N L TRI ITYELECTRICITYBy Qing Lei,Xu Lizheng and Liu PingJournalists of China Power Enterprise M anagementHena n:ECER "Com bin atio n P un ch"Since 2006,Henan province has taken great efforts to tackle ECER in the power industry innovatively and aggres-sively,which has caught the attention of vice premier Zeng Peiyan and was fully approved by director Ma Kai of NDRC (National Development and Reform Commission).The Energy Bureau chief of NDRC,Zhao Xiaoping,called it the "Henan Experience"that has been promoted and propagated throughout the whole country.Ret ire me nt of s m a ll th erm al units is of great ur-ge ncyHenan is a province with abundant resources.In the past,f y ,f y itations.According to the statistics,there were nearly 8GWsmall thermal units in Henan,and the average net standard coal consumption rate was 480g/kWh for 100MW and smaller units,which is 90g/kWh more than the provincial average.The average rate of Henan was 390g/kWh,which was about 14g/kWh and 70g/kWh higher than the national average and the world's leading rate,respectively.For this reason,it is badly urgent for Henan to retire small units especially in the background of nationwide ECER.Not long ago,based on the 3500MW of retirement goal signed with the central govern-ment,Henan planned to shoot for closing and retiring the small units of more than 5000MW during the 11th Five-Year Plan period,1500MW of which would be retired in 2007.According to the national policy of "Large (units)In and Small (units)Out (LISO),"the substitute large units replacing those retired small MW,y 6f 6,Energy Conservation and Em iss ions Reduction:Experiences fromThree Provincial Pow er Com panies and One Regional Pow er Grid Com panyPower industry isone of the key fields for energ y conservation and emissionsreduction (ECER )in China.In order to achieve the nation 's overallenergy consumption target and pollutant emission target set by the 11t h Five -Year Plan,to build the resource-conservation and environment-friendly society during the 11th Five-Year Plan period (2006-2010),it iscrucialto implement the policy of "L arge (units)In and Small (units)Out (LISO )"(i.e.,replacing small unitswith large ones)and accelerate the retirement of small thermal units.According to the statistics,the power industry has made a significant progress in SO 2emission reduction during the f irst half of 2007.Specifically,with 18.3%growth in power generation,the SO 2emission was reduced by 5.2%compared with the same period in 2006.By the end of July 2007,the retired small units have totaled 6950MW,85%of which belongs to the five major power generation g roups such as Guodian and Huadian.In this article,the achievementsand remaining issuesin Henan,Jiangsu,Sichuan Power Companiesand East China Grid Companywere presented and discussed thoroughly.32008.o.2E EC C under the historical background o electricit shortage Henan built a number o small thermal units due to the technolog lim-units would amount up to 8000each ear saving about million tons o the standard coal and reducing about 00002L TRI ITYN tons of the pollutant emissions.By the end of July 2007,Henan had signed the retirement agreements of 3550MW in total,and had actually retired 1470MW.The provincial average net coal consumption of thermal units during January through July in 2007was 363.5g/kWh,with a reduction of 13.5g/kWh over 2006,saving about 1.6million tons of standard coal and reducing around 20,000tons of pollutant emissions.La unch ed the ECER "C om bina tion Pu nch""Co mb in atio n p u n ch"p art I :imp lemen t th e a nn u al differen tia l p o wer g en eration p lanIn 2007,before the formal issuance of the national energy conservation dispatch policy,Henan implemented a transitional measure,called the Differential Power Generation Plan.Apart from the traditional equal distribution of power generating hours among units,this plan took energy conservation,environment protection,and economy as factors in laying out the annual power generation plan.For example,more generating hours were assigned to the large-capacity high-efficiency units due to their ECER advantages.Based on the in-depth investigation,considering the appropriate different weights for the capacity,environment protection,and region,the annual power generatinghours for different units were determined.During January to July,2007,the province-wide diff erential power generation in Henan had accomplished 74.346TWh (Tera-Watt-hour).It was expected to have saved about 1.8million tons of standard coal and reduce about 18,000tons of pollutant emissions in 2007,comparing to the traditional power generation plan."Co mb in atio n p u n ch"p art I I:lau n ch the tradin g of com pe ns a ted gen eratio n q u ot as fo r the ret ired s mall I f fpower industry.But if only using administrative means,the retirement can not accomplishthe anticipated target,moreover,it may cause series of problems.Therefore,considering the alleviation of contradiction between power supply and demand,Henan Electric Power Corporation grasped the favorable opportunity and proposed the trading of compensated generation quotas.That is,part or all generation quotas of local small units can be transferred with compensation to high-efficiency large units with surplus generating capability under unified dispatching.This proposal was greatly supported by the Henan Development and Reform Commission (HDRC)immediately and the "Temporary Measures for the Trading of Compensated Generation Quotas"was released to provide a policy basis.At the same time,in order to encourage the enthusiasm in retiring small units,the provincial government specified a 3-year compensation period for those retiring on schedule,during which a certain amount of compensated generation quota would be assigned.By selling the quotas the power enterprises involved can obtain some earnings,which can be used for production conversionandpersonnel settlement,etc.From January to July in 2007,the province had accomplished trading of compensated generation quotas of up to 1.839TWh and increased generating hours of involved plants with large units by 199hours."Co mb in atio n p u nch "p art I II:lau n ch the trad in g of ge neratio n rig h tsThe trading of generation rights means that the small units not included in the retirement list and the units of 200MW and below under unified dispatching can transfer (sell)their generation quotas to those high-efficiencyand large-sized units with compensation.The annual differential generation plan restricts the generating hours of small units effectively,while the trading of generation rights can encourage the small units from generating less electricity to none.This,in some senses,can be served as useful experiment duringthe transition period.From January to July in 2007,the province-wide generation right trading had accomplished 618GWh,and the generating hours of plants involved had been increased by 103hours."Co mbination pu nch "part IV:laun ch th e competitive p ric e tra d in g fo r in t er-p ro v in ce a n d in t er-re g io n tran s ac tio n sConsidering the special role of Henan Power Grid in the "hydro-thermal coordination"and the mutual power supply between south and north China,Henan Power Corporation took full advantage of its energy base position to promote the out-sending of electricity.In the competitive price trading,the out-sending electricity amount for each participating plant is y,T ff y (6MWE EC C 2008.o.2the rma l u nitst is inevitable or small thermal units to be phased out o determined based on its generation capacit grid limitation and bidding price.he high e icienc large units such as 00-24ELECTRICITYunits)will be selected with priority for their predominance in high efficiency and energy energyconservation.In2006,14.168TWh of inter-province and inter-region transaction was accomplished in Henan Province,ranking in the first place in all the provincial power corporations and increasing nearly2.5billion Yuan of income for power enter-prises.From January to July in2007,7.403TWh of inter-province and inter-region transaction was fulfilled.The gener-ating hours of plants involved was increased by339hours,and the increase was350hours for units of300MW and above."Co mb inatio n p u nc h"p art V:s treng th en man ag e-men t of e lect ricity price fo r s mall the rmal u nitsAccording to the circular from the HDRC on July26, 2007,the document No.[2007]703from the NDRC shall be strictly enforced starting Aug.1,2007.The small thermal units that went into production before2004whose on-grid price would be kept unchanged if the price is lower than the bench-mark price;otherwise,the on-grid price would be decreased to the benchmark price in steps.That is,the on-grid price would be decreased by0.02Yuan/kWh in the first year and decreased to the benchmark price in the next;if exceeding the benchmark price by0.05-0.1Yuan,the on-grid price would be reduced in three years,0.02Yuan down each in the first two years.Those small units put into operation after year2004,with on-grid price higher than the benchmark,should reduce to the bench-mark.Meanwhile,the self-serviced power of the self-owned power plants would be imposed with the governmental funds and surcharges,except for those"comprehensive utilization of resources"units and cogeneration units,which are encouraged by the central government.C ounte rm e as ure s a nd s ug ges tionsAlthough the retirement of small thermal units in Henan has achieved remarkable progress in recent years,there are still more arduous tasks and acute contradictions ahead.For this purpose,the related supporting policies,laws,and regulations shall be completed as early as possible.To build and complete the compensation mechanism for retirement of sm all ther mal units.Currently,though many small thermal power enterprises are willing to retire,the problems of personnel settlement and high debt are commonly existed.Therefore,the relevant compensation policies shall be established in the aspect of finance,tax,banking,and state assets management,in order to complete the small thermal unit retirement compensation mechanism from all aspects.For instance,in the aspect of finance,the central government could utilize special ECER funds to support the restructuring of the power industry;in the aspect of tax,the economic compensa-tion obtained from the trading of generation quotas and otherx f xx x;f,f those retired enterprises could be appropriately lowered;in the aspect of state assets,the central government shall clarify the "verification and canceling"policies related to the state assetsof retired enterprises.In addition,it shall be further clarified that the economic compensation for the small unit retirement through the trading of power generation quotas is governmental compensation capital,which shall be firstly used for personnel settlement,and it should not be diverted to any other purposes. The local governments could come up with new ideas to harmonize the settlement of staff,such as establishing special office for the personnel settlement.To accelerate the"Lar ge(units)In and Small(units)Out (LISO)"project approval and construct ion of lar ge units. The LISO projects are effective ways to promote the retirementof small units.If the approval and construction of large units can't keep up with the economy development,it is inevitable that power shortage will arise again.For this reason,we put forward some suggestions as follows.First,further clarifyingthe required conditions in project declaration and approval. Second,those projects promised to retire their small units on schedule shall be approved with priority if their closed and retired capacity has already reached a certain ratio,so as to promote the retirement of small units and set up role models. Third,the support to the cogeneration power projects shall be further strengthened.That is to say,for the cogeneration power projects constructed in accordance with the policy of LISO, count the boilers of retired units as part of the retired capacity. Fourth,the construction scale of power sources for each province during the last three years in the11th Five-Year Plan period shall be clarified,so as to allow the overall arrangementof the LISO projects.To accelerat e const ruction of power grid.With the retirement of small units under way,the problem of local power shortage may emerge.Therefore,the power grid enterprises shall further strengthen the investment of grid construction, accelerate the implementation steps of the11th Five-Year Plan, speed up the construction of power grid extension projects, complete the construction of grid's main-frame network and distribution network in towns and countryside,improve the capability of power resources optimized deployment,and ensure the ordered and reliable power supply after the retire-ment of all small units.Main ta s ks in the futureRet ir e the small units in enter pr ise self-owned power plants step by step.At present,a number of enterprises in Henan had self-owned power plants,which are the next retire-ment targets,as a result of their high energy-consumption,serious pollution,and their severe adverse impact on the realization of ECER target.The HDRC will force these self-owned powery fB f52008.o.2E EC Cpolicies could be e empted rom some ta es such as income ta and sales ta in the aspect o banking the loan interest or plants to be ph ased out and clo sed b the combinatio n o administrative measures and market mechanism.ut or those2N L TRI ITYL TRI ITYN enterprises confirming to the industry policies,after retirement of small power units on schedule,the electricity price could be lowered according to the principle of no higher than the gener-ating cost of the closed self-owned power plant.Ret rofit small unit s into biom ass units.Within the scope that is approved and encouraged by the national policies,Henan will actively promote the retrofitting of small thermal units.It required that the retrofitted biomass units must be pure straw-powered generation so as to suppress the coal-fired generation.In Changge Power Plant,for instance,new straw-powered units were completely retrofitted within less than half a year after the approval of pared with the construction of a new biomass plant,a great deal of construc-tion capital was saved.Nor malize the unit desulphur ization wit h legal means.The retrofitting of desulphurization in thermal plants is a very difficult task.Along with the department of environment protection,the HDRC will supervise and check the desulphur-ization of thermal power units bylegal means.Thus those small thermal units which are unwilling to retire before will deter-mine to retire finally because of the intolerable pressure of huge desulphurization cost.J ian gs u :"Fro nt Runn er"in Retire me nt of S ma ll The rm al Un itsJiangsu is a big economic province of China,so it is quite challenging to continuously lower its energy-consumption and pollutant-emission level considering the huge economic volume and rapid growth.It is fair to saythat,the more developed the region is,the heavier responsibility in energy cconsumption and emissions reduction (ECER).Jiangsu province proposed to insist on reducingenergyconsumption through"structure energy-conservation,technology energy-conservation,and manage-ment energy-conservation."Faced with great pressure from rapid economic growth and increasing demand for electricity,some government departments like Jiangsu Development and Reform Commission (DRC)and Jiangsu Economic &Trade Commission (ETC)cooperated with Jiangsu Pow er Corporation andhave won a preliminary success in ECER.Taking a lead in ret ire m ent of s m all unitsDuring the 11th Five-Year Plan period,Jiangsu plans to retire the small units of 3060MW as committed in the responsi-bility documents signed with the NDRC and will strive for 4300MW including some units that are not on the retiring list.The retirement of so many small units in such a short period,undoubtedly will have great impacts on the grid operation,construction,and economy development,which calls for an f Corporation.According to the statistics released by the China Electricity Council,5510MW of small units retired in the first half year of 2007in China,of which Jiangsu retired 1139MW,ranking the first place nationwide.Until July 2007,the retired small units in Jiangsu are as follows:600MW in Wangting Power Plant,425MW in Jianbi Power Plant,405MW in Nanjing Cogeneration Power Plant,124MW in Huaiyin Power Plant and 9MW in Huaneng SuzhouPower Plant,which is a good beginning of the "closing and retiring small units"endeavor.An in itia l s uc ce s s in the proc es s o f "La rge (units )I n a nd S m all (units )out (LIS O)"In Sep.2005,Jiangsu took the lead in implementing the trade of power generation rights and utilized two kinds of substitute trade terms ———negotiation and matching.Here,the "negotiation"was called the face-to-face free substitute trade,while the "matching"took the matching principle of stock exchange as reference and the substitute transaction was performed on the platform set bythe JiangsuPower Trade Center.In Sep.2006,the substitution scope was further extended,i.e.,the size of small units to be replaced was increased from 100MW and below to 200MW and below;in addition,the replacement form was extended to substitutions among units within the same power enterprise,substitutions among units within the same power group,and even substitutions among the units of different enterprises across the province.In 2007,the process of "LISO"was further strengthened,shifting from the self-dec-laration method used in 2006to the explicit stipulation that the units of 200MW and below must assign 50%of their genera-tion plan to large units as "substitute generation."Meanwhile,the substitute in terms of negotiation is required to be only between the small units and the 600-MW units that hold high efficiency,considering the situation that the substitute genera-tion involving 300MW in the 4th quarter of 2006is more than that involving 600-MW units.According to the statistics from the department of Electric Power and Energy Resources in Jiangsu Economic and Trade Commission,the province-wide substitute electricity totaled 6.2TWh,saving 310thousand tons of standard coal and reducing 6000tons of SO 2emissions in 2006;the province-wide substitute electricity hit 10TWh,saving 530thousand tons of standard coal and reducing 10,000tons of SO 2emissions from January to May,2007.Effic ienc y power plant (EPP )is highly e ffe ct ive After years of active exploration and experience,the demand-side management has been an effective measure to increase the efficiency of power utilization and reduce the cost of power consumption,playing an important part in ECER.The f f y y 6E EC C 2008.o.2proactive responding and research in advance rom the related departments in p rovincial government and Jiangsu PowerEPP is a kind o virtu al power plant integrating all k in ds o energ -conservation measures and energ -conservation2ELECTRICITYprojects.This power-saving scheme is implemented in order toaccumulate certain amount of power-saving capacity,whichequals to the electricity generated by power plants,and it canreduce the electricity demand.This is,in fact,equivalent to theextension of power supply pared with conventionalpower plants,the EPPs have significant advantages,suchas short period of construction,low operating cost,no landoccupation and zero pollution;compared with usual power-saving measures by distributed management,the EPPs can fullyutilize the mode of market-based operation to invest and operatein large scale.The investment returns and profits mainly comefrom the surcharge on electricity price and don't need fullsubsidies from the central government.Since2006,Jiangsu province has implemented the EPPPlan across the board,namely the big power consumers wereled to perform series of power-saving plans by reconstructing old equipment and installing new equipment with high-effi-ciency,so that"big power consumers"would be changed into "big power savers."It is advocated by Chinese tradition to increase income and reduce expenditure,but the function of "expenditure reduction"obviously outweighs that of"income increase"due to the temporary and seasonal power shortages even though the overall power supply and demand situation has been alleviated for the time being.By means of the EPP Plan, the efficiency of those"big power consumers"has been fully increased and the construction capital of new power plants and power grids has been saved as well.Meanwhile,part of the saved capital can also be used as subsidies for the technological retrofit of those"big power consumers,"so as to impel a virtuous cycle.In the first half of2007,Jiangsu has initiated309EPP projects with70million Yuan of technological retrofitting subsidies for energy conservation from the local government, 220of which have been built with600GWh of annual power saving capacity.This is equivalent to the standard coal conser-vation of240thousand tons and SO2emission reduction of 4800tons every year.Inc re as ing e fficien cy wit h s upport of s cienc e& tec hnologyThe science&technology is the prime driving force for ECER.In July2007,the ECER science and technology supporting action has been formally launched in Jiangsu. Focusing on the ECER technological requirements in several key industries,such as metallurgical,electric power,petro-chemical,building material,and textile industries,the technology and resources deployment and integration were optimized, meanwhile,the research on common technologies and devel-opment of key equipment would be accelerated,and wide-spread application of model projects would be promoted.AR y x,f,achievement transformation,and model promotion.This will strengthen the science and technology support for ECER.In recent years,the Jiangsu Electric Power Corporation has made significant progresses in utilizing science&technology to support ECER.First,the corporation invested15million Yuan and successfully developed the Cogeneration Unit Management Information System(CUMIS),which is used to assist the Jiangsu Economic and Trade Commission in formu-lating the"Heat Output Determines Power Output"policy for cogeneration enterprises.After scheduling the power generation based on the results of CUMIS,energy utilization efficiency was effectively improved,specifically,the standard coal was saved by about500thousand tons and the SO2emission was reduced by nearly10thousand tons in2006.Additionally,the corporation invested2billion Yuan to install more than30,000 energy-conservation transformers,actively enhanced all levels of power grids,and strengthened the corresponding manage-ment,which have resulted in the year-by-year reduction of the comprehensive line loss rate of Jiangsu Power Grid.C ounte rme as ures a nd s u gges tionsSince contradictions and problems are inevitable in the process of economic development,we shall evaluate the pros and cons from a global view and solve the problems with a development perspective.During the transition period of power industry reform,the substitute mode of power generation by "replacing small units with large ones"(not simply closing the small units of200MW and below),was used to balance the economic profits of all involved parties and realize the optimized configuration of energy efficiency and environment protection.As a matter of fact,this kind of approach can only alleviate the situations during the transition period,but can not thoroughly solve the problems resulted from the industry structural contradictions.x f ff z f f y'"L2008.o.2E EC Cprovince-wide integral ECE s stem is e pected to be built in 2010which is the combination o technological innovationAlthou gh the e p erience o Jiangsu can be tak en o rre erence to reali e the so t-landing o power industr s arge27N L TRI ITYL TRI ITYN (units)In and Small (units)Out (LISO)"for the moment,it is more important to seek aneffective way to accelerate the power industry's restructuring and establish a long-term effective mechanism.First ly,to gradually establish a fair ,scient ific,and standar dized system for market investment and competition.In recent years,the nationwide disordered and regulation-vio-lated construction of power sources has become the major factor for the unbalanced power source ernments at all levels shall adopt a fair,scientific,and standardized system of market investment and competition to guide power source construction and adjust the power source structure.The small units with high energy-consumption must be s trictly prevented from being constructed again.Secondly,to accelerat e the production conversion and retrofit of small units with high energy-consumption.The key to solve the ECER problem is to strengthen the restructuring of power industry and retire those small units with high energy-consumption.Meanwhile,several other issues concerning personnel settlement and social stability shall be addressed properly as well.Under the environment of encouraging and supporting development of renewable energy,considering the benefits of all involved parties,some small units can be retrofitted into biomass units.This provided a new way in addition tocogeneration.Thir dly,t o r et ir e small boilers with high ener gy-con-sumption while adopting centralized heat supply.At present,most coal-fired small boilers are of high energy-consumption and serious air pollution,due to the lack of dust treatment facil-ities.According to related data,the distributed heat supply of small coal-fired boilers consume more coal and emit more pollutants than small thermal units.Thus,the small boilers with high energy-consumption shall be phased out step by step,while the centralized heat supply especially the direct heatsupply by large units shall be used as much as possible.Fourth,to encourage ECER thr ough policies.The policy incentives are essential for ECER,especially much needed are those unified and coordinated supporting policies on electricity price,loan providing,tax incentives,and industry policies.For instance,in order to attract more investors,some international successful experience could be used as reference,i.e.,a small portion of electricity revenue can be set aside as investment fund for power conservation,which can be used to subsidize or directly invest in "bigpower savers."S ichu an:"Hydro-Th erma l Coo rd ina tion "to P ro mote Multi-WinSichuan is abundant in resources while at the same time with large pared with the national level,the energy consumption per unit (10,000Yuan)GDP in Sichuan is much higher.Specifically,the national energy consumption for per unit GDP is 1.22tons of standard coal,while Sichuan is 1.53tons,which is 25.4%higher than the national average.The energy consumption for industrial added value is 3.52tons of standard coal per 10,000Yuan,35.9%higher than the national average.For this reason,ECER in Sichuan is in a dire situation and will be a very demanding task.According to the goals set in the 11th Five-Year Plan of Sichuan,the province-wide energy consumption for per unit GDP should be reduced by more than 20%;to 2010the comprehensive energy consumption for industrial added value per 10,000Yuan is expected to reduce by more than 20%comparing to 2005.Based on this target,in 2007the province-wide energy consumption for unit industrial added value needs to be reduced by 6%.The 39enterprises included in the "Energy Conservation Action of 1000Enterprises"of the state were expected to save more than 620thousand tons of standard coal,and the 200enterprises covered in the "Energy Conservation Action of Hundred Enterprises"of the province were expected to save more than 1.02million tons of standard ernm ent prom ote s EC ER us ingm ultiplem ean sStren gth en ing th e ad ju s tm ent a nd o pt imization o f po we r ind u s try s tru ctu reSichuan made the following explorations in adjustment and optimization of power industry structure.Fir st is to restrict the rapid gr owth of high energy-consuming enter pr ises.The checking procedures for land use and loan were strictly controlled,as well as the threshold of market entrance,in order to prevent the duplicated construction of surplus high energy-consuming enterprises.In addition,Sichuan strictly carried out y f y ,f f f x,E EC C 2008.o.2appro ving or investment o i ed assets establish ed the28。
