[smart grid market research] china: state grid corporation of china profile, march 2012

Zpryme Smart Grid Insights | March 2012 | China: State Grid Corporation of China Profile | Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved

CHINA: State Grid Corporation of China Profile

1 Zpryme Smart Grid Insights | March 2012

China: State Grid Corporation of China Profile

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.

―Over the next 5 years, SGCC

expects to invest just over $400

billion in power grid construction,

of which about $100 billion will be

directed towards Smart Grid

technologies.‖

Source: State Grid Corporation of China’s (SGCC) announcement January 2011 and April of 2011




The Worlds Largest Electric Utility

The State Grid Corporation of China’s (SGCC) size is mind-

boggling. It supplies power to 88% of China and serves an

area populated by over 1 billion people. At the end of

2011, SGCC had 286 million customers. Leveraging its huge

size and ability to start building Smart Grid technology into

its transmission infrastructure from scratch rather than

retrofitting an antiquated system, it is not only the driving

force behind China’s efforts to build a nationwide Smart

Grid, but also for China’s push to be the world leader in

developing a large-scale Smart Grid system. According to

the SGCC, only 36 million smart meters have been installed

as of 2011, but they have an ambitious plan to install over

300 million smart meters by the end of 2015. The sheer

enormity of the state-owned transmission company,

coupled with streamlined regulatory processes designed

to promote rapid construction without barriers typical in

further developed countries are among the key reasons

that China is the largest, most important market for Smart

Grid development in the world.

Over the next 5 years, SGCC expects to invest just over

$400 billion in power grid construction, of which about

$100 billion will be directed towards Smart Grid

technologies, and about one-sixth of the capital on

developing a transmission network across China.1

Additionally, China’s government expects to spend on the

order of $473.1 billion over the next 5 years on

developments to incorporate renewable sources of

energy, such as wind and solar power.2

1 State Grid Announcement January 2011 and April of 2011. 2 Planned Investment from China’s 12th Five-Year Plan for Economic and Social Development (2011 -2015).

*SGCC AMI reported data for 2009 - 2011, and target installations for 2015. Projections

for 2012 – 2014 estimated by Zpryme.

145

170 181

244 258

286

0

50

100

150

200

250

300

350

2006 2007 2008 2009 2010 2011

Total SGCC Customers Served

2006 - 2011 (in millions)

(figure 1, source: 2011 SGCC CSR Report)

2.2

33 36

86

146

221

300

0

50

100

150

200

250

300

350

2009 2010 2011 2012 2013 2014 2015

Total SGCC Installed Smart Meters

(in millions)

2009 to 2011 actual | 2012 to 2015 ptojections*

(figure 2, source: SGCC Smart Meter Plans, February 2012)




SGCC Key Operation Metrics, 2006 – 2011 figure 3

Utility Metric Unit 2006 2007 2008 2009 2010 2011 CAGR

Number of customers served million 145 170 181 244 258 286 14.6%

Smart meters installed million n/a n/a n/a 2.2 33 36 n/a

Electricity sales TWh 1,710 1,974 2,124 2,275 2,689 3,093 12.6%

Revenue billion USD $135 $160 $180 $199 $242 $265 14.4%

Total assets billion USD $192 $215 $260 $291 $329 $349 12.7%

Investment in power grid construction billion USD $28 $34 $39 $48 $42 $48 11.3%

Centralized tendering volume billion USD $19 $26 $30 $29 $28 $37 14.2%

Market share % 87.1 88.1 90.0 90.7 93.7 95.6 n/a

Peak load in the service area MW 306,516 342,755 370,224 424,900 484,100 535,460 11.8%

Length of transmission line [110 (66) kV and above] km 413,219 457,104 496,332 561,456 618,837 655,131 9.7%

Transforming capacity [110 (66) kV and above] MVA 1,137,790 1,342,700 1,601,420 1,886,540 2,131,930 2,391,620 16.0%

Line loss % 6.40 6.29 6.10 6.12 5.98 6.53 n/a

Total on-grid electricity in the service areas TWh 1,840 2,540 2,280 2,430 2,880 3,240 12.0%

Connected capacity from renewable energy generator units MW 2,285 4,076 8,030 14,308 25,530 40,030 77.3%

On-grid power from renewable energy generator units TWh 3.4 6.2 14.6 27.4 49.2 115.4 102.7%

Source: SGCC Corporate Social Responsibility Report, 2011




SGCC Profile

With just over 1.5 million employees, the SGCC is the

largest electric power transmission and distribution

company in the world. It is headquartered in Beijing, in

China’s Xicheng District. Formed in December, 2002 when

the State Electric Power Company was dissolved and

broken into separate companies according to function,

SGCC operates power transmission, distribution and other

assets previously belonging to the former giant, the State

Electric Power Company. For distribution, it has its five

subsidiaries: Northern China, Northeastern China, Eastern

China, Middle China and Northwestern China. The mission

of the company is to provide safe, economical, clean and

sustainable electric power for social and economic

development.

The world’s largest transmission company, transmitting

energy to over 88 percent of China and serving an area

with over 1 billion inhabitants, SGCC has enormous

influence over not only the development of Smart Grid

infrastructure, design, and management in China but also

throughout the world. This is partly because China aspires

to emerge as the global leader, not only across the entire

Electric Vehicle (EV) value chain, but in Smart Grid

development and implementation overall.

Electricity Sales and Peak Load

From 2006 to 2011, SGCC’s electricity sales have increased

by 12.6% a year, on average. Electricity sales have grown

from 1,710 terawatt-hours (TWh) to 3,093 TWh during this

time period. In 2011, SGCC’s peak load in their service

area reached a staggering 535.5 GW.

1,710

1,974 2,124

2,275

2,689

3,093

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2006 2007 2008 2009 2010 2011

Total SGCC Electricity Sales

2006 - 2011 (in TWh)

(figure 4 , source: 2011 SGCC CSR Report

$135.1

$159.8

$180.3 $198.9

$242.2

$265.0

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

2006 2007 2008 2009 2010 2011

SGCC Total Revenues

2006 - 2011 (in U.S. billions)

(figure 5 , source: 2011 SGCC CSR Report)




Revenues

The SGCC’s 2009 total revenues were $199 billion. In 2011,

SGCC announced revenues of about $265 billion. Pre-tax

profits reached $8.4 billion. SGCC ranked seventh in the

2011 Fortune Global 500 list of the world's largest

companies by revenue.

Transmission and Substation Capacity

In 2011, SGCC’s total length of the transmission lines [110

(66) kV and above] it owns and operates was greater than

655,131 kilometers (407,080 miles). Its substation capacity

was 2.39 billion KVA.

Renewable Energy

In 2010 installed wind power capacity in China reached

41.9 GW, overtaking the U.S. for the first time, and

becoming the world leader. However, the state-run power

grid is a bottleneck to using this energy, as much of this

capacity was unable to be integrated and thus was

excess capacity. In order to support the massive grid

power integration, in 2011 SGCC announced that they will

increase efforts in developing the power grid and that by

2015 they will have completed the Smart Grid, bringing the

smart gird to international high-tech levels, and increasing

its ability to integrate power from wind farms to 100 GW

and solar farms by 5 GW.

At the end of 2011, SCGG had a total of 40.0 GW of

renewable energy capacity.

Organizational Structure

The SGCC runs power transmission and distribution

networks in 26 of China's 31 provinces, municipalities and

autonomous regions.

SGCC is comprised of 5 regional power grid companies,

26 provincial electric power companies, 5 scientific

research institutes and 22 affiliates. The smaller companies

include two electric power grid operators, five electric

power generation companies and four relevant business

companies. Each of the five electric power generation

companies owns less than 20% (32 GW of electricity

generation capacity) of China's market share for electric

power generation.

China's power transmission system remains under-

developed. There is no national grid. Instead there are six

regional grids—five managed by the (giant) SGCC (north,

north-east, east, central and north-west) and an

independent grid (south) managed by SGC (covering the

light manufacturing hub around Guangzhou-Shenzhen

and the inland areas of Guangdong, Guangxi and

Guizhou). The lack of a unified national grid system

hampers the efficiency of power generation nationwide

and heightens the risk of localized shortages.

The central government has made creation of a unified

national grid system a top economic priority to improve

the efficiency of the whole power system and reduce the

risk of localized energy shortages. This will also enable the

country to tap the enormous hydro potential from western

China to meet booming demand from the eastern coastal

provinces.




SGCC Regional Power Companies and Provincial Electric Power Companies figure 6

North China Power Grid Company, Ltd East China Power Grid Company, Ltd Central China Power Grid Company, Ltd

Beijing Electric Power Company

Tianjin Electric Power Company

Hebei Electric Power Company

Shanxi Electric Power Company

Shandong Electric Power Company

Shanghai Electric Power Company

Zhejiang Electric Power Company

Jiangsu Electric Power Company

Anhui Electric Power Company

Fujian Electric Power Company

Hubei Electric Power Company

Hunan Electric Power Company

Henan Electric Power Company

Jiangxi Electric Power Company

Sichuan Electric Power Company

Chongqing Electric Power Company

Northeast China Power Grid Company, Ltd Northwest China Power Grid Company, Ltd

Liaoning Electric Power Company

Jilin Electric Power Company

Heilongjiang Electric Power Company

East Inner Mongolia Electric Power Company

Shaanxi Electric Power Company

Gansu Electric Power Company

Qinghai Electric Power

Ningxia Electric Power

Xinjiang Electric Power

Tibet Electric Power Company

*Note: The SGCC also holds a 100% stake in State Grid Brazil Holding, which consists of seven transmission companies in Brazil, and a stake in the National Grid Corp of

Philippines.




SGCC Smart Grid Plan

SGCC’s definition of a ―strong and smart‖ grid is a modern

power grid based on a strong information and

communication platform, with a UHV grid backbone and

subordinate grids coordinated at all levels. Furthermore

the subordinate grids must be IT-based, automatic and

interactive. SGCC has divided the development of a

Smart Grid into three phases: Phase 1: Planning and Pilots

(completed in 2010); Phase 2: Construction (2011 – 2015);

and Phase 3: Enhancement (2016 – 2020).

At the end of 2011, SGCC has implemented 238 Smart

Grid pilot projects to solve technical issues, test designs,

and develop management systems. These projects

covered the entire gamut of Smart Grid implementation,

ranging from connecting wind power plants to

automating distribution networks to metering households.

The projects were implemented across different regions of

China, including a highly publicized Smart Grid

demonstration project at the Shanghai World Expo. Using

the experience gained from these projects, SGCC

released a set of industry rules, standards, and favored

technologies for 22 criteria of Smart Grid technology in

June 2010.

In April of 2011, an expert from the Energy Research

Institute of the State Grid indicated that SGCC will invest

about $400 billion from 2011 to 2015 in their power grid.3

Of this amount, about 25% or $100 billion will be directed

towards Smart Grid equipment and technologies. In 2011,

SGCC invested $47.7 billion in power grid investments, an

increase of $6.0 billion from 2010.

3 www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1102&MainCatID=&id=20120228000008

Because of these investments, China is predicted to

become by far the world’s largest Smart Grid market.

Although the SGCC is looking for domestic manufacturers

to drive down the cost of smart meters through economies

of scale, much of the technology inside the meters will

come from Taiwan and Silicon Valley based companies.

The SGCC’s focus right now is on distribution networks -- in

an attempt to prevent it from splitting from the transmission

network. In the meantime, SGCC is also building a strong

supply chain internally, making its own specifications and

standards, manufacturing equipment, and integrating the

equipment into its own grid. To position itself better to

benefit from the coming Smart Grid boom, SGCC

acquired electrical-equipment makers Pinggao Electric

and XJ Electric, early in 2010; it is very likely that they will be

on the lookout for other value-adding acquisitions or

mergers.

$28.0

$33.7

$39.5

$47.9

$41.8

$47.7

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2006 2007 2008 2009 2010 2011

SGCC Investment in Power Grid Construction

2006 - 2011 (in U.S. billions)

(figure 7 , source: 2011 SGCC CSR Report)




Summary of SGCC Smart Grid Pilots, Projects, and Demonstrations

figure 8

Technology Area As of Year Ending in 2011 Future Plans

Overall SCGG Smart

Grid Pilots/Projects

238 pilots, projects, and demonstrations are in operation across 25 different technological segments

298 pilots, projects, and demonstrations will be operation

across 29 different technological segments (to be

completed by 2015)

Pilots cover 88% of China taking place in 26 of 31 provinces

Advanced Metering

Infrastructure

26 provinces and 2.2 million users (2009) 300 million smart meters (2015), realize 100% coverage

33 million smart meters (2010)

36 million smart meters (2011)

EV Charging and EV

Infrastructure

26 provinces and 108 public charging/swapping stations Full SGCC service area network coverage (to be

complete by 2015)

7,245 AC charge points

EV charging networks constructed in Qingdao and Hangzhou

Smart Cities and

Communities

6 smart communities constructed in Beijing, Chongqing, and Langfang Enhancements such as green power options, home

energy management, and additional smart buildings

25 new smart communities started in 2011

3 smart parks constructed in Jiangsu, Shandong, and Gansu

4 smart building construction started in Shanghai, Chongqing, Beijing, and Zhejiang

Large-Scale Smart

Grid Demonstration

Projects

Shanghai Expo Smart Grid Demonstration (completed in 2010) Yangzhou Economic& Technical Developing Zone (to be

completed in 2012)

Sino-Singapore Tianjin Eco-City (completed in 2011) Jiangxi Gongqingcheng city (to be completed in 2012)

Beijing Future Tech City (to be completed in 2013)

Customer Service and

Online Consumer

Portals

2 centralized service centers built in Jiangsu and Shanxi All provincial level service centers complete (by 2015)

9 interactive service websites/portals covering North China 17 additional service websites (to be completed in 2012)

3 interactive service halls build in Anhui, Zhejiang, and Fujian 3 interactive service halls in Shanghai, Jiangsu, and

Gansu (to be built in 2012)

Smart Power

Equipment Testing

Centers

National Smart Grid R&D (testing) center (Beijing/Nanjing)

SGCC smart power consumption testing center (Nanjing)

SGCC metering center (Beijing/Wuhan

Source: SGCC Presentation, Practice of Smart Power Consumption in Chinese Smart Grid, February 8, 2012




SGCC’s Smart Grid Plan includes a sub-plan for each

subsidiary regional and provincial power company, and

two special topic sub-plans: 1) an R&D plan for key Smart

Grid equipment and 2) a sub-plan for Smart Grid technical

standards.

By 2015, the proportion of installed clean energy power

generation capacity in China is expected to reach 32%.

Zpryme estimates that China will lead the world in the

hydro and other renewable electricity generation,

accounting for 24% (581 GW) of world capacity by 2035.

Moreover, China’s wind generation capacity will grow by

1200% from 2010 to 2035, when it will reach 533 GW.

According to Yimin Wang, Director of Smart Grid for

SGCC, in order to support the nation's wind power

development plan, SGCC aims to integrate 100 million KW

of wind power and 5 million KW of solar power by 2015.

Through 2010, SGCC has invested $6.3 billion to construct

23,200 kilometers of power lines for wind power integration

and integrated over 28.26 million KW of wind power

installed capacity, with maximum overall grid load of 4.2%.

This translates to a two-fold increase each year, for five

consecutive years.

The SGCC’s recent launch of the world’s largest battery –

storing 36 megawatt hours of energy and taking up the

size of a football field –also marks a significant step in

Smart Grid development. The battery, fed by a 100

megawatt wind farm and a 40 megawatt solar farm, is

predicted to increase renewable integration efficiency by

5-10 percent, as it can store energy during peaks in

production and the supply power when demand is

highest. China’s energy storage capacity will only

increase as more of these batteries are built and as

China’s electric vehicle fleet is integrated into the grid.

Within the time frame of the 12th Five-Year Plan, the State

Grid Corporation plans to build a backbone of ultra-high

voltage power transmission infrastructure, connecting

large coal, hydro and nuclear plants, as well as large scale

new energies projects with key load centers, bringing

energy allocation to a new level, and pushing forward

large scale wind power development and usage. Experts

estimate that 100-200GW transmission capacity will be

required for delivering electricity over long distance from

west to east and from north to south in the next 15 years.

The existing grid structure in China, which is primarily based

on 500KV AC and ±500KV DC backbones, is insufficient for

serving the purpose.

Companies are starting to team up with SGCC in order to

get their feet in the door in the developing markets of

China. For example, GE, the Chinese Academy of

Science and SGCC have embarked together on a

Standardization Project in January, 2011. The project

covers electricity charging and discharging technology for

EVs, large-capacity storage systems and network

technology, as well as other related Smart Grid

technology systems. Kandi, a player in the Electric Vehicle

industry, has announced plans to form a strategic alliance

with SGCC.

In conclusion, any company with ambitions to enter or

gain market share in China’s Smart Grid space would be

remiss not to carefully follow the plans and actions of

SGCC.




SGCC Enterprise Standards Relevant to Power Consumption

figure 9

Technology Area Standard Short Description

AMI

Q/GDW 376.1 Communication protocol between master station and terminals

Q/GDW 376.2 Interface for local communication module of concentrators

Q/GDW 377 Technical specification for security and protection

Smart Consumption

Service

GB/T 50314-2206 Smart building design criterion

Q/GDW Z 620 Functional requirements of smart community; Specification for information exchange interface between

home appliance and power grid; Technical specification for communication interface of smart home

Electric Vehicles

Q/GDW 235 Communication protocol for EV off board charger

Q/GDW 397 Technical requirements of EV off board charging/discharging devices

Q/GDW 400 Technical specification for EV charging/discharging billing devices

Distributed Generation

Q/GDW 480 Technical specification for integration of distributed energy source to power grid

Q/GDW 564 Technical specification for integration of energy storage system to distributed grid

Source: SGCC Presentation, Practice of Smart Power Consumption in Chinese Smart Grid, February 8, 2012




Zpryme Credits Editor

Tibor Sarlos

Managing Editor

Sean Sayers

Research Lead

Stefan Trifonov

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