Project Name Qingdao Smart Low-Carbon District Energy
Project Number 48003-001
Country China, People's Republic of
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8625-PRC: Qingdao Smart Low-Carbon District Energy
Technical Assistance Special Fund US$ 600,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Sector / Subsector

Energy - Conventional energy generation - Renewable energy generation - biomass and waste - Renewable energy generation - solar

Gender Equity and Mainstreaming
Description The proposed Qingdao Smart Low-Carbon District Energy Project will demonstrate one of the first coal-free district energy (heating and cooling) systems in the People's Republic of China's (PRC). Instead of coal, the project will use a mix of cleaner and renewable heat sources such as natural gas, waste heat recovery, and solar thermal. It will also demonstrate highly energy efficient low temperature district energy networks with computerized demand-side load management system in Lilun District in Qingdao City. The cleaner source of heat combined with highly energy efficient district energy system will reduce emission of greenhouse gases and other air pollutants in Qingdao City.
Project Rationale and Linkage to Country/Regional Strategy

Qingdao is a large city in Shandong Province, located in the northeastern part of the PRC where winter temperature drops to as low as 17 C, and sub-zero temperatures typically last for 5 months in a year. Heating services is an essential requirement for sustaining the people's livelihood. Like other large cities in the PRC, Qingdao has also been experiencing hazy sky and polluted air in winter. According to local air quality monitoring system, Qingdao's daily particulate matter less than 2.5 micrometers (PM 2.5) concentration ranges from 151 g/m3 200 g/m3 ,which is almost six to eight times higher than World Health Organization (WHO) guideline of 25 g/m3. Similarly, particulate matter less than 10 micrometers (PM10) in Qingdao have been measured as 132 g/m3, which is more than twice the WHO guideline.

It is estimated that 45% of PM 2.5 in the PRC is contributed by coal combustion. Current coal-based heating practice is a major cause of increased outdoor and indoor air pollution during winter months. The poor indoor and outdoor air quality increases the risk of acquiring respiratory and heart diseases, with higher impact on the sick, children, elderly and poor people. Large air pollution in the PRC also increases transboundary air pollution in neighboring countries such as Japan and Korea. A key lesson from the United Kingdom, which experienced the London Great Smog due to serious air pollution in 1952, is that a rapid switch from coal to clean energy consumption (mainly gas) can contribute greatly to pollution reduction. Fuel switching from coal to gas and renewable energy integration in the district energy system is the way forward in major cities in the PRC, including Qingdao, which are facing serious urban air pollution especially during winter season.

Qingdao is one of the national low carbon development pilot cities selected by the National Development Reform Commission (NDRC) in December 2012. One third of carbon dioxide (CO2) emission in Qingdao is contributed by the residential and heating sector. One of the key interventions to achieve the low carbon development in Qingdao is to replace coal-based boilers with natural gas and reduce losses in district heating network. In June 2013, the State Council of the PRC issued ten air pollution prevention and control measures, which includes the reduction of coal usage and increasing the utilization of natural gas and renewable energy in district energy. In July 2013, Qingdao Municipal Government (QMG) issued a comprehensive policy for urban air pollution reduction which includes a ban on using coal in district energy in urban areas. In January 2014, the PRC has set new targets for provinces to reduce air pollution by 5% 25%. Under the new regulation, Shandong Province will have to reduce PM 2.5 emission by 20% annually by 2017.

Apart from the use of cleaner and renewable heat sources and low-temperature heating, the proposed project will also introduce additional features that will bring the energy efficiency of district energy system to international current best practices. These features include (i) replacing the conventional insulated steel pipes by installing insulated plastic pipes to reduce the heat and water losses, (ii) installing heat storage facility for peak demand shaving, and (iii) installing centralized chillers utilizing waste heat and other clean sources for district cooling during the summer months. The proposed project will not only directly benefit to 450,000 households in the project area (36% of total urban population in Qingdao City) by providing cleaner district energy services and improved air quality, but also indirectly benefit the remaining urban population in downstream districts of Qingdao through improved air quality by removing the polluting sources from the project area.

The proposed project is directly responding to the urgent national, provincial, and municipal priorities to develop low carbon cities and reduce urban air pollution (para 4). Upon successful demonstration of the proposed project, the similar technical application can be replicated in other major cities in the PRC. It is closely aligned with ADB's Strategy 2020, where moving developing member countries are moving onto low-carbon growth paths by improving energy efficiency and introducing renewable energy has been identified as one of the key means of achieving environmentally sustainable growth. ADB's Energy Policy (2009) prioritizes energy efficiency and access to energy for all, including district heating. The PRC's country partnership strategy (2011 2015) identified environmental sustainability as one of the three pillars of ADB assistance.

Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Main stakeholders of the project are Qingdao Energy Group Limited, Qingdao Municipal Development and Reform Commission, Qingdao Finance Bureau, heat sources operators, communities, and businesses in the project areas. They have been participating in the project design through consultations and series of review and approval processes. Potentially affected communities have participated in public consultations during the domestic environment impact assessment preparation and will also have an opportunity to engage in project design improvement through potential public consultation meetings and other communication channels that will be set during the project preparation stage as well as project implementation.
During Project Implementation The environment team of the consulting firm worked with the local design institutes to finalize the EDD reports and parts of the IEE report. The technical team met with the implementing agency and local design instituate to clarify details about the FSR and compile the draft TDD report. Various organizations and institutions in Denmark and Sweden were visited by the representatives of Qingdao province in the second week of September 2015 to obtain first hand knowledge and skills on the various technologies on district heating systems in Europe.
Business Opportunities
Consulting Services The TA will take a two stage approach to use consulting services efficiently. Part 1 (data gathering and preliminary assessment) will require a total of 7.5 person-months of one international and three individual national consultants while Part 2 (detailed assessment) will require a total of 6 person-months of international and 15 person-months of national consulting services through a consulting firm. Part 1 will be implemented while the selection of consulting services of Part 2 is underway. Hiring a small number of individual consultants is more appropriate for the quick mobilization of consulting service and cost-effective than firms to perform the assignment of Part 1. The information collected by the consultants of Part 1 will be carried over to the consultants of Part 2. The expected benefit of this approach may advance the loan processing schedule. As for Part 1, the three individual national consultants will be engaged by ADB in accordance with the Guidelines on the Use of Consultants (2013, as amended from time to time). As for Part 2, a consulting firm will be recruited by ADB in accordance with ADB's Guidelines on the Use of Consultants through quality- and cost-based selection method (with a quality-cost ratio of 90:10 due to importance of technical aspects) using simplified technical proposal.
Procurement The procurement of equipment by consultants, under the TA, will follow ADB's Procurement Guidelines (2013, as amended from time to time). The proceeds of the TA will be disbursed in line with ADB's Technical Assistance Disbursement Handbook (2010, as amended from time to time). The equipment procured under the TA will be turned over to the executing agency upon TA completion.
Responsible ADB Officer Teruhisa Oi
Responsible ADB Department East Asia Department
Responsible ADB Division Energy Division, EARD
Executing Agencies
Qingdao Municipal Development & Reform Commission
Foreign Economic Relations & Trade Div
No. 11 Xiang Gang Zhong Road
Concept Clearance -
Fact Finding -
Approval 04 Mar 2014
Last Review Mission -
Last PDS Update 23 Sep 2015

TA 8625-PRC

Approval Signing Date Effectivity Date Closing
Original Revised Actual
04 Mar 2014 20 Mar 2014 20 Mar 2014 29 Feb 2016 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
600,000.00 0.00 100,000.00 0.00 0.00 0.00 700,000.00 04 Mar 2014 205,615.31

This project data sheet was generated from on 27 November 2015