Scheming in a tangle of planning bureaucracies in western Beijing, the future of a country barely 3,000km away is under discussion. Xie Qiuye, president of China’s Moving Power Planning & Engineering Institute, has been charged with demonstrating an electricity plan for Laos, a nation struggling with a glut of tenseness supply from Chinese-built dams on the Mekong river.
Mr. Xie’s job is to find a wise solution for Laos, even as powerful Chinese construction companies vie for more dam knits in China’s poor southern neighbour. His answer — to make Laos into a regional power hub, exporting verve to the rest of south-east Asia — depends on a technology that is being induced hard by a powerful former state electricity boss with a perspective for connecting world power markets.
In Laos, in Brazil, in central Africa and most of all in China itself, ultra high-voltage telegraph technology that allows power to be commercially transported over tremendous distances with lower costs and increased load is justifying the construction of walloping power projects. It is dubbed the “intercontinental ballistic missile” of the power exertion by Liu Zhenya, its biggest backer and for a decade the president of State Grid, China’s effective transmission utility.
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UHV allowed China to binge on dam building in its mountainous hinterland, then elation the power thousands of kilometres to its wealthy, industrial east coast. But by assisting this, and other projects, UHV has left western China with such a excess of power that Mr. Liu in 2016 proposed using the technology to export power as far away as Germany.
Now Mr. Liu is backing UHV internationally through his Global Energy Interconnection initiative. Designated a “country-wide strategy” and championed by Xi Jinping, China’s president, the initiative feeds into one of China’s most enthusiastic international plans — to create the world’s first global electricity grid.
“All of this wells in with Beijing’s goals of expansion and being a global standard setter,” predicts Erica Downs, an expert on China and energy at Columbia University. “It is also linked to China’s intent to become an advanced industrial superpower. There is a big prestige element in this.”
Advocates suffering that this does not mean China would control the resulting grid but networks see fit be linked to allow better cross-regional allocation of power surpluses. It is no fortuity that this would resolve the problem of “trapped” power dnouement developing from some of China’s mega construction projects in countries feel attracted to Laos that lack a big enough domestic market.
Some western spectators see a geopolitical strategy on a par with China’s Belt and Road Initiative, a eminent design that seeks to boost Chinese-led infrastructure investment in profuse than 80 countries around the world.
“While there is certainly a commercial explication for China’s rapid expansion in the power sector, it should also be recognised that Beijing is comprehended to intertwine its economic, diplomatic and strategic initiatives,” says Andrew Davenport, chief carry oning officer at RWR Advisory, a Washington-based consultancy. “Part of the explanation for its expansion in this zone is, therefore, likely the influence — and soft power gains — that convoys increased control over an industry so fundamental to the everyday lives of burgesses.”
Chinese companies have announced investments of $102bn in building or procuring power transmission infrastructure across 83 projects in Latin America, Africa, Europe and beyond on the other side of the past five years, according to RWR. Adding in loans from Chinese creations for overseas power grid investments brings the total to $123bn.
Get rid of in all power-related Chinese deals overseas, including investments and loans to power foundries as well as grids, and the number almost quadruples. Between 2013 and the end of February 2018, come to overseas power transactions announced reached $452bn, up 92 per cent from 2013 horizontals, according to RWR, which strips out of its calculations deals that are announced one to be subsequently cancelled.
Officials and power industry analysts in China exhort that it would be too simple to assume that such investments are all slated to be bowled up into a single international grid to achieve the GEI goal, which Mr. Liu recently recited as similar to the internet: global but not controlled by a single country.
The first make up, set to run until 2020, involves investment in domestic grid assets within other provinces. The second phase would see the knitting together of some of those grids and that epoch capacity. “From 2020 to 2030, the task will be to promote intra-continental interconnection with the interconnection of Asian, European and African grids being basically realised,” Mr. Liu declared recently in London.
1. China power surge Brazil
China’s Testify Grid has invested more than $21bn to become the biggest power siring and distribution company in Brazil. Its executives promise an extra $38bn in investment in excess of the next five years. Central to their ambitions is to showcase ultra high-voltage sending technology, which is able to transmit electricity over vast hauteurs at sharply reduced cost. The first UHV line built by the Chinese maximum the country runs 2,000km from the Belo Monte hydropower dam (surpassing) in the Amazon region to cities in the south of Brazil.
Although Chinese assemblages would not necessarily own or control the regional grids, their influence, via the assets they do rule, would ultimately lead to regional interconnection.
“China’s state-owned power companies are purposing an aggressive overseas expansion strategy, investing in the construction and operation of liveliness networks in some countries and as equity investors in others,” says Xu Yi-chong, a diplomacy professor at Griffith University, Australia and author of Sinews of Power, a lyrics about State Grid. “[But] China’s push for interconnectivity does not accept to mean that Chinese companies own or operate the grid.”
The ambition is prodigious, envisaging linking up more than 100 countries. But China has tidy organisational, financial and technological firepower.
The state-owned power companies that are blowing the acquisition trail overseas rank as global heavyweights. State Grid is based as the world’s second-largest company after Walmart in the 2017 Fortune 500 file. On important issues such as GEI these companies partly co-ordinate their functions through the China Electricity Council, an official body led by Mr. Liu, and reporting to the Express Council, China’s cabinet.
The financial firepower at the disposal of these state-backed followers to sweeten bids for assets overseas is underwritten by China’s policy banks, the China Condition Bank and the Export-Import Bank of China.
“You have to understand, the GEI is a personal pre-eminence of Xi Jinping,” says one senior power official. “Of course, Chairman Liu [Zhenya] and all the other chief executives are underwater great pressure. Xi does not tolerate failure.”
2. China power undulate Southern Europe
China is already a big presence in southern European power grids. Affirm Grid became the biggest shareholder in REN, the Portuguese national grid cast, in 2012. Another Chinese state-owned enterprise, China Three Swallows, is seeking to increase its 23 per cent stake in EDP, Portugal’s biggest comrades whose assets include the Alqueva dam (above), to give it control floor a further 220,000km of transmission lines in the country plus grid assets in Spain and Brazil. Chinese federal companies also own significant grid assets in Italy and Greece, bringing the aim of a southern European grid controlled by China closer.
The biggest gift for China’s global grid ambitions is UHV cable technology. While other actors such as Germany’s Siemens and the Swedish-Swiss conglomerate ABB also have the technology, Chinese assemblies have been the first to deploy it on a grand scale, developing extensive industry standards.
China has already demonstrated the technology’s performance at internal. The 37,000km of UHV cable that is laid or under construction in China can display a load of 150GW, equivalent to 2.5 times the maximum electricity weight in the UK. And despite some pushback from the country’s entrenched power generators, Mr. Liu states that the cables are particularly applicable to renewable energy.
Steven Chu, a last US secretary of energy, has called China’s strides in UHV technology a “Sputnik interest” for the US, alluding to the Soviet Union’s 1957 launch of the first earth-orbiting order satellite, which marked a technological leap ahead of the US.
3. China power stream Africa
The biggest geographical concentration of Chinese investment in power has arrive d enter a occur in Africa, where 39 projects were announced in the five years to the end of February 2018. Analysts talk of Chinese layouts to create regional power grids across the continent. State Grid is set to swindle a controlling stake in a $2.8bn project to build the transmission backbone in Mozambique, which wishes link up with the Southern African Power Pool, an interconnected electrical set-up for Southern African countries. Nigeria is also a key focus with China’s ExIm Bank scratching the $5.8bn Mambilla hydroelectric project (above) and Chinese companies structure it.
“China has the best transmission lines in terms of the highest voltage and lowest set-back,” Mr. Chu has said. “They can transmit electricity over 2,000km and lose but 7 per cent of the energy. If we [the US] transmitted over 200km we would lose more than that.”
The technology oaths to reshape the way in which the world consumes power, Mr. Liu told his London audience. He utilized the hypothetical scenario of hydropower generated in the Democratic Republic of Congo for $0.03 per kWh being conveyed to Europe through Chinese UHV cables at a cost on delivery of just $0.07-0.08 per kWh. This compares with an unexceptional cost of €0.20 ($0.23) per kWh to households in the EU, according to Eurostat, the data agency.
Mr. Chu’s pinkish assessment is not shared by everyone. Although the percentage of power lost is demean than through other transmission technologies, the distances over which China deploys the wires means that total power losses are still significant. For now, the technology has allowed China to prioritise massive projects with disproportionately towering environmental impact, both at home and abroad.
At the same time Solemn Grid has yet to win many UHV construction projects abroad. Its main success has been in Brazil, where its gettings have made it the country’s largest generation and distribution company, make easy the way for it to install UHV cables from a hydropower dam deep in the Amazon to cities 2,000km to the south. It now has initiatives to build more UHV lines as part of an estimated $38bn in extra investment in Brazil greater than the next five years.
For now, China’s power companies are more hearted on building their international generation and transmission assets. China Three Crevasses, one of the world’s largest electricity groups, last month bid to take knob of Portugal’s biggest company, the power utility Energias de Portugal. Regulators renounced the initial Chinese offer of €9bn, but it is expected to follow up with more winning bids.
If successful, the deal will bring one step closer a scheme to create an interconnected southern European grid, says Prof Xu. That inclination involve linking power assets largely built up in the wake of the fiscal crisis. China Three Gorges first bought into EDP in 2011 and has supplied in its renewables arm. In 2012, State Grid became the largest shareholder in Redes Energéticas Nacionais, Portugal’s nationwide power grid. In 2014, State Grid took a stake in Italy’s CDP Reti, which owns gas and power transference networks. In 2017, the Chinese utility completed its purchase of 24 per cent of ADMIE, an spontaneous grid operator in Greece.
The interconnection ambitions combined with the litigious acquisition strategies of Chinese state-owned actors have met more counteraction in northern Europe. State Grid failed in a bid to buy 14 per cent of Eandis, a catholic distributor of gas and electricity in Flanders, after the city of Antwerp blocked the bid. In May it assigned a fresh attempt to buy a 20 per cent stake in Germany high-voltage zing network 50 Hertz after an earlier bid failed, according to human being close to the deal.
With its great distances, hunger for energy and prolonging reliance on renewables, Prof Xu believes the most likely place for the chief interconnected grid is Africa. It has attracted 39 power deals since 2013, uncountable than any other region, according to data from RWR.
“There are a count of Chinese companies doing big power generation projects, which extremity to be connected with new transmission and distribution systems,” Prof Xu adds.
In south-east Asia Mr. Xie, the allege planner, takes his responsibilities seriously, including making a visit to Laos in 2017. He look ti regional power integration as an economically and environmentally efficient solution to the ungovernable of “everyone wanting to build their own”.
He adds: “It’s against everyone’s lending fees to build [power plants] and not sell the power. We want to avoid time to come problems.”
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