Commission (1990 prices) $/kW $/kW Yuan/KW Power Generation (1989) 7,000 1,675 2,400 to 3,000 Annualized Investment Cost 1156 347 to 449 Levelized Cost (Y,$/kWh) 0.364 0.0773 0.060 to 0.094 Assumptions Annual Operating Hours 5,000 5,256 to 6,570 Construction Period 3 year 3 years Economic Life 15 years 30 years Maintenance Ratio 7.40 % 47 $/kW Fuel Cost 0 0 Labor Ratio 1 % 0 C. Alternatives as a Direct Substitute for Coal 2.40 In addition to coal, China currently uses oil, natural gas, and biomass fuels as direct energy sources. Under the baseline GHG scenario, China will require about 2 billion tce in the year 2020 for non-power energy applications, including transport, residential cooking and heating, and industrial process heat. It is assumed in the analysis that petroleum will be used almost exclusively in the transport and petrochemical sectors. Fuel for direct use in the residential and industrial sectors will include coal, gas, and renewables such as solar and fuelwood. (1) Biomass 2.41 Non-commercial biomass fuels, including fuelwood, crop residues and some animal dung, amounted to approximately 300 million tons of coal equivalent (mtce) in 1990. As much as half of the estimated 150 mtce of fuelwood consumed in China is obtained from the overcutting and destruction of natural forests and is therefore not sustainable. If new sources of biomass for fuel can be produced on a sustainable basis, there will be no net CO2 emissions since the carbon released during combustion will not exceed the amount absorbed by the plant during its life. Depending on the technology used, biomass fuel combustion can produce other GHG emissions besides CO2. For instance, biomass burning resulted in emissionq of about 3.6 million tons of methane, and 0.05 million tons 27 of N20 in 1990, equivalent to 10 percent and 19 percent, respectively, of total national emissions of these GHG gases.9 2.42 Fuelwood. Unlike most other alternative energy sources, the costs of producing fuelwood in China can be lower than coal on an energy equivalent basis. Based on an economic analysis of fuelwood plantations in which fuelwood is grown under good conditions and intensive management, the discounted cost of producing a ton of fuelwood was found to be 119-245 Y/tce compared with coal at about 160 Y/tce.'0 The region where fuelwood production costs are lowest is South China, where costs range from 119-141 Y/tce. However, the current price of fuelwood sold by state forest farms in China is only about 90 Y/tce, which is below the break-even price calculated for fuelwood plantations in all regions of China. If fuelwood were used to a larger extent in China for commercial purposes, such as tobacco and tea drying, or power generation, fuelwood plantations would have a ready source of funds for development and a true market price for fuelwood could develop. While strong commercial demand would aid in the development of fuelwood plantations, Chinese foresters argue that strong demand and higher prices make it even more difficult to protect natural forests from illegal felling; protection of forests has been the major reason for government support of fuelwood plantations. (2) Natural gas 2.43 Because of its convenience and higher end-use efficiency, natural gas is highly valued in China as a residential cooking fuel. Given its cleanliness, natural gas will become even more important as a substitute for coal for environmental reasons, particularly in urban areas. Development costs of new gas finds are uncertain at this point. If environmental benefits are considered, the highest-valued use of natural gas is expected to be in the residential sector and, depending on the amount of domestic gas that is discovered, this may preclude much natural gas being used by the power sector. 2.44 Coal-bed methane. Methane from coal mining represents one of China's best alternative energy options that can be developed in the short-term. Eqonomic analysis of various uses of coal-bed methane carried out under a GEF technical assistance study'" conclude that the highest valued use of the gas is as a substitute to coal by coal mines and their immediate locality. Other uses, including piping of the gas to nearby cities for residential consumption and on-site electricity generation, also show rates of return above 12 percent at current market prices for gas, coal, and power. The main barriers to the development of coal-bed methane have been low gas prices and a lack of domestic technical expertise in gas recovery and processing. The reform of natural gas 9 See Subreport 1, Estimation of Greenhouse Gas Emissions and Sinks in China, 1990, August 1994. '° The costs of producing fuelwood are detailed in Subreport 6, Greenhouse Gas Emissions Control in the Foresty Sector, November 1994. Coal-bedMethane in China, GEF Technical Assistance Study. 28 prices in China since 1990 has led to an increase in the amount of coal-bed methane recovered. This trend is likely to continue given the local environmental benefits of gas use and the high willingness to pay for gas by residential consumers. (3) Other: solar, wind, and geothermal 2.45 Renewable technologies for non-power applications, including passive solar energy, solar cookers, solar water heating, and geothermal heating, can play an important energy supply role in China in the future, particularly in the residential sector. Nonetheless, even under optimistic assumptions, these technologies are not expected to account for a large percentage of China's total energy supply. 2.46 In rural areas not connected to an electric power grid, wind can be a low-ost source of power for agricultural, residential and light industrial purposes. Solar, both active and passive, could play an important role in residential water heating and space heating/cooling in China. There are reportedly about 2 million residential solar water heaters in China today and another 500,000 domestically-produced units are being sold annually. Although precise cost information on solar water heaters produced in China is not available, domestic units are likely to be competitive in certain parts of China, and with further development, their use could be expanded in the residential- commercial sector and in some industrial process heat applications. One of the drawbacks of solar and wind energy which increases their costs, is that back-up capacity may be needed, particularly for commercial and industrial applications. 29 3. FUTURE ROLE OF ALTERNATIVES IN CHINA 3.1 Greenhouse gas emissions in China can be substantially reduced by lowering the carbon-intensiveness of China's energy supply mix. However, over the short term, there are limits on the extent of substitution away from coal due to the long lead times needed to develop alternative technologies, the abundance of low-cost coal in China, and because of the sheer magnitude of energy supply that will be needed to fuel China's economic expansion. A baseline energy use scenario to the year 2020 has been generated as part of the overall China greenhouse gas study. (see Table 3.1) This scenario assumes relatively rapid economic growth and continued improvements in energy efficiency. Total primary energy use expands over three-fold between 1990 and 2020 under the baseline scenario with a roughly comparable expansion of GHG emissions. Table 3.1 Baseline commercial energy use scenario, 1990-2020 1990 2000 2010 2020 Average annual growth rate, 1991- 2020 Total primary energy use (mtce) 987 1,560 2,380 3,300 4.1 Electric power use (TWh) 623 1,300 2,430 3,850 6.3 Per capita energy use (kgce) 863 1,200 1,700 2,280 3.3 Source: China: Issues and Options in Greenhouse Gas Emissions Control, Summary Report, December 1994. 3.2 The only low carbon-intensive fuels that are expected by most experts to supply an appreciable incremental amount of energy over the medium term (to 2010) in China are hydro for power generation, and biomass, natural gas, and coal-bed methane as direct substitutes for coal. By the year 2020, nuclear, wind, and solar could also provide significant amounts of low-carbon energy, particularly for electric power generation. The key issue for the expansion of low-carbon energy sources beyond the baseline scenario is cost. Nonetheless, over the long term, the only option for significantly reducing GHG emissions in China is the adoption of alternative energy supplies. 30 A. How Much Alternative Energy Can be Supplied? 3.3 Under the baseline scenario, coal, petroleum, and gas (including coal-bed methane) account for nearly 90 percent of China's total energy supply and around 77 percent of total electricity generation in 2020. Under the baseline, alternative energy supplies are used exclusively for electricity production. In addition to the baseline scenario, the joint study team generated three other coal substitution scenarios to reflect increasing amounts of alternative energy supplies that could be developed in China by the year 2020.12 Figure 3.1 Baseline energy supply scenario, 2020 4% 2% 1% 5%x * Coal 23%Q 65%~~~~~~~~~~~~~~C 001 & gas k~~~~~~~~~~~~~~ * Hdro 23% i165% 3D Other renew ables * Coal-bed methane 3.4 Short- to medium-term. The mix and quantities of energy resources that could be developed on a large scale before 2010 are limited to those that are already available in China or could be easily imported from abroad. Coal is projected to continue to be the primary fuel for electric power generation and as a direct fuel. Table 3.2 shows the amount of coal substitution available in the electric power sector by the year 2010 under the baseline and most the aggressive substitution case (AE-Max). The limitation on the expansion of alternatives for power generation over the short- to medium-term is due to: (i) the substantial lead times that are needed for capital-intensive projects such as hydro and nuclear power, and (ii) the fact that some alternatives may not be fully commercial before 2010. Hydroelectricity is by far the most important source of non- carbon power generation in China in the year 2010. The only alternatives to coal that could provide significant amounts of energy for direct use before 2010 are coal-bed methane, biomass, natural gas, and possibly solar. 12 A Thigh-substitution" scenario ir used in the Summary Report that is adapted from the three alternative enegy sceauios in this report. 311 Table 3.2 Alternative Electric Power Scenarios, 2010 Baseline Percent AE-Max Percent Production Scenario* (CWh) (TWh) Total 2,430 100% 2,430 100% Coal 1,903 78% 1,627 67% Hydro 360.0 15% 472.5 19% Mini-Hydro 105.0 4% 157.5 6% LNG 18.0 1% 90.0 4% Nuclear 37.8 1.5% 60.0 2.5% Solar PV Grid 0.2 0.0% 0.9 0.0% Solar PV Non-Grid 0.9 0.0% 2.0 0.1 % Wind 1.5 0.1% 12.5 0.5% Mini-Wind 0.2 0.0% 1.2 0.0% Solar Thermal 0.8 0.0% 1.5 0.1% Biogas 0.2 0.0% 1.0 0.0% Geothermal 1.0 0.0% 2.5 0.1% * Details of the three Alternative Energy (AE) scenarios (Min, Mid, Max) are provided in Annex 1. Note that AE-Max is different from the "high-substitution" scenario that is used in the Summary Report. 3.5 Longer-term. Alternative fuels, including hydro, nuclear, wind, and solar, could provide more than 40 percent of China's electricity by 2020, equivalent to between 15 and 20 percent of total energy. While there are a number of low-carbon substitutes for coal in electric power generation, such as hydro, nuclear, wind, and solar, currently more than 80 percent of the energy used in China is directly consumed for process heat or for residential cooking and heating. Even with accelerated growth in electric power sector in China, direct use of energy will still account for around 60 percent of total commercial energy in the year 2020. Direct substitution for coal by fuelwood is estimated to be able to provide 75 mtce by 2020, while coal-bed methane could provide up to 40 mtce of energy by 2020. (1) Electric Power Alternatives 3.6 Hydro. Hydropower is part of China's least-cost development program for electric power generation and China is rapidly developing its hydroelectric resources. Under the baseline scenario, which assumes that 80 percent of China's hydro resources are developed by 2050, hydro capacity expands from 36 GW in 1990 to about 138 GW in the year 2020. Despite the large expansion in hydro capacity, hydro's contribution to power generation drops from 20 percent in 1990 to about 16 percent in 2020. Even assuming a development program in which China develops every economic hydro site by the middle of the 21 st century, hydro's contribution to total electricity production would still fall below 20 percent by the year 2020. If hydro resources are developed at a faster pace than the 32 baseline scenario, the key question is how rapidly the marginal cost of installed capacity will rise. Table 3.3 Alternative Electric Power Scenarios, 2020 Baseline Percent AE-Max Percent Production Scenario (TWh) ORWh) Total 3850 100.0% 3850 100.0% Coal 2953 77% 2099 55% Mini-Hydro 133.0 2.9% 192 5% Wind 4.2 0.1% 18.2 0.5% Geothermal 1.4 0.0% 3 0.1% Hydro 486.0 10.7% 650 17% Nuclear 208.4 4.6% 585 15% Biogas 0.4 0.0% 2 0.1% LNG 21.0 0.5% 97.5 2.5% Solar PV 35.9 0.8% 182 5% Mini-Wind 0.5 0.0% 1.9 0.1% Solar Thermal 1.2 0.0% 4 0.1% * Details of the three Alternative Energy (AE) scenarios (Min, Mid, Max) are provided in Annex 1. Note that AE-Max is different from the "high-substitution" scenario used in the Summary Report. 3.7 Nuclear. Most Chinese energy experts emphasize nuclear power development, together with hydro, as the principal alternatives to coal for electric power generation in China in the future. The baseline scenario assumes that China's nuclear capacity would grow from zero in 1990 to between 30 and 35 GW in 2020. The AE-Max scenario assumes that China would have nearly 100 GW of installed nuclear capacity by the year 2020. A slightly less ambitious nuclear scenario (the high substitution scenario) was used for the Summary Report. Under this scenario, China would have 87 GW of installed nuclear capacity by the year 2020, which would require China to complete more than ten 600 MW plants each year from 2010 onwards. Cost issues aside, such, a nuclear program would be the largest in the world and would require immediate major action on technology development, personnel training, and the establishment of the necessary regulatory framework. 3.8 Nuclear power's expanded role in China depends on the development of low-cost reliable nuclear plants, and eventually either discovery of large uranium resources or radical change in the type of nuclear power plant now being built. Such advances will require significant investment in research and development in improved nuclear designs, which the current development plan for nuclear power in China appears unlikely to achieve. 3 Table 3.4: Nuclear Power Scenarios for China (GW) Scenario 2000 2010 2050 Chinese Experts Low 3.3 7.3 120 Medium 4.3 8.3 180-240 High 5.3 10-20 360 International Expert Report* Low 2.1 2.4 12 Medium 2.1 3.3 20 HiLh 2.1 ~~~~~4.5 50 *Desai (1992). 3.9 Liquified natural gas. The high capital costs and the lack of large numbers of suitable ports will limit the contribution of LNG in China's energy future. It is assumed that under the most optimistic case, China could develop four full-scale receiving facilities at 5,000 MW each by the year 2020. So far, little research and engineering has been done to determine how many feasible port facilities are available in China. Nor is it known how much the development costs of each potential site will be. 3.10 Wind. The wind energy resources that could be exploited in China in the stratum near the earth are more than 200,000 MW. 'The current capacity of wind generators in China is about 9 MW. Chinese energy experts estimate that wind generator capacity could increase at most to 4,300 MW by 2010 and 9,000 MW by the year 2020. For comparison, there is currently around 2,000 MW of wind-generated capacity worldwide. Nonetheless, 9 GW is a small fraction of the potential wind power in the country, and many international energy experts believe wind capacity could be expanded further. Finding good quality sites will not be a limiting factor in the near term development of the wind resource. However, areas where wind speeds are consistently high enough to justify wind farm development are mostly located in isolated regions of the country. Intermittent production requires that some form of back-up generation also be built. As mentioned above, increasing the quality and reducing the cost of turbine production is the only major barrier to making wind a significant component of China's electricity supply. 3.11 Other renewables. The joint study team estimates that as much as 82 GW of solar power generating capacity could be installed in China by the year 2020. In 1991, worldwide shipments of solar PVs were around 55 MW. Despite the potential for large- scale expansion of solar and wind, other renewables would only provide around 5 percent of electric power generation in 2020, and even this expansion will require significant reductions in technology costs. Massive investments in research and production will be needed to take advantage of the potential cost reductions resulting from mass production. 34 Table 3.5 Chinese Estimates of Biomass Usage (mtce) Direct Combustion Large-scale gasification Total Biomass Usage Year 2000 236 million tce 30 million tce 266 million tce Year 2010 214 million tce 50 million tce 264 million tce Year 2020 1 10 million tce 160 million tce 270 million tce (2) Non-power Alternatives 3.12 In addition to coal, China currently uses oil, natural gas, and biomass as direct fuel sources. It is expected that all additional sources of oil will be used in the transport and petrochemical sectors and are unlikely to be available for process loads or heating. 3.13 Fuelwood. The use of biomass fuels is expected to diminish in the future as commercial fuels become more available and as laws and regulations prohibit the exploitation of wood from public lands. Government and private efforts are underway in China to increase the supply of new biomass resources, particularly fuelwood from dedicated fuelwood plantations. While fuelwood plantations do not sequester much carbon on a net basis, their contribution to CO2 reduction can be significant if fuelwood is substituted for fossil fuels. Fuelwood from new plantations could amount to 276 mt (air dry), or approximately 150 mtce, by 2020. 3.14 Natural gas. Natural gas sources may be expandable either by discovery and development of new domestic sources, including tapping the large reserves of coal-bed methane, or imported by way of pipeline construction or shipments of liquefied natural gas. It is assumed that in the future natural gas will be used primarily for residential and commercial energy purposes, and, depending on the total supply, could be used for electric power generation. Given the high value of natural gas in China, a more aggressive exploration and development program is warranted. Domestic natural gas production is assumed to rise from 15 bcm in 1990 to 115 bcm in 2020 under the baseline scenario and to 150 bcm under the most optimistic scenario. Both these scenarios will require large additions to proven natural gas reserves in China. Still, these amounts are equivalent to only 4 and 6 percent, respectively, of total projected energy use in China in the year 2020. 3.15 Coal-bed methane. Currently, only about 430 million cubic meters (cm) of methane, or less than 5 percent of methane emissions from large state-owned mines, is recovered through mine degasification and used. This amount could be increased to 2-4 billion cm if the state mines with methane recovery systems could increase their recovery to levels of best-practice in China. If coal production in China in the year 2020 expands to the levels envisioned by the baseline scenario, the amount of coal-bed methane that could be recovered and used with existing domestic technology would be about 30 bcm, or double the current natural gas production in China. 35 3.16 Other renewables. While small in comparison to overall energy use, other renewables can play an important role in specific applications. Solar for residential and industrial water heating, for example, has significant potential for displacing coal for direct use. (3) GHG Reduction Potential 3.17 Under the baseline scenario, greenhouse gas emissions increase nearly three-fold between 1990 and 2020 from around 800 mtC to 2,400 mtC. Through the adoption of various mitigation measures, including the expansion of low-carbon energy technologies, it is estimated that China's GHG emissions could be limited to a two-fold increase between 1990 and 2020. 3.18 For estimating the GHG reduction potential in China, a "high (coal) substitution" scenario was created by the joint study team. The estimates of low-carbon energy supply used for the high substitution scenario are between the AE-Mid and AE-Max scenarios for electricity generation. In addition, estimates of low-carbon for direct substitution have been added. The overall results of the scenario for China's total energy supply in the year 2020 are shown in Figure 3.2. Figure 3.2 Total Energy Supply in 2020, High Substitution Scenario 6% 2% 2%1% 8% U Coal 0 Oil & gas Hyo* d . , d . , , . * Nuclear * Other renewables 58% O Fuelwood 23% El Coal-bed rnethane 36 3.19 The potential for limiting GHG emissions through the expansion of low-carbon energy sources is presented in Table 3.6. Again, for GHG reduction from the electric power sector, the joint study team created a high substitution scenario based on the AE- Mid and AE-Max scenarios. Under the high substitution scenario, nearly 60 percent of the potential is in substitutes for coal for electric power generation. Of the low-carbon power potential, nuclear accounts for more than one-half, while additional hydro (above and beyond the baseline) accounts for around 19 percent. Non-power coal substitution comes from two dominant sources -- coal-bed methane and biomass production -- which together account for about 40 percent of the total GHG reduction potential from low-carbon energy technologies in the year 2020. Table 3.6 Greenhouse Gas Reduction Potential for Low-carbon Energy Technologies, 2020 Low-carbon Technology Reduction Potential: High Substitution Scenario ......................................... ............ Nuclear 74 Hydroelectric 26 LNG 6 Wind 5 Solar PV 28 Electricity-substitution 140 Coal-bed methane 42 Fuelwood (new plantations) 55 Direct use 97 TOTAL 237 B. The Cost of Expanding Alternative Energy Supplies 3.20 Based on a review of international and domestic experience, the joint study team has estimated the costs of expanding alternative energy sources. For electric power, where the number of alternative technologies are greatest, both investment and levelized generation costs have been estimated. Because major substitution before 2010 will be limited, the time frame for the cost estimates is roughly the year 2020. Ranges have been used to reflect the large degree of uncertainty for most of these estimates. Cost estimates for alternative energy sources that could substitute for coal or other fossil fuels for direct 37 use have made use of the economic analyses conducted for this study and other GEF projects. 13 3.21 Even under optimistic assumptions, most of the alternative energy sources that can be developed on a sizable scale in China over the next 25 years are more costly than coal. 14 Unless the costs of alternatives can fall to a level comparable with coal, there will be a large net cost for reducing CO2 through the adoption of alternative energy. The joint study team estimates that, compared with the baseline scenario, it will require an additional 750 billion yuan (US$159 billion) to meet electric power demand in the year 2020 under the high substitution scenario.1i (1) Electric power 3.22 Under all alternative energy scenarios, the absolute amount of thermal power capacity in China will increase over the next 25 years. The extent to which low carbon- intensive fuels can be substituted for coal for power generation is related to upfront capital investment and capacity cost, and to the average cost of generating electricity for each of the alternatives. Table 3.7 China: Estimates of Capital and Levelized Costs of Electric Power under Current Trends, 2020 Investment Cost Levelized Cost Average (1990 Y/KW) (1990 Y/KWh) US$/KWh) Coal 4,000-5,000 0.18-0.25 0.046 Wind (grid) 3,300-6,500 0.20-0.37 0.061 Geothermal 7,000-14,000 0.28-0.45 0.078 Incremental hydro 6,000-7,500 0.30-0.35 0.069 Nuclear 7,000-12,000 0.35-0.66 0.107 Biomass (gasified) 5,000-10,000 0.29-0.45 0.079 LNG 4,000-8,000 0.24-0.40 0.068 Solar PV 10,000-20,000 0.50-1.00 0.213 Solar thermal 8,000-12,000 0.32-0.70 0.109 3 Cost estimates for coal-bed methane recovery and use were obtained from the Global Climate Change Division, US Environmental Protection Agency, which is involved in a GEF-supported technical assistance project assessing coal-bed methane use in China. 4 The cost of coal use in China is assumed to increase, both for direct use and for electric power generation, due to more strict environmental controls on coal combustion. 5 Cost estimates for the three alternative energy scenarios (AE-Min, AE-Mid, AE-Max) are provided in Annex 1. All cost estimates are in 1990 const -it prices and converted to USS at the 1990 official exchange rate of 4.7 yuanlUSS. 38 (2) Comparison of Levelized Costs 3.23 Coal is the cheapest and most expandable of all electricity-generation options. No other option can compare directly with coal in either levelized cost or ability to meet increased demand. Annex 1 shows the levelized costs of the various technologies as projected by Chinese and international experts. The key finding of the analysis is that the average cost of coal fired generation is likely to be considerably cheaper than other options for electricity generation in China. Table 3.8 shows the additional costs of expanding low-carbon energy technologies beyond the baseline in 2010 for several alternative energy scenarios. Therefore, in general, until costs of other technologies drop in China, there will be a positive cost to reducing CO2 through the substitution of alternative energy technologies for coal. Support of these technologies will require incremental amounts of financial support if they are to actively be substituted. The exceptions are those technologies that are currently economic under certain conditions, including hydroelectric power, coal-bed methane, fuelwood production, domestic natural gas, and wind-powered electricity generation. Table 3.8 The Costs of CO2 Reduction, 2010 Year 2010 Baseline AE-Min AE-Mid AE-Max Electricity Consumed (TWh) 2,430 2,430 2,430 2,430 Total Investment (billion Yuan) 2,135 2,192 2,261 2,414 Levelized Cost (Yuan/KWh) 0.234 0.240 0.246 0.260 CO2 Reduced (million tons over baseline) 16 36 59 Investment per CO2 Reduced (Yuan/ton) 3,488 3,537 4,742 Levelized Cost per ton C2 Reduced 893 861 1,090- 3.24 Electricity generation in China beyond 2010 is likely to continue to be dominated by coal unless major funds are provided to develop and promote alternatives. In addition, removing coal as a form of generation will be quite costly. As shown in Table 3.9, the levelized cost and investment required to accelerate low-carbon technologies beyond the baseline is considerable. Table 3.9 The Costs of CO2 Reduction, 2020 Year 2020 Baseline AE-Min AE-Mid AE-Max Electricity Consumed (tWh) 3,850 3,850 3,850 3,850 Total Investment (billion Yuan) 4,297 4,550 4,812 5,263 Levelized Cost (Yuan/kWh) 0.206 0.219 0.229 0.246 CO2 Reduced (million tons over baseline) 48 96 179 Investment per CO2 Reduced (Yuan/ton) 5,282 5,354 S,398 Levelized Cost per C20 Reduced 1,067 _939 876 3;9 4. CONCLUSIONS AND RECOMMENDATIONS A. Summaty of Findings 4.1 By the year 2020, large-scale adoption of low-carbon energy sources could displace a substantial quantity of coal in China, particularly for electric power generation. Based on a projection of current trends in technological development, the joint study team estimates that low-carbon fuels could provide as much as 35-40 percent of electric power generation and 15-20 percent of China's total energy supply by the year 2020. 4.2 However, large-scale substitution of coal use by 2020 based on current alternative energy technologies can be achieved only at enormous financial cost. According to the analysis, most of the low-carbon fuels that cDuld substitute on a large scale for coal will be more costly than coal over the next twenty-five years, even when an environmental premium is added to the cost of coal. Expanded development, beyond current trends, of nuclear power, hydro, wind, solar, gas and other non-coal energy sources is therefore very expensive. As an example, to reduce the share of coal in total energy use in the year 2020 from 65 percent (baseline scenario) to 58 percent would carry an additional cost of more than US$100 billion. 4.3 There are a number of existing alternative energy technologies that are currently cost-effective compared with coal under a wide variety of conditions. There is thus some opportunity for expanding low-cost "no-regrets" investments in low-carbon energy supply technologies, including investments in hydroelectric power, the use of coal-bed methane, fuelwood production under favorable natural conditions, expanded exploration and development of natural gas, and wind-powered electricity generation in certain places. However, significant development of alternative energy technologies can only occur in China by lowering investment and operating costs; this will require technology development. B. Policy Recommendations 4.4 China is likely to require large quantities of alternative energy supplies during the early part of the next century for local environmental and logistical reasons, in addition to global environmental concerns. Given the abundance of low-cost coal resources in China, the necessary technological development of alternative energy sources is not likely to occur at sufficient speed solely through reliance on market forces. At present, China's energy industry is guided by short-term objectives focused on alleviating shortages and adjusting to the new market -nvironment. Institutional responsibilities for developing alternative energy sources are also fragmented. However, large-scale development of coal 40 alternatives in the future requires sustained policy support and strategically placed investment for technology development and demonstration today. 4.5 Accelerated development of alternative energy sources will require a program of well-targeted Government and international support for technology development, especially for renewable energy. The first step in this process is the adoption of a well- targeted and clear overall strategy for the development of cost-effective alternative energy technologies. A study has recently been completed in China by the three commissions responsible for alternative energy development policy,'6 which outlines a plan for alternative energy during the 9th five-year plan (1996-2000). 4.6 The joint study team recommends that the Chinese government establish, with international assistance where required, an aggressive program to accelerate the development of alternative energy sources, particularly renewable energy technologies. Primary emphasis should be given to technologies which ultimately have the potential to make a large contribution to China's long-term energy supply. The program should focus on research, technology transfer from abroad, and technology demonstration and dissemination activities aimed to reduce the costs of alternative energy supply and to improve cost-effectiveness compared with use of coal. Transfer of advanced technology from abroad clearly will be important in the proposed technology development effort. It should be recognized, however, that the developed countries do not face the same challenge that China faces to develop very large new supplies of non-coal energy for economic development. To spur technology development and lower costs, it is probably necessary for China to establish strong domestic research and development and manufacturing capabilities. For these reasons, technical leadership in China for the development of alternative energy technologies is needed. 4.7 Technical assistance and transfer and demonstration of approaches and techniques new to China can accelerate the development of alternative energy and should be promoted. One of the most important means of promoting the transfer of technologies to China is through policy reform to allow private sector investment. As described in Chapter 2, important advances have been made world-wide in the last few years in many alternative energy technologies. Liberalizing trade policies in China and in supplier countries could greatly aid in the transfer of commercial or near-commercial technologies. In addition to the private sector, bilateral and international assistance, including support from the GEF, can also be important in introducing new technologies and approaches to China. 4.8 Examples of alternative energy technologies that have been proven abroad and which could be transferred to China include expanded coal-bed methane extraction and use, and further development of sustainable biomass fulel use, such as through development of high-yield plantations for fuelwood production for direct use or for power 16 The three national agencies are: thi State Planning Commission, the State Science and Technology Commission, and the State Economic and Trade Commission. 41 generation. Other examples of technologies that have potential for cost-effective substitution of coal on a large scale in China, but which need further development, include more cost-effective methods for harnessing nuclear power, wind farms based on large-scale generators, advances in solar photovoltaic and thermal-electric technologies, large-scale biomass energy utilization schemes, and new methods for extracting natural gas under difficult geological conditions. Displacement of coal in non-power uses in China, such as industrial process heat and residential cooking, will be a particular challenge. 4.9 Based on the research carried out under the overall China greenhouse gas study, there are two major options for reducing greenhouse gas emissions in China: (i) improvements in energy efficiency, and (ii) the substitution of low- or non-carbon energy technologies for fossil fuels. Based on current cost-effectiveness, energy efficiency improvements can and should be undertaken immediately and be sustained. However, unlike energy efficiency, which only buys the world time in terms of lowering atmospheric concentrations of GHGs, low- or non-carbon technologies are the only sustainable option for limiting GHG emissions. While large-scale adoption of low-carbon energy supplies cannot be immediately undertaken in China, without action now on technology development, China will be unable to realize even modest increases in alternative energy supplies in the future. 42 5. REFERENCES Bao, Yunqiao. "Report on Nuclear Power," Background report prepared for the GEF project, China: Issues and Options in Greenhouse Gas Emissions Control (hereafter, China GHG Study), April 1993. California Energy Commission, Energy Technology Status Report, Appendix A: Detailed electric generation technology evaluations, 1991, 1992, 1993, Sacramento. China: Issues and Options in Greenhouse Gas Emissions Control, Summary Report, Joint report of the Chinese Government, United Nations Development Programme, and the World Bank, December 1994. China Solar Energy Society (ed.) "The Development of New and Renewable Energy Resources in China," China Science and Technology Press, Beijing, 1994. China Statistical Yearbook, 1991-1994. (in Chinese), China Statistical Press, Beijing. Chinese Ministry of Electric Power, "Electric Power," Beijing, 1994. Desai, Nikhil, "World Nuclear Power Status and Size/Cost Projections for China," Background report prepared for the China GHG Study, October 1992. , "World Nuclear Power Capacity and Costs, " Memorandum prepared for the China GHG Study, February 1993. Hao, Jiming et al, Estimation of Greenhouse Gas Emissions and Sinks in China, 1990, Subreport No.1, China GHG Study, August 1994. Johnson, Todd M., Lampietti, Julian, Blomkvist, Lars, and Xu, Deying. Greenhouse Gas Emissions Control in the Forestry Sector, Subreport No. 6, China GHG Study, November 1994. Kong, Zhiping. "Report on Natural Gas," Background report prepared for the China GHG Study, April 1993. Lin Anzhong, and Lee, Anding. "Report on Photovoltaic Generation," Background report prepared for the China GHG Study, April 1993. U.S. Department of Energy, 1990, Solar Thermal Electric Technology Rationale, Solar Thermal and Biomass Power Division, Office of Energy Conversion, US DOE, Washington DC. 43 Wang, Yietao, and Shi, Pengfei. "Report on Wind Energy," Background report prepared for the China GHG Study, April 1993. Ward, William A. et al, Energy Efficiency in China: Case Studies and Economic Analysis, Subreport No. 4, China GHG Study, December 1994. Wells, Gary J., Xu, Xiping, and Johnson, Todd M., Valuing the Health Effects of Air Pollution: Application to Industrial Energy Efficiency Projects in China, Subreport No. 8, China GHG Study, October 1994. Wu, Changlun, Zhang, Zhengmin, Liu, Di, and Li, Jingjing. "Alternative Energy Supply Options to Substitute for Carbon-Intensive Fuel: A Review of Scenario Analysis (Final Report (Vol. 1) and Model and Appendix (Vol. 2))," Background report prepared for the China GHG Study, April 1993. Yin, Lian, "Renewable Energy Programs and Projects in China," Chinese Ministry of Electric Power, 1994. Zhang, Zhihong, "Wind-electricity Generation: Technology, Market, and Economics," Background report prepared for the China GHG Study, September 1992. ANNEX 1. I COST OF ALTERNATIVE TECHNOLOGIES FOR ELECTRICITY GENERATION IN 2000 BAU (IN 1990'S YUAN) BUSINESS AS USUAL IN 2000 unit TOTAL COAL HYDRO MINI- IMPORTED- NU- SOLAR SOLAR WINDI MINI- SOLAR BIOGAS GEO- -ELEC. GENERATION HYDRO GAS-BASED CLEAR PVII] PV 12] | WIND THERMAL THERMAL I . Electricity denand in 2000 TWh 1302.00 940.23 247.50 87.50 6.00 19.80 0 0.17 0.41 0.09 0.00 0.10 0.20 2. Annual operating hours Hours/year 5000 3800 2700 6000 6000 2200 2200 2700 3100 2500 2000 5000 3. Capacity required in 2000 GW 290.23 188.05 5.13 32.41 1.00 3.30 0.00 I 0.08 0.15 0.03 0.00 0.05 0.04 4. Existing capacity in 1992 GW 165.74 125.00 24.00 16.00 0.40 0.30 0 0.00 0.00 0.00 0.00 0.01 0.03 5 New capacity required (3-4) GW 124.49 63.05 41.13 16.41 0.60 3.00 0 0.08 0.15 0.03 0.00 0.04 0.ol 6. Investment per kW Yuan/kW 4500.00 5360 4500 3608 8500 28400 39400 7160 10000 13200 5000 7000 7. Total investment required Billion yuan 749.11 319.11 298.19 83.05 2.16 41.86 0.03 3.05 1.04 0.30 0.00 0.22 0.09 8. Interest rate = 12% % anmua 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 9. Econon life Years 25.00 50.00 30.00 25.00 30.00 30.00 30.00 20.00 10.00 20.00 30.00 15.00 10. Capital Recovery Factor(CRF) % 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annualized investment cost Billion yuan 92.99 40.69 35.91 10.31 0.28 5.20 0.00 0.38 0.14 0.05 0.00 0.03 0.01 (7*10) _ _ _ _ _ _ _ __ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ 12. Aniual naintenance cost Billion yuan 11.17 5.96 1.66 0.04 0.96 0.00 0.02 0.02 0.01 0.00 0.00 0.01 1 13. Annual labour cost Billion yuan 3.19 1.19 0.33 0.01 0.17 0.00 0.02 0.01 0.00 0.00 0.00 0.00 14. Anmua fudelcost Billion yuan 9.24 0.00 0.00 0.79 1.32 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15. Totalanual cost (II+12+13+14) Billion yuan 129.11 64.28 43.06 12.30 1.12 7.65 0.00 0.42 0.16 0.06 0.00 0.03 0.02 16. Annual generation from new TWh 538.23 315.23 156.30 44.30 3.60 18.00 0.00 0.17 0.39 0.09 0.00 0.09 0.06 Ratio oftotal 100.00 58.57 29.04 8.23 0.67 3.34 0.00 0.03 0.07 0.02 0.00 0.02 0.01 17. Levelized cost (15/16) Yuan/kWh 0.24 0.20 0.28 0.28 0.31 0.42 1.71 2.44 0.41 0.68 0.00 0.36 0.36 18. Period ofconsrruction year 3.00 6.00 3.00 1.00 9.00 1.00 1.00 1.00 1.00 3.00 1.00 3.00 19. Coalequivaleit coef. for elec. g/kWh 350 350 350 350 350 350 350 350 350 350 350 350 20. Todal lete gen.(in coal Mtee 188.38 110.33 54.71 15.51 1.26 6.30 0.00 0.06 0.14 0.03 0.00 0.03 0.02 oqivalent) __ __ _ 21. CO2menssion coef. Ton cabiontce 1.14 0.74 0.41 22. Total C02 eaission M.ton carbon 81.61 21.09 0.52 23. Amul intea percntage % adn 28.60 3.50 2.00 2.00C 2.00 2.30 0.70 0.70 1.50 3.00 2.00 1.50 7.40 24. Coniribution to peak load GW 124.50 63.05 41.13 16.41 0.60 3.00 0.00 0.08 0.15 0.03 0.00 0.04 0.01 25. Additiol coal-based capacity for GW 13.04 0.00 0 12.31 0.60 0.00 0 0.00 0 0.00 0.00 0.00 0. meding peak load demand - - - - - - - - -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~( ANNEX 1.2 COST OF ALTERNATIVE TECHNOLOGIES FOR ELECTRICITY GENERATION IN 2000 SCENARIO AE-MIN (IN 1990S YUAN) SCENARIOAE-MIN IN 2000 Unit TOTAL COAL HYDRO MINI- IMPORTED- NU- SOLAR SOLAR WIND MINI- SOLAR BIOGAS GEO- -ELECTRICITY GENERATION HYDRO GAS-BASED CLEAR PV [I PV [2] WIND THERMA THERMA _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~L L 1. Electricity demand in 2000 TWh 1302.00 926.13 247.50 87.50 12.00 25.80 0 0.21 2.16 0.12 0.13 0.20 0.25 2. Annual operating hours Hours/year 5000 3800 2700 6000 6000 2200 2200 2700 3100 2500 2000 5000 3. Capacity required in 2000 GW 290.20 185.23 65.13 32.41 2.00 4.30 0.00 0.10 0.80 0.04 0.05 0.10 0.05 4. Existing capacity in 1992 GW 165.74 125.00 24.00 16.00 0.40 0.30 0 0.00 0.00 0.00 0.00 0.01 0.03 5. New capacity required (34) GW 124.46 60.23 41.13 16.41 1.60 4.00 0 0.09 0.80 0.04 0.05 0.09 0.02 6. Investment per kW Yuan/kW 4500 5360 4500 3608 8500 23800 34900 7160 10000 13200 5000 7000 7. Total investment required Billion yuan 758.49 304.84 298 83 5.77 55.82 0.05 3.30 5.70 0.40 0.74 0.47 0.17 8. Interest rate = 12% % annual 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 9. Eeonomic life Years 25 50 30 25 30 30 30 20 10 20 30 15 10. Capital Recovery Factor(CRF) 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annualized investinent cost (7* 10) Billion yuan 94.18 38.87 35.91 10.31 0.74 6.93 0.01 0.41 0.76 0.07 0.10 0.06 0.03 12. Annual maintenance cost Billionyuan 10.67 5.96 1.66 0.12 1.28 0.00 0.03 0.09 0.01 0.01 0.01 13. Annual labour cost Billion yuan 3.05 1.19 0.33 0.02 0.22 0.00 0.02 0.03 0.00 0.00 0.00 0.00 14. Annual fuel cost Billion yuan 8.82 0.00 0.00 2.11 1.76 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15. Total annual cost (11+12+13+14) Billion yuan 131.61 61.41 43.06 12.30 2.99 10.20 0.01 0.46 0.88 0.08 0.12 0.07 0.04 16. Annual generation froin new capacity TWh 538.23 301.13 156.30 44.30 9.60 24.00 0.00 0.21 2.15 0.12 0.13 0.19 0.11 Ratio of substitution % 100.00 0.00 0.00 -42.55 42.55 -0.02 -0.27 -12.45 -0.22 -0.89 -0.71 -0.35 17. Levelized cost (15/16) Yuan/kWh 0.24 0.20 0.28 0.28 0.31 0.42 1.43 2.21 0.41 0.68 0.94 0.36 0.36 18. Period ofconstruction Years 3.00 6.00 3.00 1.00 9.00 1-1.00 1.00 1.00 3.00 1.00 3.00 19. Coal-equivalentcoef forelee. g/kWh 350 350 350 350 350 350 350 350 3501 3501 350 350 20. Total elect. genL(in coal equivalent) Mtce 188.38 105.39 54.71 15.51 3.36 8.40 0.00 0.07 0.75 0.041 0.04 0.07 0.04 21. CO2emissioncoef. Toncarbon/tee 0.74 0.41 22. Total C02 emission M.ton carbon 78.84 77.46 1.37 23. Annualrmaintenancepercentage %annual 3.50 2.00 2.00 2.00 2.30 0.70 1.00 1.50 3.00 2.00 1.50 7.40 24. Contributiontopeakload GW 116.52 69.83| 31.00 9.00 1.60 4.00 0 0.09 0.80 0.04 0.05 0.09 0.02 25. Additionalcoal-basedcapacityfor GW 7.69 0.00 0.00i 6.75 0.00 0.00 0.16 0.00 0.73, 0.00o 0.05 0.00 0.00 meeting peak load demand ANNEX 1.3 COST OF ALTERNATIVE TECHNOLOGIES FOR ELECTRICITY GENERATION IN 2000 SCENARIO AE-MID (IN 1990S YUAN) SCENARIO AE-MID IN 2000 Unit TOTAL COAL HYDRO MINI- IMPORTED- NIJ- SOLAR SOLAR WIND MINI- SOLAR BIOGAS GE- -ELECTRICITY GENERATION HYDRO GAS-BASED CLEAR PV [11 PV [21 WIND THERMA THIERMA _____________ ____ __ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~L L 1. Electricity demand in 2000 TWh 1302.00 883.87 270.00 94.50 18.00 31.80 0.01 0.24 2.60 0.19 0.20 0.30 0.30 2. Annual operating hours Hoursfyear 5000 3800 2700 6000 6000 2200 2200 2700 3100 2500 2000 5000 3. Capacity required in 2000 GW 292.55 176.77 71.05 35.00 3.00 5.30 0.00 0.11 0.96 0.06 0.08 0.15 0.06 4. Eidsting capacity in 1992 GW 165.74 125.00 24.00 16.00 0.40 0.30 0 0.00 0.00 0.00 0.00 0.01 0.03 5. New capacity required (3-4) GW 126.8t 51.77 47.05 19.00 2.60 5.00 0.00 0.11 0.96 0.06 0.08 0.14 0.03 6. Inveshnent per kW Yuan/kW 4500 5360 4500 3608 8500 21000 32200 7160 10000 13200 5000 7000 7. Tod ineshnent required Billion yuan 791.58 262.06 341.11 96.17 9.38 69.77 0.06 3.40 6.86 0.60 1.19 0.72 0.25 8. Intret rate = 12% % annual 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 9.Econouuc life Years 25 50 30 25 30 30 30 20 10 20 30 15 10. Capital Reovery Factor(CRF) _ 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Anzmlized investment cost (7* 10) Billion yuan 98.03 33.41 41.083 11.94 1.20 8.66 0.01 0.42 0.92 0.11 0.16 0.09 0.04 12. Annulmaintenance cost Billion yuan 9.17 6.82 1.92 0.19 1.60 0.00 0.03 0.10 0.02 0.02 0.01 0.02 13. Anmul labour cost Billion yuan 2.62 1.36 0.38 0.04 0.28 0.00 0.02 0.03 0.00 0.01 0.00 0.00 14. Annual fuel coat Billion yuan 7.58 0.00 0.00 3.43 2.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15. Totalannualcost(11+12+13+14) Billion yuan 135.91 52.79 49.26 14.25 4.85 12.75 0.01 0.47 1.06 0.13 0.19 0.10 0.06 16. A ual generaion from new capacity TWh 538.23 258.87 178.80 51.30 15.60 30.00 0.01 0.23 2.59 0.19 0.20 0.29 0.16 Ratio ofsaubstitution % 100.00 -39.93 -12.42 -21.29 -21.29 40.01 -0.11 -3.90 -0.17 -0.35 -0.35 -0.18 17. Levelized cost (I5/16) Yuan/kWh 0.25 0.20 0.28 0.28 0.31 0.42 1.29 2.04 0.41 0.68 0.94 0.36 0.36 18. Period ofconstruction Years 3.00 6.00 3.00 1.00 9.00 1.00 1.00 1.00 1.00 3.00 1.00 3.00 19. Coal-equivalent coef. for elec. glkWh 350 350 350 350 350 350 350 350 350 350 350 350 20. Toal dlec gen.(in coal equivalent) Mtce 188.38 90.61 62.58 17.96 5.46 10.50 0.00 0.08 0.91 0.07 0.07 0.10 0.06 21. C02 emission coef. Ton carbon/tce 0.74 0.41 22. Total C02 emission M.ton carbon 68.83 66.59 2.23 23. Annual mairtance percentage % annual 3.50 2.00 2.00 2.00 2.30 1.00 1.00 1.50 3.00 2.00 1.50 7.40 24. Contribution to peak load GW 117.39 61.37 36.00 11.00 2.60 5.00 0.00 0.11 1.00 0.06 0.08 0.14 0.03 25. Additional coal-based capacity for GW 9.25 0.00 0.00 8.25 0.00 0.00 0.00 0.00 0.92 0.00 0.08 0.00 0.00 meeting peak load demand ANNEX 1.4 COST OF ALTERNATIVE TECHNOLOGIES FOR ELECTRICITY GENERATION IN 2000 SCENARIO AE-MAX (IN 1990/S YUAN) SCENARIO AE-MAX IN 2000 Unit TOTAL COAL HYDRO MINI- IMPORTED- NU- SOLAR SOLAR WIND MINI- SOLAR BIOGA GE- S -ELECTRICITY GENERATION _ HYDRO GAS- CLEAR PV [(I PV [21 WIND THERMA THERMA BASED L L I. Electricity demand in 2000 TWh 1302.00 832.04 292.50 105.00 30.00 37.80 0.01 0.25 3.00 0.25 0.25 0.50 0.40 2. Annual operating hours Hours/year 5000 3800 2700 6000 6000 2200 2200 2700 3100 2500 2000 5000 3. Capacity required in 2000 GW 295.31 166.41 76.97 38.89 5.00 6.30 0.01 0.12 1.11 0.08 0.10 0.25 0.08 4. Existing capacity in 1992 GW 165.74 125.00 24.00 16.00 0.40 0.30 0 0.00 0.00 0.00 0.00 0.01 0.03 5. New capacity required (3-4) GW 129.57 41.41 52.97 22.89 4.60 6.00 0.01 0.11 1.11 0.08 0.10 0.24 0.05 6. Investrnent per kW Yuan/kW 4500 5360 4500 7900 8500 20000 31200 7160 10000 13200 5000 7000 7. Total investmnent required Billion yuan 845.03 209.59 384.04 115.85 36.34 83.73 0.10 3.54 7.92 0.80 1.48 1.22 0.41 8. IntereT . ate = 12% % annual 12 12 12 12 12 12 12 12 12 12 12 12 12 9. Economic life Years 25 50 30 25 30 30 30 20 10 20 30 15 10. CapitalRecoveryFactor(CRF) % 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annualized investment cost (7* 10) Billion yuan 104.44 26.72 46.24 14.38 4.63 10.39 0.01 0.44 1.06 0.14 0.20 0.15 0.06 12. Annual rnaintenance cost Billion yuan 7.34 7.68 2.32 0.73 1.93 0.00 0.04 0.12 0.02 0.03 0.02 0.03 _i 13. Annual labour cost Billion yuan 2.10 1.54 0.46 0.15 0.33 0.00 0.02 0.04 0.00 0.01 0.01 0.00 14. Annual fuel cost Billion yuan 6.07 0.00 0.00 6.07 2.64 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15. Totalannualcost(11+12+13+14) Billionyuan 144.12 42.22 55.46 17.16 11.58 15.30 0.01 0.49 1.22 0.17 0.24 0.18 0.09 16. Annual generation from new capacity TWh 538.23 207.04 201.30 61.80 27.60 36.00 0.01 0.25 2.99 0.25 0.25 0.49 0.26 Ratio of substitution % 100.00 -41.59 -16.18 -22.18 -16.64 -0.01 -0.07 -2.40 -0.14 -0.23 -0.37 -0.18 17. Levelized cost (15/16) Yuan/kWh 0.27 0.20 0.28 0.28 0.42 0.42 1.23 1.97 0.41 0.68 0.94 0.36 0.36 18. Period of construction Years 3.00 6.00 3.00 1.00 9.00 1.00 1.00 1.00 1.00 3.00 1.00 3.00 19. Coal-equivalent coef. for elec. g/kWh 350 350 350 350 350 350 350 350 350 350 350 350 20. Total elect gen.(in coal equivalent) Mtce 188.38 72.46 70.46 21.63 9.66 12.60 0.00 0.09 1.05 0.09 0.09 0.17 0.09 21. C02 eniissicn coef. Ton 0.74 0.41 carbonhtceI__ __ _ 22. Total C02 ezmissionx M.ton carbon 57.21 53.26 3.95 23. Annual maintenance percentage % annual 3.50 2.00 2.00 2.00 2.30 1.00 1.00 1.50 3.00 2.00 1.50 7.40 24. Contributionto peak load GW 118.40 51.01 41.00 14.00 4.60 6.00 0.01 0.11 1.20 0.08 0.10 0.24 0.05 25. Additional coal-based capacityfor GW 11.63 0.00 0.00 10.50 0.00 0.00 0.01 0.00 1.02 0.00 0.10 0.00 0.00 D x ANNEX 1.5 COST OF ALTERNATIVE TECHNOLOGY FOR ELCRMICITY GENERATION IN 2010 SCENARIO BAU (IN 1990I YUAN) BUSINESS AS USUAL unit TOTAL CO HYDRO MIN IMPORTED- NU- SOLAR SOLAR WINDJ MI- SOLARI BIOGA O IN 2010-ELEC. GENERATION BASED HYDRO GAS-BASED CLEAR PV [11 PV(2J WIND THlRMA THERMA ____ ____ ~~~~~~~~IL __ L 1.Electricitydemamdin=2010 TWh 2422.88 1903.30 360 105 18 37.8 0.22 0.88 1.5444 0.16 0.75 0.2 1 2. Amual oprading houbs Hors/year 5000 3800 2700 6000 6000 2200 2200 2860 3100 2500 2000 5000 3. Capacity fquired in 2010 oW 525.29 380.66 94.74 38.89 3.00 6.30 0.10 0.40 0.54 0.06 0.30 0.10 0.20 4. Eqn i pacityin 1992 GW 165.74 125 24 16 0.4 0.3 0 0.0015 0.0045 0 0 0.006 0.028 5. New capacity required (3-4) GW 359.55 255.66 70.74 22.89 2.60 6.00 0.10 0.40 0.54 0.06 0.30 0.09 0.17 6. Investment per kW YunhkW 4500 6230 5000 3608 8500 19800 29340 6000 10000 10000 5000 7000 7. Total invesatent required Billion yuan 2134.62 1294.05 596.05 128.73 9.38 83.73 1.98 11.69 3.21 0.60 3.37 0.47 1.35 8. Inerest rate = 12% %amnual 12 12 12 12 12 12 12 12 12 12 12 12 12 9. Eonomiclife Years 25 50 30 25 30 30 30 20 10 20 30 1 10. Capial Recovery Factor(CRF) 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annalized invesznet cost (7*10) Billion yuan 267.28 164.99 71.77 15.98 1.20 10.39 0.25 1.45 0.43 0.11 0.45 0.06 0.20 12. Annualmwdntenancecost Billion yuan 511.54 45.29 11.92 2.57 0.19 1.93 0.02 0.12 0.05 0.02 0.07 0.01 0.10 13. Anmud lxur cost Billion yuan 12.94 2.38 0.51 0.04 0.33 0.00 0.06 0.02 0.00 0.02 0.00 0.01 14. Annual fued cost Billion yuan 37.45 0.00 0.00 3.43 2.64 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15. Toal annual cost (11+12+13+14) Billion yuan 389.4075 260.68 86.08 19.07 4.85 15.30 0.27 1.63 0.49 0.13 0.54 0.07 0.31 16. Annual gcneration from new capacity TWh 1665.11 1278.30 268.80 61.80 15.6 36.00 0.22 0.88 1.53 0.19 0.75 0.19 0.86 Ratio oftoal % 100.00 76.77 16.14 3.71 0.94 2.16 0.01 0.05 0.09 0.01 0.05 0.01 0.05 17. Levelized cost (15/16) Yuan/kwh 0.23 0.20 0.32 0.31 0.31 0.42 1.22 1.86 0.32 0.68 0.71 0.36 0.36 18. Period of construction Years 3 6 3 1 9 1 1 1 1 3 1 3 19. Coal-equivalent cef. for clec. g/lWh 340 340 340 340 340 340 340 340 340 340 340 340 20. Total elea gen.(in coal equivalent) Mtce 566.14 434.62 91.39 21.01 5.30 12.24 0.07 0.30 0.52 0.06 0.26 0.06 0.29 21. C02 enission ooef Ton 0.735 0.409 carbontce _ 22. Total C02 enission M.ton carbon 321.62 319.45 2.17 23.Annual maintane pcretage %annual 3.5 2 2 2 2.3 1 1 1.5 3 2 1.5 7.4 24. Couribution to peak load GW 278.74 198.48 56.00 14.00 2.60 6.00 0.10 0.40 0.54 0.06 0.30 0.09 0.17 25. Additiona coal-based capacity for GW 18.06 0.00 0 17.167 0 0.1 0 0.49 0 0.3 0 0 meding peak load demand (0 ANNEX 1.6 COST OF ALTERNATIVE TECHNOLOGY FOR ELECTRICITY GENERATION IN 2010 SCENARIO AE-MIN (IN 1990'S YUAN) SCENARIO AE-MIN IN 2010 Unit TOTAL COAL HYDRO MINI- IMPORTED- NU- SOLA SOLAR WIND MINI- SOLAR BIOGA GEO ________________ ____ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~R Si -ELEC. GENERATION HYDRO GAS-BASED CLEA PV [1] PV [2] WIND THERMA THERMA _ _ _ _ _ _ _ _ ~~~ ~ ~~~~~~~~R _L _ _L I. Electricity demand in 2010 TWh 2428.88 1824.3 382.5 122.5 42.0 43.8 0.4 1.4 8.6 0.6 1.0 0.4 1.5 2. Annual operating hours Hours/year 5000 3800 2700 6000 6000 2200 2200 2860 3100 2500 2000 5000 3. Capacity required in 2010 GW 530.06 364.85 100.66 45.37 7.00 7.30 0.16 0.62 3.00 0.20 0.40 0.20 0.30 4. Existing capacity in 1992 GW 165.74 125 24 16 0.4 0.3 0 0.0015 0.0045 0 0 0.006 0.028 5. New capacity required (3-4) GW 364.32 239.85 76.658 29.370 6.6 7 0.16 0.62 3.00 0.2 0.4 0.194 0.272 6. Investment per kW Yuan/kW 4500 6230 5000 3608 8500 15100 24600 6000 10000 10000 5000 7000 7. Total investnentrequired Billion yuan 2191.87 1214.04 645.94 165.18 23.81 97.68 2.42 15.22 17.97 2.00 4.50 0.97 2.1 8. Interes; ite = 12% % amiual 12 12 12 12 12 12 12 12 12 12 12 12 12 9. Economic life Years 25 50 30 25 30 30 30 20 10 20 30 15 10. Capital Recovery Factor(CRF) 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annualized investment cogt (7* 10) Billion yuan 274.23 154.79 77.78 20.51 3.04 12.13 0.30 1.89 2.41 0.35 0.60 0.12 0.31 12. Annual maintenance cost Billion yuan 42.49 12.92 3.30 0.48 2.25 0.02 0.15 027 0.06 0.09 0.01 0.16 13. Annual labour cost Billion yuan 12.14 2.58 0.66 0.10 0.39 0.00 0.08 0.09 0.01 0.02 0.00 0.0 14. Annual fuel cost Billion yuan 35.14 0.00 0.00 8.71 3.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15. Total annual cost (11+12+13+14) Billion yuan 399.46 244.56 93.28 24.47 12.32 17.84 0.33 2.12 2.77 0.42 0.71 0.14 0.49 16. Annual generation fron new capacity TWh 1665.1 1199.26 291.3 79.3 39.6 42 0.352 1.360 8.56 0.62 1 0.388 1.36 Ratio of substitution % 100.00 -28.47 -22.14 -30.37 -7.59 -0.17 -0.61 -8.90 -0.55 -0.32 -0.25 -0.63 17. Levelizedcost(15/16) Yuan/kWh 0.24 0.20 0.32 0.31 0.31 0.42 0.93 1.56 0.32 0.68 0.71 0.36 0.36 18. Period ofconstruction Years 3 6 3 1 9 l I 1 1 3 1 3 19. Coal-equivalent coef. for elec. g/kWh 340 340 340 340 340 340 340 340 340 340 340 340 20. Total elect. gen.(in coal equivalent) Mtce 566.14 407.75 99.04 26.96 13.46 14.28 0.12 0.46 2.91 0.21 0.34 0.13 0.4624 21. C02 eniission coef. Ton 0.735 0.409 carbon/tcee_ _ _ _ _ __ _ _ _ _ 22. Total C02 emission Mcton 305.20 299.70 5.51 carboi 23. Annual maintaaneepercentage % annual 3.5 2 2 2 2.3 1 1 1.5 3 2 1.5 7.4 24. Contribution to peak load GW 281.12 182.68 61 19 6.6 7 0.16 0.62 3.00 0.2 0.4 0.194 0.272 25. Additional coal-based cpacity for GW 25.34 0.00 0 22.03 0 0 0.16 0 2.76 0 0.4 0 0 i p load demd_ D x ANNEX 1.7 COST OF ALTERNATIVE TECHNOLOGY FOR ELECTRICITY GENERATION IN 2010 SCENARIO AE-MID (IN 199.0S YUAN) SCENARIO AE-MID IN 2010 Unit TOTAL COAL HYDRO MINI- IMPORTED- NU- SOLAR SOLAR WIND MINI- SOLAR BIOGA GEO -ELEC. GENERATION HYDRO GAS-BASED CLEAR PV [i] PV [21 WIND THERMA TIERMA ________________ ___ _____ ~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~L __L 1. Elctricity deniand in 2010 TWh 2428.88 1734.1 421.2 140 66 49.8 0.55 1.65 10.8 0.93 1.25 0.6 2 2. Annual opeating houts Hours!year 5000 3800 2700 6000 6000 2200 2200 2860 3100 2500 2000 5000 3. Capacityrequiredin2010 GW 535.09 346.82 110.84 51.85 11.00 8.30 0.25 0.75 3.78 0.30 0.50 0.30 0.40 4. Existing capacity in 1992 GW 165.74 125 24 16 0.4 0.3 0 0.0015 0.0045 0 0 0.01 0.03 5. New capacity required (3-4) GW 369.35 221.82 86.84 35.85185 10.6 8 0.25 0.75 3.77 0.3 0.5 0.29 0.37 6. Investnent per kW Yuan/kW 4500 6230 5000 3608.00 8500 11700 21300 6000 10000 10000 5000 7000 7. Total investrent required Billion yuan 2260.55 1122.76 731.76 201.63 38.24 111.64 2.93 15.94 22.63 3.00 5.62 1.47 2.93 8. Inter, rate=12% %annual 12 12 12 12 12 12 12 12 12 12 12 12 12 9. Economic ife Years 25 50 30 25 30 30 30 201 0 20 30 15 10. Capital Recovery Factor(CRF) e 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annualized investmnert cost (7* 10) Billion yuan 282.30 143.15 88.12 25.03 4.88 13.86 0.36 1.98 3.03 0.53 0.75 0.18 0.43 12. Annualraintenance cost Billion yuan 39.30 14.64 4.03 0.76 2.57 0.03 0.16 0.34 0.09 0.11 0.02 0.22 t 13. Annual labour cost Billionyuan 11.23 2.93 0.81 0.15 0.45 0.00 0.08 0.11 0.02 0.03 0.01 0.03 D 14. Annual fuel cost BilGon yuan 32.50 0.00 0.00 13.99 3.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15. Total annual cost (11+12+13+14) Billion yuan 410.41 226.17 105.68 29.87 19.79 20.39 0.40 2.22 3.48 0.64 0.89 0.21 0.68 16. Annual g_ ration from new capacity TWh 1665.11 1109.1 330 96.8 63.6 48 0.55 1.6467 10.78 0.93 1.25 0.588 1.86 Ratio of substitution 100.00 -36.17 -20.69 -28.37 -7.09 -0.20 -0.46 -5.47 -0.44 -0.30 -0.24 -0.59 17. Levelized cost (15/16) Yuan/kWh 0.25 0.20 0.32 0.31 0.31 0.42 0.72 1.35 0.32 0.68 0.71 0.36 0.36 18. Period of conshuction Years 3 6 3 1 9 1 1 1 1 3 1 3 19. Coal-equivalent coef. for elec. glkWh 340 340 340 340 340 340 340 340 340 340 340 340 20. Total elect gen(in coal equivalent) Mtce 566.14 377.09 112.20 32.91 21.62 16.32 0.19 0.56 3.67 0.32 0.43 0.20 0.6324 21. C02 enission coef. Ton 0.735 0.409 carborVtce _ _ __ 22. Total C02 anission M.ton carbon 286.01 277.16 8.84 23. Arnual nainenance percentage % annual 3.5 2 2 2 2.3 1 1 1.5 3 2 1.5 7.4 24. Conribution to peak load GW 283.30 164.64 69.6 24 10.6 8 0.25 0.75 4.00 0.3 0.5 0.29 0.37 25. Additional coal-based capacity for GW 31.11 0.00 0 26.88889 0 0 0.25 0 3.47 0 0.5 0 0 meeting peak load demand rD x ANNEX 1.8 COST OF ALTERNATIVE TECHNOLOGY FOR ELECTRICITY GENERATION IN 2010 SCENARIO AE-MAX (IN 1990'S YUAN) SCENARIO AE-MAX IN 2010 Unit TOTAL COAL HYDRO MINI- IMPORTED NU- SOLAR SOLAR WIND MINI- SOLAR BIOGAS GEO- -ELEC. GENERATION HYDRO GAS- CLEAR PV (1] PV 121 WIND THERMA THERMA BASED L L 1. Electricity demand in 2010 TWh 2428.88 1627.28 472.5 157.5 90 60 0.88 1.98 12.5 1.24 1.5 1 2.5 2. Annual operating hours Hours/year 5000 3800 2700 6000 6000 2200 2200 2860 3100 2500 2000 5000 3. Capacity required in 2010 GW 540.80 325.46 124.34 58.33 15.00 10.00 0.40 0.90 4.37 0.40 0.60 0.50 0.50 4. Existing capacity in 1992 GW 165.74 125 24 16 0.4 0.3 0 0.0015 0.0045 0 0 0.01 0.03 5. New capacity required (3-4) GW 375.062 200.456 100.34 42.333 14.6 9.7 0.4 0.90 4.37 0.4 0.6 0.49 0.47 6. Investment per kW Yuan/kW 4500 6230 5000 7900 8500 10500 20000 6000 10000 10000 5000 7000 7. Total investment required Billion yuan 2414.22 1014.63 845.51 238.08 115.34 135.36 4.20 17.97 26.20 4.00 6.75 2.47 3.72 8. Interestrate= 12% %annual 12 12 12 12 12 12 12 12 12 12 12 12 12 9. Econormic life Years 25 50 30 25 30 30 30 20 10 20 30 15 10. Capital Recovery Fadtor(CRF) 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annualizedinvestmentcost(7*10) Billionyuan 300.97 129.37 101.81 29.56 14.71 16.80 0.52 2.23 3.51 0.71 0.90 0.31 0.55 12. Annual maintenance cost Billion yuan 35.51 16.91 4.76 2.31 3.11 0.04 0.18 0.39 0.12 0.13 0.04 0.28 13. Annual labour cost Billion yuan 10.15 3.38 0.95 0.46 0.54 0.00 0.09 0.13 0.02 0.03 0.01 0.04 14. Annual fuel cost Billion yuan 29.37 0.00 0.00 19.27 4.27 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15. Totalannualcost(11+12+13+14) Billionyuan 433.47 204.39 122.11 35.27 36.75 24.73 0.57 2.50 4.03 0.85 1.07 0.36 0.8 16. Annual generation from new capacity TWh 1665.11 1002.28 381.3 114.3 87.6 58.2 0.88 1.9767 12.4871 1.24 1.5 0.988 2.36 Ratio of substitution 100.00 40.76 -19.02 -26.09 -8.04 -0.24 -0.40 -3.97 -0.38 -0.27 -0.29 -0.54 17. Levelized cost (15/16) Yuan/kWh 0.26 0.20 0.32 0.31 0.42 0.42 0.65 1.26 0.32 0.68 0.71 0.36 0.36 18. Periodofconstruction Years 3 6 3 1 9 1 1 1 1 3 1 3 19. Coal-equivalent coef. for elec. g/kWh 340 340 340 340 340 340 340 340 340i 340 340 340 20. Total elect. gen.(in coal equivalent) Mtce 566.14 340.78 129.64 38.86 29.78 19.79 0.30 0.67 4.25 0.42 0.51 0.34 0.80 21. C02 emission coef Ton 0.735 0.409 carbon/Ice 22. Total C02 emission M.ton 262.65 250.47 12.18 carbon I 23. Annualmauntenancepercentage %anaual 3.5 2 2 2 2.3 1 1 1.5 3 2 15 7.4 24. Contribution to peak load |GW 285-84 143-28 81 29 14.6 9.7 0.4 0.90 5.00 0.4 0.6 0.49 0.47 25. Additionalcoal-basedcapacityfor 1GW 36.770 0 0 31.75 0 0 0.4 0|4.02098 0 0.6 0 0 meeting peak load demand I I - ANNEX 1.9 COST OF ALTERNATIVE TECHNOLOGY FOR ELECTRICITY GENERATION IN 2020 BAU (IN 1990IS YUAN) BUSINESS AS USUAL IN 2020 Unit TOTAL COAL HYDRO MINI- IMPORTED NU- SOLAR WIND MINI- SOLAR BIOGAS GEO- ELECTRICITY GENERATION HYDRO GAS-BASED CLEAR PV WIND THERMAL THERM _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~~~~~~~~~~~~~AL 1. Electricity demand in 2020 TWh 3844.52 2952.57 486 133 2 1 208.35 35.915 4.2583 0.4595 1.1875 0.4 1.375 Ratio of total 100.00 76.80 12.64 3.46 0.55 5.42 0.93 O.1l 0.01 0.03 0.01 0.04 2. Annual operating hours Hours/year 5000 3800 2700 6000 6000 2200 3100 3200 2500 2000 5000 3. Capacity required in 2020 GW 824.69 590.51 127.89 49.26 3.50 34.73 16.33 1.37 0.14 0.48 0.20 0.28 4. Existing capacity in 1992 GW 165.74 86.40 24.00 16.00 0.40 0.30 0.00 0.00 0.00 0.00 0.01 0.03 5. New capacity required (3-4) GW 658.95 504.11 103.89 33.26 3.10 34.43 16.33 1.37 0.14 0.48 0.19 0.25 6. Investment per kW Yuan/kW 4500 7300 5500 7900 6500 6540 5500 8000 7600 5000 7000 7. Total investment required Billion yuan 4297.40 2551.63 1025.80 205.76 24.49 367.36 106.77 7.55 1.11 4.06 0.95 1.93 S. Inter .rate= 12% %°annual 12 12 12 12 12 12 12 12 12 12 12 12 9. Economiclife Years 25 50 30 25 30 30 20 10 20 30 15 10. Capital Recovery Factor(CRF) % 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annualized investment cot (s*8) Billion yuan 538.53 325.33 123.52 25.54 3.12 45.61 13.25I 1.01 0.20 0.54 0.12 0.28 k 12. Annual maintenance cost Billion yuan 125.93 89.31 20.52 4.12 0.49 8.45 2.67 0.11 0.03 0.08 0.01 0.14 13. Annual labour cost Billion yuan 32.20 26 4.10 0.82 0.10 1.47 0.11 0.04 0.01 0.02 0.00 0.02 14. Annual fuel cost Billion yuan 93.62 74 0.00 0.00 4.62 15.15 0.00 0.00 0.00 0.00 0.00 0.00 15. Total annual cost (9+10+11+12) Billion yuan 790.29 514.01 148.14 30.48 8.33 70.67 16.03 1.16 0.24 0.65 0.14 0.45 16. Levelized cost (13/1) YuanikWh 0.21 0.17 0.30 0.23 0.40 0.34 0.45 0.27 0.51 0.54 0.34 0.32 17. Periodofconstruction Years 3 6 3 1 9 1 1 1 3 1 3 18. Coal-equivalent coef. for elec. g/kWh 300 300 300 300 300 300 300 300 300 300 300 19. Total elect gen.(in coal equivalent) Mtce 1153.36 885.77 145.80 39.90 6.30 62.51 10.77 1.28 0.14 0.36 0.12 0.41 20. C02 emission coef. Ton carbon/tce 0.735 0.409 21. Total C02 emission M.ton carbon 653.62 651.04 2.58 22. Annual mainenance percentage % annual 3.5 2 2 2 2.3 2.5 1.5 3 2 1.5 7.4 23. Contribution to peak load GW 1015.26 564.86 192 62 5 120 65 4 0.4 1 0.5 0.5 24. Additional coal-based capaciy for GW 43.0068 0 0 24.94 0 0 16.325 1.265 0 0.475 0 meeting peak load denand I x x ANNEX 1.10 COST OF ALTERNATIVE TECHNOLOGY FOR ELECTRICITY GENERATION IN 2020 SCENARIO AE-MIN (IN 1990S YUAN) SCENARIO AE-MIN IN 2020 Unit TOTAL COAL HYDRO MINI- IMPORTED NU_ SOLAR WIND MINI- SOLAR BIOGAS -ELECTRICITY GENERATION HYDRO GAS- CLEAR PV WIND THERMA THERMA ______ ~~~~~~~~~~~BASED L L 1. Electricity demand in 2020 TWh 3844.52 2721.78 526.5 152.25 46.5 302.85 71.764 17.685 0.945 1.6875 0.8 1.75 Ratio of substitution % 100.00 70.80 13.69 3.96 1.21 7.88 1.87 0.46 0.02 0.04 0.02 0.05 2. Annual operating hours Hours/year 5000 3800 2700 6000 6000 2200 3100 3200 2500 2000 50001 3. Capacity required in 2020 GW 837.57 544.36 138.55 56.39 7.75 50.48 32.62 5.70 0.30 0.68 0.40 0.35 4. Existing capacity in 1992 GW 127.15 86.40 24.00 16.00 0.40 0.30 0.00 0.00 0.00 0.00 0.01 0.03 5. Newcapacityrequired(3-4) GW 710.42 457.96 114.55 40.39 7.35 50.18 32.62 5.70 0.29 0.68 0.39 0.32 6. Investment per kW Yuan/kW 4500 7300 5500 7900 6500 6540 5500 8000 7600 5000 7000 7. Total ir. estment required Billion yuan 4549.66 2318.00 1131.03 249.86 58.07 535.43 213.33 31.37 2.33 5.77 1.95 2.52 8. Inerest rate = 12% % annual 12 12 12 12 12 12 12 12 12 12 12 12 9. Economic life Years 25 50 30 25 30 30 20 10 20 30 15 10. Capital RecoveryFactor(CRF) % 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 11. Annualized investment cost (5*8) Billion yuan 569.11 295.54 136.20 31.02 7.40 66.47 26.48 4.20 0.41 0.77 0.24 0.37 Ul 12. Annual maintenance cost Billion yuan 81.13 22.62 5.00 1.16 12.31 5.33 0.47 0.07 0.12 0.03 0.19 13. Annual labourcost Billionvuarn 31.52 23 452 1.00 0.23 2 14 0.21 0 16 0.01 003 001 0-03 14. Annual fuel cost Billion yuan 112.19 80 0.00 0.00 10.23 22.21 0.00 0.00 0.00 0.00 0.00 0.00 15. Total annual cost(9+10+11+12) Billionyuan 841.25 479.60 163.34 37.02 19.03 103.14 32.03 4.83 0.49 0.92 0.28 0.58 Ratio of substitution 100.00 -44.17 -18.99 -31 09 -94.36 -46.51 -10.65 -0.75 -079 -0.42 -0.40 16. Levelizedcost(13/1) Yuan/kWh 0.22 0.18 0.31 0.24 0.41 0.34 0.45 j 0.27 0.52 0.54 0.35 0.33 17. Period of construction Years 3 6 3 1 9 1 1 1 3 1 3 18. Coal-equivalent coef. for elec. g/kWh 300 300 300 300 300 300 300 300 300 300 300 19. Total elect. gen.(in coal equivalent) Mtce 1153.356 816.536 157.95 45.675 13.95 90(855 21.5292 5.3055 0.2835 0.50625 0.24 0.525 20. C02 emission coef Ton C/tce 0.735 0.409 t t 21. Total C02 emission M.ton carbon 605.86 600.15 5.71 i ___ i 22. Annual maintenance percentage % annual 3.5 2 2 2 2.3{ 2.5 1.5 3 2 1.5 74 23. Contributiontopeak load GW 1047.97 427.366 213 69 10 180 130 15 06 1.5 1 0.5 24. Additional coal-based capacity for GW 80.835 0 0 42.2 0 0 32.62 5.24 0 0.675 0 0 meeting peak load demand - - - - _ - j - J - - CD X ANNEX 1.11 COST OF ALTERNATIVE TECHNOLOGY FOR ELECTRICITY GENERATION IN 2020 SCENARIO AE-MID (IN 1990S YUAN) SCENARIO AEMID IN 2020 Unit TOTAL COAL HYDRO MINI- IMPORTED NU- SOLAR WIND MINI- SOLAR BIOGAS GEO- -ELECTRICITY GENERATION HYDRO GAS- CLEAR PV WIND THERMA _ TERMA - - ~~~~~BASED ___ _L L I. Eledricity danand in 2020 TWh 3844.52 2487.9 582.525 171.5 72 397.35 102.9125 22.6 1.4175 2.8125 1.2 2.25 Ratioofoubdtibution % 100.00 0.65 0.15 0.04 0.02 0.10 0.03 0.01 0.00 0.00 0.00 0.00 2. Amual opeiating hous Hours/year 5000 3800 2700 6000 6000 2200 3100 3200 2500 2000 5000 3. Capacity required in 2020 GW 849.32 497.59 153.30 63.52 12.00 66.23 46.78 7.29 0.44 1.13 0.60 0.45 4. Existi apcity in 1992 GW 165.74 86.40 24.00 16.00 0.40 0.30 0.00 0.00 0.00 0.00 0.01 0.03 5. New capacity required (3-4) GW 6S3.59 411.19 129.30 47.52 11.60 65.93 46.78 7.29 0.44 1.13 0.59 0.42 6. InvestmentperkW Yuan/kW 4500 7300 5500 7900 6500 6540 5500 S000 7600 5000 7000 7. Todal ir"esmnt rpired Billion yuan 4812.40 2081.28 1276.60 293.97 91.64 703.51 305.93 40.09 3.51 9.62 2.95 3.31 S. nbta,etrate=12% %annual 12 12 12 12 12 12 12 12 12 12 12 12 9. Economic life Years 25 50 30 25 30 30 20 10 20 30 15 10. Capital Recovery Factor(CRF) 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 It. An35jz5djl. i n cost (5*8) Billion yuan 600.71 265.36 153.72 36.49 11.68 87.34 37.98 5.37 0.62 1.29 0.37 0.49 u 12. Amual mnntence cost Billion yuan 131.11 72.84 25.53 5.88 1.83 16.18 7.65 0.60 0.11 0.19 0.04 0.24 4 13. Amual labour cost Billion yuan 30.90 21 5.11 1.18 0.37 2.81 0.31 0.20 0.02 0.05 0.01 0.03 14. Anal fuel cot Billion yuan 117.88 73 0.00 0.00 15.84 29.14 0.00 0.00 0.00 0.00 0.00 0.00 15. Totalmaal oost (9+10+11+12) Billion yuan 880.59 431.92 184.36 43.55 29.72 135.47 45.93 6.17 0.74 1.53 0.43 0.76 16. Levalized cos (13/1) Yuan/kWh 0.23 0.17 0.32 0.25 0.41 0.34 0.45 0.27 0.52 0.54 0.35 0.34 17. Periodofconaction Years 3 6 3 1 9 1 1 1 3 1 3 18. Coal-eqtivaknt coef for clec. g/kWh 300 300 300 300 300 300 300 300 300 300 300 19. Total ele geL(in coal equivalent) Mtce 1153.36 746.39 174.76 51.45 21.60 119.21 30.87 6.78 0.43 0.84 0.36 0.68 20. C02 _nission coef Ton 0.735 0.409 c__ _ _fb n W _ 21. Total C02 emission M.ton carbon 557.43 548.59 8.83 22. Amalnaintenance pacentage % anmual 3.5 2 2 2 2.3 2.5 1.5 3 2 1.5 7.4 23. Contribution to peak lod GW 10S2.224 288.224 237 76 1 5 240 200 20 0.9 3 1.5 0.6 24. Addin coal-bad capacity for GW 102.24939 0 0 47.63888 0 0 46.77840 6.707096 0 1.125 0 0 _ _ _ _ _ _ _ _ _ _ _ _ _ _5 9 _ _ _9 8 _ _ _ mee-4 pek load den6 d x ANNEX 1.12 COST OF ALTERNATIVE TECHNOLOGY FOR ELECTRICITY GENERATION IN 2020 SCENARIO AE-MAX (IN 1990'S YUAN) SCENARIO AE-MAX IN 2020 Unit TOTAL COAL HYDRO MINI- IMPORTED NU- SOLAR WIND MINI- SOLAR BIOGAS GEO- -ELECTRICITY GENERATION HYDRO GAS- CLEAR PV WIND THERMA THERMA BASED _ L L 1. Electricity detnand in 2020 TWh 3844.52 2099.22 650.25 192.5 97.5 585 182.16 26.875 1.89 4.25 2 2.875 Ratio of substitution . 100.00 0.55 0.17 0.05 0.03 0.15 0.05 0.01 0.00 0.00 0.00 0.00 2. Annual operating hours Hours/year 5000 3800 2700 6000 6000 2200 3100 3200 2500 2000 5000 3. Capacity required in 2020 GW 871.34 419.844 171.1 71.3 16.25 97.5 82.8 8.669 0.590625 1.7 1 0.575 4. Existing capacity in 1992 GW 165.74 86.40 24.00 16.00 0.40 0.30 0.00 0.00 0.00 0.00 0.01 0.03 5. New capacity required (34) GW 705.60 333.44 147.12 55.30 15.85 97.20 82.80 8.67 0.59 1.70 0.99 0.55 4. Investment per kW Yuan/kW 4500 7300 5500 7900 6500 6540 5500 8000 7600 5000 7000 5. Total investment required Billion yuan 5262.53 1687.76 1452.57 342.09 125.22 1037.25 541.51 47.67 4.69 14.53 4.95 4.29 6. Interes' Ae = 12% % annual 12 12 12 12 12 12 12 12 12 12 12 12 7. Economic life Years 25 50 30 25 30 30 20 10 20 30 15 S. Capital Recovery Factor(CRF) % 0.1275 0.1204 0.1241 0.1275 0.1241 0.1241 0.1339 0.1770 0.1339 0.1241 0.1468 9. Annualized investment cost (5*8) Billion yuan 654.93 215.19 174.91 42.47 15.96 128.77 67.23 6.38 0.83 1.95 0.61 0.63 10. Atuual maintenance cost Billion yuan 136.40 59.07 29.05 6.84 2.50 23.86 13.54 0.72 0.14 0.29 0.07 0.32 k- 11. Annual labour cost Billion yuan 29.65 17 5.81 1.37 0.50 4.15 0.54 0.24 0.02 0.07 0.02 0.04 12. Annual fuel cost Billion yuan 125.86 62 0.00 0.00 21.45 42.90 0.00 0.00 0.00 0.00 0.00 0.00 13. Total annual cost (9+10+11+12) Billion yuan 946.84 352.65 209.78 50.68 40.42 199.67 81.30 7.34 0.99 2.31 0.71 0.99 14. Levelized cost (13/1) Yuan/kWh 0.25 0.17 0.32 0.26 0.41 0.34 0.45 0.27 0.53 0.54 0.36 0.34 15. Period of constuction Years 3 6 3 1 9 1 1 1 3 1 3 16. Coal-equivalent coef. for elec. g/kWh 300 300 300 300 300 300 300 300 300 300 300 17. Total elect gen.(in coal equivalent) Mtce 1153.36 629.77 195.08 57.75 29.25 175.50 54.65 8.06 0.57 1.28 0.60 0.86 IS. C02 emnission coef£ Ton 0.735 0.409 carbon/tee. 19. Total C02 emission M.ton carbon 474.84 462.88 11.96 20. Annual maintenance percentage % annual 3.5 2 2 2 2.3 2.5 1.5 3 2 1.5' 7.4 21. Contribution to peak load GW 1139.632 47.132 263 85 20 360 330 25 1.2 5 1.5 0.8 22. Additional coal-based capacity for GW 145.94 0 0 53.47 0 0 82.8 7.97 0 1.7 0 0 meeting peak load demand tD x ANNEX 1.13 COST OF ALTERNATIVE TECHNOLOGY FOR ELECTRICITY GENERATION IN 2020, CALIFORNIA ENERGY COMMISSION LOW COST SCENARIO IN 1990'S YUAN IN 2020 Unit TOTAL COAL HYDRO MINI- IMPORTED NU- SOLAR WIND MINI- SOLAR BIOGAS GEO- ELECTRICITY GENERATION HYDRO GAS-BASED CLEAR PV WIND THERMAL THERMAL 1. Electricity denand in 2020 BAU TWh 3844.52 2952.66 486 133 21 208.35 35.915 3.76 1.4783 0.7645 0.8123 0.775 2. Levelized cost Yuanikwh 0.267 0.221 0.398 0.392 0.275 0.520 0.363 0.262 0.262 0.325 0.295 0.283 3. Total annual cost Billion yuan 1028.14 652.54 193.43 52.93 5.78 108.34 13.04 0.99 0.39 0.25 0.24 0.22 4. Capacityr quired in 220 BAU GW 691.55 449.42 138.70 49.26 3.50 31.71 16.40 1.72 0.46 0.14 0.12 0.12 5. Existing capacity in 1992 GW 165.74 86.40 24.00 16.00 0.40 0.30 0.00 0.00 0.00 0.00 0.01 0.03 6. New capacity requircd (3-4) GW 525.81 363.02 114.70 33.26 3.10 31.41 16.40 1.72 0.46 0.14 0.11 0.09 7. Operating hours Hours 6570 3504 2700 6000 6570 2190 2190 3200 5519 6570 6570 8. Investnent per kW Yuan/kW 7700.00 11000.00 11000.00 4900.00 22600.00 5900.00 3800.00 3800.00 13400.00 5600.00 11733.55 9. Periodofconstudion Years 5 5 3 1 10 1 1 1 3 2 3 10. Discountrate 12 12 12 12 12 12 12 12 12 12 12 I 1. Total invetment required Billion Yuan 6936.04 3551.53 1603.06 411.51 15.19 1245.82 96.76 6.52 1.74 2.09 0.67 1.16 1. Electricity denand in 2020 AE-MIN TWh 3844.52 2721.7885 526.5 152.25 46.5 302.85 71.764 17.685 0.945 1.6875 0.8 1.75 2. Amount of substittion 1122.7315 596.2315 443.9815 397.4815 94.6315 22.8675 5.1825 4.2375 2.55 1.75 0.00 Ratio oftotal 100.00 70.80 13.69 3.96 1.21 7.88 1.87 0.46 0.02 0.04 0.02 0.05 3. Total annual cost Billion Yuan 1074.14 601.52 209.55 60.60 12.79 157.48 26.05 4.63 0.23 0.55 0.24 0.50 4. Capacity required in 2020 AE-MIN GW 716.60 414.28 150.26 56.39 7.75 46.10 32.77 8.08 0.30 0.31 0.12 0.27 5. Existing capacity in 1992 GW 165.74 86.40 24.00 16.00 0.40 0.30 0.00 0.00 0.00 0.00 0.01 0.03 6. New capacity reiired (3-4) GW 550.86 327.88 126.26 40.39 7.35 45.80 32.77 8.07 0.29 0.31 0.11 0.24 7. Totl inveatmietrequired Billion Yuan 7557.85 3207.73 1764.60 499.72 36.02 1816.27 193.34 30.68 1.11 4.61 0.66 3.12 1. Electricity demand in 220 AE-MID TWh 3844.52 2487.9525 582.525 171.5 72 397.35 102.9125 22.6 1.4175 2.8125 1.2 2.25 2. Amourt of subsitution 1356.5675 774.0425 602.5425 530.5425 133.1925 30.28 7.68 6.2625 3.45 2.25 0.00 Ratio oftotal 100.00 64.71 15.15 4.46 1.87 10.34 2.68 0.59 0.04 0.07 0.03 0.06 3. Total nnual cost Billion Yuan 1121.92 549.84 231.84 68.26 19.80 206.62 37.36 5.92 0.37 0.91 0.35 0.64 4. Capacity required in 2020 AE-MID GW 739.72 378.68 166.25 63.52 12.00 60.48 46.99 10.32 0.44 0.51 0.18 0.34 5. Existing capacity in 1992 GW 165.74 86.40 24.00 16.00 0.40 0.30 0.00 0.00 0.00 0.00 0.01 0.03 6. New capacity required (3-4) GW 573.98 292.28 142.25 47.52 11.60 60.18 46.99 10.32 0.44 0.51 0.17 0.31 7. Total inveatent required Billion Yuan 8210.05 2859.52 1988.06 587.94 56.84 2386.73 277.25 39.21 1.67 7.68 1.02 4.12 1. Electricity demand in 220 AE-MAX TWh .3844.52 2099.22 650.23 192.5 97.5 585 182.16 26.875 1.89 4.25 2 2.875 2. Amouit of substituion 1745.3 1095.05 902.55 805.05 220.03 37.89 11.015 9.125 4.875 2.875 0.0 Ratio oftotal 100.00 54.60 16.91 5.01 2.54 15.22 4.74 0.70 0.05 0.11 0.05 0.07 3. Total annua cost Billion Yuan 1206.80 463.93 258.80 76.62 26.81 304.20 66.12 7.04 0.50 1.38 0.59 0.81 I Capacity quired in 2020 AE-MAX GW 779.23 319.52 185.57 71.30 16.25 89.04 83.18 12.27 0.59 0.77 0.30 0.44 ' 5. Existingcapcity in 1992 GW 165.74 86.40 24.00 16.00 0.40 0.3 0.00 0.00 0.00 0.00 0.01 0.03 6. New cacityrequned (3-4) GW 613.49 233.12 161.57 55.30 15.85 88.74 33.18 12.27 0.59 0.77 0.29 0.41 7. Toda inveaiegtreqired Billion Yuan 10026.25 2280.66 2593.63 S82.13 79.63 3531.38 490.75 46.63 2.24 11.61 1.81 5.78