China's Smart Grid Ambitions Could Open Door to US-China Cooperation

China’s largest electric transmission company has announced an ambitious plan to develop a national smart grid by 2020 that would help utilities and their customers transport and use energy more efficiently.

The sheer size of the project raises some intriguing questions. First, about whether China has the capital and technology for such an extensive upgrade. And second, whether the project could provide an opening for U.S.-China cooperation on technological improvements that could benefit both.

There's little question that the grid upgrade is becoming a necessity for State Grid Corporation of China, which is responsible for delivering power to 80 percent of the population.

Repeated blackouts in China’s coastal metropolises caused by power shortages in recent years, plus pressure to expand electrification to the rural inland and the growth of wind farms, have prompted considerable government investment in supply-side electricity improvements.

Underscoring the current pressure on the Chinese government to address the issue of power equity, Ryan Hodum, a senior associate for clean energy consulting firm David Gardiner & Associates said that while it

"will be critical to develop a 'clean energy backbone' across China to deliver electrons derived from clean and efficienct sources," the Chinese government also "need[s] to focus on rural electrification so that the country not only develops a Smart Grid but...also raises the level of access to energy."

Private firms and provincial governments across northern and eastern China are already commissioning several 10-gigawatt wind and solar generation bases that will depend on an advanced grid to help China reach its target of 15% energy from renewables by 2020, not to mention the 35% goal SGCC expects to meet.

SGCC general manager Liu Zhenya said the smart grid project would get started this year with the development of technical standards.

Part of the physical foundation is already in the works, such the “West-East Electricity Transfer Project,” an initiative to build three East-West corridors totaling 20 GW in transmission capability. Since January, the State Grid has also been operating a 400 mile long, 1,000 kilovolt ultra-high voltage AC demonstration project, which allows heavy electricity flow with lower transmission loss. It plans break ground on three more UHV AC lines this year, and build roughly 11,000 miles of UHV AC lines by 2012.

More financial and technical details of the smart grid plan are expected to emerge over the next few weeks.

Meanwhile, questions remain about the source of the needed technology.

China's Localization Push Poses a Challenge for Technology 

Though the pilot UHV line was developed entirely in China, building out a smart grid in China will depend on importing key technologies, a fact that was not lost on the over 40 utility data management-related exhibitors that turned out to the third annual MeteringChina Conference, held in Beijing just days after the SGCC announcement.

Nevertheless, China may be as intent to develop domestic smart growth technologies as it has been in promoting a homegrown wind industry by mandating at least 70% domestically produced components in the construction of wind power plants. China Strategies president Louis Schwartz is confident that as with “just about every industry, [China’s] ultimate goal is localization.”

But localization will not come cheap.