|Project Rationale and Linkage to Country/Regional Strategy
The power sector in the PRC has grown rapidly in tandem with the economic growth. Installed power capacity has expanded by about 70% in the past five years alone. Since the power sector relies heavily on coal-fired power generation which accounts for more than 75% of total power, the rapid expansion in capacity has caused large increase in carbon dioxide (CO2), the major greenhouse gas (GHG) responsible for climate change. Promoting more diversified energy mix with higher share of renewable energy is the core priority to decarbonize the country's power sector to meet its carbon intensity reduction target which is set at 40% 45% reduction by 2020 compared with 2005 levels. In 2005, the Renewable Energy Law of the PRC enacted to kick start large scale renewable energy development in the country. It provides a set of incentives to promote some non-hydro renewable technologies, specifies grid-feed in requirements and standard procedures, and establishes supervisory measures. In 2007, the National Development and Reform Commission (NDRC) issued the Medium- and Long-Term Development Plan for Renewable Energy in the PRC, which aims to increase the share of renewable energy in the total primary energy consumption to 15% by 2020. The Twelfth Five-Year Plan, 2011 2015, has set an intermediate targets to increase share of renewable energy to 11.4% in 2015, and to decrease carbon intensity by 17% by 2015 compared with 2005 levels to meet the larger 2020 targets.
During the Eleventh Five-Year Plan period (2006 2010), the PRC has witnessed a significant growth in domestic wind power and solar photovoltaic (PV) market. During this period, the installed capacity of wind power increased from 1.3 gigawatt (GW) to 41.8 GW. Solar PV installed capacity has also expanded but more modestly from 0.07 GW to 0.9 GW during the same period. But it surged by 2.9 GW in 2011. During the Twelfth Five-Year plan (2011 2015), the PRC has set a target of more than 5 GW for solar power. The rapid increase in wind power and solar PV capacity into the grid is posing new challenges to grid stability due to intermittent nature of power supplied by these plants. Moreover, due to uncertainty in their output, the grid company cannot schedule their dispatch economically and require back up power from alternative sources.
CSP is a state of the art renewable energy technology which provides stable solar power at any time of the day to allow the grid company to schedule their dispatch economically, thus improving grid operation. By 2011, utility scale CSP plants of 1.3 GW installed capacity were in commercial operation, mainly in Spain and in United States. CSP converts direct solar irradiation into usable heat generating the medium to high quality steam that runs steam turbine for power generation. With thermal storage, CSP enables steam turbine to run at full load during night time or in case of insufficient direct solar irradiation during the day time, and supply reliable, predictable, and dispatchable electricity. The PRC has around 1,050 2,450 kilowatt-hour per square meter (kWh/m2) of direct normal irradiation (DNI) over more than 700,000 square kilometer (km2) which is suitable for CSP installation and can potentially generate more than 51,000 terrawatt-hour (TWh) of electricity per year compared to PRC's total electricity generation of 4,228 TWh in 2010. But utility scale CSP remains at the early stage of development in PRC primarily due to limited hands-on experience with the technology. Other factors such as extreme cold climate and water scarcity condition prevalent in the suitable locations for CSP combined with lack of CSP specific development policy, and insufficient tariff support have inhibited or slowed investment in CSP thereby causing delays in CSP demonstration and deployment.
Asian Development Bank (ADB) has been promoting CSP in the PRC since 2009 through a capacity development TA. The TA has provided assistance in (i) developing road map for CSP plant development in Gansu and Qinghai provinces, (ii) preparing pre-feasibility study for CSP project in Gansu province, and (iii) implementing pilot CSP project in Beijing. By the end of 2011, the government of the PRC decided to construct four 50 MW utility scale demonstration CSP demonstration projects including the proposed project. It will provide valuable hands-on experience and mitigate some of the perceived and real technology risks associated with first-of-kind projects. Successful demonstration will lead to market acceptance and large scale CSP deployment in the PRC.
The proposed project location is one of the most suited locations due to higher DNI of about 2,000 kWh/m2 and over 3,100 daylight hours per year. The proposed project will utilize a parabolic trough CSP, which is one of the four major CSP technologies, with 50 MW of installed capacity with 7 hours thermal storage system. The Project will annually generate 199 gigawatt-hour (GWh) non-fluctuating and clean electricity, thereby avoiding annual CO2 emission by 100,000 tons. The electricity to be generated by the proposed project, will be fed into the existing transmission system at 330 kV by interconnecting at an existing grid substation located 8 kilometers from the project site. The proposed project is also designed to further lower the environmental footprint and address one of the core issues of water scarcity by adopting air cooling system, which will reduce water consumption by one-third as compared with a conventional CSP plant with wet cooling system. Successful demonstration of the proposed project will provide valuable learning lessons and experiences to deploy CSP not only in the PRC but in the other countries with similar climate and geographical features. Being the first-of-its-kind, the proposed project has high certainty to be eligible for carbon finance through Clean Development Mechanism. ADB's Carbon Market Initiative will provide necessary support to mobilize carbon finance.
The proposed project is included in the Country Operations Business Plan (COBP 2012 2014), and is also in line with the (i) ADB's Energy Policy 2009, (ii) Medium- and Long-Term Development Plan for Renewable Energy of the PRC in 2007, and (iii) the Twelfth Five-Year Plan, 2011 2015 of the PRC. The proposed project also contributes to 3,000 MW solar power capacity addition target by 2013, under the ADB's Asia Solar Energy Initiative (ASEI) launched in May 2010.