U.S. Energy Companies Sign On In China
By Ye Jinan and Greg Hallberg, Waymark Shanghai
Published March 31, 2010
While the deal continues to be shrouded in some elements of non-disclosure as of this writing, we do know that the Charlotte, North Carolina-based energy company confirms that an agreement has in fact been signed and that work has already begun. The Chinese partner is likely State Grid Corporation (my Shanghai home utility, by the way), who is the largest power distributor in China.
There are only two major companies in Mainland China’s electrical power and transmission distribution system. They are State Grid as mentioned and China Southern Power Grid Corporation. According to news releases both in the United States and China, Duke has been open about it interest in working with both Chinese electricity supply players. Discussions have been proceeding for a number of months additionally soliciting partnerships with other Chinese power supply companies.
At this point, Duke has entered into memorandums of understanding actually with three Chinese companies, however the public disclosure has previously involved only China Huaneng Group and ENN Group. Duke’s Chief Executive Jim Rogers, has since confirmed publicly the deal-making efforts. A fourth deal is quite possibly also in the works.
One of the agreements involves smart-grid technology. Duke executives were in China during the early part of March, 2010. The agreements focus on joint business development in grid technologies. With China in an excellent position to test smart-grid ideas and products, due to its rapidly expanding power distribution system.
The U.S. and Chinese electricity markets differ substantially, with American electrical demand in residential and commercial sectors consuming 75% of the power generation domestic capacity. However in China, 80% of the sales of electricity go to large industrial customers. China has been plagues for decades with brown-outs and disruptions in both domestic and industrial electrical supplies, especially during peak facilities operating times of the day. The result has been a combination of creative portable generator usage, along with power rationing and industrial plants being forced to maintain night shift manufacturing, during lower electricity demand 24-hour cycles.
The various collaborative discussions have also centered on the integration of renewable energy sources, including solar and wind power technology. The continuing concern in each of those alternative energy resources is the intermittent source of power generation, thus causing special operating issues and grid optimization. The proposed partnerships have further discussed ultra-high voltage transmission. This is an area in which the Chinese have considerable experience. Talks remain on the table relative to nuclear power development as well as bringing Chinese capital to U.S. utility projects.