China, People's Republic of: Guangdong Energy Efficiency and Environment Improvement Investment Program - Project 2

Energy / Energy sector development and institutional reform

The Project is to promote energy efficiency and environmental protection in Gungdong Province using advanced technologies, and is justified in technical, economic, and financial terms. The energy savings will result from retrofitting existing equipment with more efficient equipment, which in aggregate will reduce the need to construct and operate a conventional coal-fired power plant.

The Project will consider only retrofits of proven energy efficiency technologies in the following areas: (i) motors and motor-drive systems; (ii) transformers and reactive power compensators; (iii) lighting; (iv) heating, ventilation, and air conditioning; (v) air compressors and pumping systems; (vi) recovery of waste energy from industry; (vii) coal-fired industrial boilers and industrial cogeneration; and (viii) other related energy efficiency improvement projects.

The Project will have multiple benefits: (i) energy security improves as lesser new power supply capacity will be needed to meet future demand, and less coal will be used for power generation; and (ii) the local and subregional environment improves, and the contribution to global climate change is lower because of avoided coal use.

Currently, PRC is one of the largest energy consumers in the world. Within its energy mix, approximately 70% of the primary energy demand is met by coal, and about 80% of electricity is generated from coal. The large share of coal-fired power generation results in serious environmental issues and accounts for about 50% of the PRC's sulfur dioxide emissions and 80% of nitrogen oxide emissions both pollutants result in acid rain that falls on one third of the country. Rapid implementation of energy conservation measures, including implementation of EPPs, will lower the burden for later addressing the consequence of carbon emissions and climate change.

Guangdong has the largest and fastest-growing economy among all the PRC provinces. Its gross domestic product (GDP) has grown at 14% per annum since 1995. Electricity consumption is dominated by energy-intensive heavy industries, with the industry and manufacturing sectors combined representing about 73% of total electricity use. The province has relatively low natural resource endowments. It imports 100% of coal requirements and 80% of oil needs; approximately 20% of electricity is imported from other provinces. The demand for power has outpaced supply and power shortages have been experienced during the summer peak periods. About 75% of the generation capacity is from coal-fired power plants, which have caused serious air pollution. Therefore, improving energy efficiency is a high priority for GPG to help address both energy security and environmental issues. Guangdong also provides a good setting to pilot the EPP model because of its vibrant economy and the large impact that energy savings will have in comparison with less industrialized provinces.

Energy efficiency projects of Tranche 2 implemented

ESCO sector developed in Guangdong

Capacity developed for promotion and assessment of energy efficiency

100% of the total amount loan was withdrawn. All six sub-borrowers have fully utilized their sub-loans.

Tranche 2 has developed approximately an EPP equivalent to 40.4 MW, and provided energy savings of about 202,013 MWh/year and emissions reduction of total suspended particulates (TSP) of 676 tons/year (t/y), sulfur oxide of 1,818 t/y, nitrogen oxide of 404 t/y, and carbon dioxide of 157,500 t/y, which have already achieved more than the designed energy efficiency and emission reduction results.

Three workshops have been held, and public education program has been conducted at the Guangzhou Energy Conservation Exhibition yearly.