“One belt, one road” ambitions for China’s export ambitions

Lucy Hornby writes in the Financial Times about a new proposal by a Chinese company to export power as far as Europe. The idea is intriguing as long as the power is from renewables and not their numerous coal power plants.

 

China looks to export surplus energy to Germany

China’s proposed investments in long-distance, ultra-high voltage (UHV) power transmission lines will pave the way for power exports as far as Germany, the head of the national power grid said on Tuesday as he launched an initiative for cross-border power connections.

Exporting power to central Asia and beyond falls into China’s “one belt, one road” ambitions to export industrial overcapacity and engineering expertise as it faces slowing growth at home. The plan would allow enormous hydropower dams, coal-fired power plants and wind farms in frontier regions such as Xinjiang to sell into higher-priced markets overseas. The “belt” refers to the land route from Asia to Europe, while the “road”, curiously, refers to the sea route via the Indian Ocean.

Talk of exporting power is a reversal for China, which as recently as 2004 suffered rolling blackouts across its manufacturing heartland. But huge investments in power in the decade since, and the construction of a number of dams, nuclear reactors and coal-fired plants due to begin operating in the next 10 years, mean the country faces a growing surplus.

Liu Zhenya, chairman of State Grid, told reporters that wind and thermal power produced in Xinjiang could reach Germany at half the current cost of electricity there. “There are so many resources, but no market. We need to find it externally.”

The distance from Kashgar, an oasis city in Xinjiang near China’s central Asian frontier, to Berlin is only about 400 miles farther as the crow flies than the distance from Kashgar to Shanghai, China’s financial centre.

Other potential markets include Pakistan, India and Myanmar, Mr Liu said. Less than five years ago, Myanmar cancelled a dam that was designed to export power to China. Now, with an excess of dams in China’s south-west, it is the Chinese-produced power that is seeking an outlet.

Mr Liu has forged his career on his support for UHV transmission, which has enabled China to build huge energy projects far from its power-demand centres on the eastern and southern coasts. That has made him a controversial figure among environmentalists opposed to large-scale coal mining and mega-dams. Some power industry executives believe State Grid’s emphasis on UHV has sidelined smaller, more efficient projects nearer to population centres.

Also on Tuesday, State Grid signed a memorandum of understanding with Korea’s power utility and SoftBank of Japan to promote an interconnected grid in north-east Asia.

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