The Asian Development Bank is working with the People’s Republic of China to develop a district heating, cooling and power production and distribution system using low-carbon energy sources in Qingdao city. The pilot project is cutting carbon dioxide emissions, improving air quality and reducing energy losses through the adoption of a smart energy management system.
|Project Name||Qingdao Smart Low-Carbon District Energy Project|
|Country||China, People's Republic of
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Environmentally sustainable growth
Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
|Sector / Subsector||
Energy / Energy utility services
|Gender Equity and Mainstreaming||Some gender elements|
|Description||The project will develop and demonstrate a low-carbon, energy-efficient district heating, cooling, and power production and distribution system in eight locations in Qingdao city. Instead of coal, the system will use natural gas, solar thermal, shallow-ground geothermal, and waste heat recovered from industrial plants as its energy sources. The project will also demonstrate a low-temperature district energy distribution network and combine it with a smart energy management system. The project system is expected to lower energy intensity by 40% and carbon intensity by 64% from the averages achieved by comparable standard systems now in use in the northern People's Republic of China (PRC).|
|Project Rationale and Linkage to Country/Regional Strategy||
Qingdao is in Shandong Province in the northeast of the PRC where winter temperatures drop to as low as 17 degrees Celsius and are typically below zero for 5 months a year. Heating is therefore an essential service for public health and well-being and sustaining people's livelihoods. Demand for heating grew along with urbanization at an average rate of 11% a year during 2011- 2014 in Qingdao. The city air has become hazy and polluted in the winter, a problem common in the PRC's urban regions. According to the local air quality monitoring system, the average annual fine particulate matter concentration in 2014 was 84 micrograms per cubic meter, more than 8 times the level recommended by the World Health Organization. It is estimated that on winter days 40% of this particulate matter comes from burning coal.
Coal-based heating is a major cause of rising levels of outdoor and indoor air pollution during the winter months and the growing risk of respiratory and heart diseases that results. The sick, children, the elderly, and the poor are affected the most. In June 2013, the Government of the PRC issued a policy on 10 air pollution prevention and control measures, which included the reduction of coal use and greater use of natural gas and renewable energy. In July 2013, the Qingdao municipal government developed a comprehensive policy for urban air pollution reduction, which included a ban on the use of coal in district energy systems for new and additional heating areas, and a plan to eliminate the use of coal over time in urban areas. In January 2014, the PRC set new targets for provinces to reduce air pollution by 5% 25% during 2015- 2020. The United Kingdom, where smog rose to serious levels in London in 1952, showed that a rapid switch from the use of coal to gas as a basic energy fuel can greatly reduce air pollution.
Qingdao was selected as pilot city for low-carbon development by the government's National Development and Reform Commission in December 2012. One-third of carbon dioxide emissions in the city come from residences and the heating industry, many of which still use coal-based systems and high-loss heating networks. This makes the replacement of boilers and centralized district heating networks using coal with decentralized systems using natural gas and renewable sources a high priority of Qingdao in the effort to reduce carbon dioxide emissions.
The district heating systems in the PRC also tend to overheat buildings, which leads to significant energy loss through the building envelope. This happens because heat suppliers do not know and cannot react to the customer demand for heat in real time. Use of a smart energy management system will prevent overheating, save energy, and improve the quality of heating service. These systems provide interactive communications and energy control between heat suppliers and customers to indicate and meet household demand.
The project design responds directly to the urgent national, provincial, and municipal government priorities to develop low-carbon cities and reduce urban air pollution. When the project is completed, the design can be replicated in other major cities to bring their systems in line with current international best practices for achieving energy efficiency. By providing cleaner district energy services and improving air quality, the project will directly benefit about half a million people in the project area, or about 15% of the city's urban population, as well as commercial enterprises and public agencies. It will indirectly benefit the residents of the other parts of Qingdao by removing some of the sources of pollution now emanating from the project area.
Energy efficiency in district energy improved.
Cases of respiratory and heart diseases decreased.
|Description of Outcome||Carbon and pollutant emission from district energy system in Qingdao avoided.|
|Progress Toward Outcome||As of Q4 2020, the project has awarded 24% of contracts and disbursed 19% of the total loan amount (13 procurement contracts and 2 consulting contracts) at an elapsed time of 64%. The project is following a new implementation plan with completion date of June 2023.As of June 2020, the emissions reductions are as follows: 60,445 tons of carbon dioxide, 804 tons of sulfur dioxide, 219 tons of nitrogen oxide, and 339 tons of particulate matter.|
|Description of Project Outputs||A smart, distributed district energy system constructed in Qingdao|
|Status of Implementation Progress (Outputs, Activities, and Issues)||
As of Q4 2020, the project has achieved 375.25 MW or 37.41% of heating supply (1,003 MW target); 26.89 MW or 15.28% of cooling supply (176 MW target); 0.46 MW or 0.58% of electricity supply (79 MW target); and 53.42 km or 46.05% of pipeline (116 km target).
Progress per subproject location:
1. Binhai energy system: (i) industrial waste use, peaking boilers, and heat storage: now goods, engineering, and civil works awarded as of reporting period: (a) heat exchange station and peaking boilers at 28 subdistricts: 1 goods package awarded; no engineering and civil works awarded; (b) peaking boilers: 3 goods packages awarded; 7 engineering contracts awarded; and 6 civil works packages awarded; (c) heat storage: 2 goods packages awarded; 7 engineering packages awarded; 6 civil works awarded;(ii) Commercial building HQ: no packages awarded as of yet(iii) licuang sewage heat pump: 1 goods package awarded; 41 engineering contracts awarded; and 17 civil works contracts awarded(iv) primary heating networks: 1 goods contract awarded; no engineering and civil works contracts awarded as of yet.
2. Houhai energy system(i) houhai energy island: no goods, civil works and engineering contracts are awarded;(ii) Qingdao north station: 1 goods contract awarded; no civil works and engineering contracts awarded;(iii) heating networks: 1 goods contract awarded; 13 engineering contracts and 8 civil works contracts awarded;
3. Licang unit-based heating and cooling system:(i) Licuang district retrofitting: 1 goods contract awarded; 41 engineering and 17 civil works contracts awarded;
4. Shibei heat exchange stations(i) heat exchange station and peaking boilers at 28 subdistricts: 2 goods contracts awarded; 11 engineering and 7 civil works contracts awarded;(ii) air heat pump: 3 goods contracts awarded; 7 engineering and 6 civil works contracts;(iii) heating networks: no goods, engineering, and civil works awarded as of yet;
5. Jidong energy system(i) BS#1: no goods, engineering, and civil works contracts awarded(ii) BS#2: no goods, engineering, and civil works contracts awarded(iii) gas boilers in 6 districts: 2 goods contracts awarded; no engineering and civil works contracts awarded;(iv) heating networks: 1 goods contract awarded; no engineering and civil works awarded.
6. East Licang heating system(i) Licuang east clean energy heating: 2 goods contracts awarded; no engineering and civil works awarded;(ii) heating networks: non goods, engineering, and civil works contracts awarded
7. Shinan unit-based heating and cooling system: 2 goods contracts awarded; 12 engineering contracts and 1 civil works contracts awarded
8. Shibei geothermal and solar heating system: 1 goods contract awarded; no engineering and civil works contracts awarded
9. Smart energy management system: 2 goods contracts awarded; no engineering and civil works contracts awarded as of yet.
|Summary of Environmental and Social Aspects|
|Environmental Aspects||The project is classified as category B for environment. The initial environmental examination (IEE) complied with ADB's policies and requirements, including those under Asian Development Bank's (ADB) Safeguard Policy Statement (2009). The risks during project construction identified by the IEE included those related to (i) noise and dust, (ii) construction waste, (iii) community disturbance and public safety, and (iv) occupational health and safety. It found potential adverse environmental impacts during system operation to be related to (i) the emission of nitrogen oxides, (ii) noise, (iii) the disposal of wastewater from the heat source plants, and (iv) occupational health and safety. The IEE concluded that all the construction and operational risks it pinpointed could be mitigated by implementing measures specified by the environmental management plan, monitoring implementation, and assigning institutional responsibility for ensuring proper environmental management.The Qingdao municipal government and the Qingdao Energy Group (QEG) carried out meaningful consultations with the public in accordance with ADB's Safeguard Policy Statement. The Qingdao municipal government and the QEG are committed to managing the environmental risks cited by the IEE and have agreed on a comprehensive set of environment-related loan covenants and to participate in a training program that will strongly emphasize environmental safeguards. The IEE was posted on ADB's website on 3 August 2015. Environmental safeguard documents were disclosed to the affected people. Potential environmental complaints or disputes will be handled in accordance with the grievance redress mechanism established for the project. An assessment of the climate change risks posed to the project considered them to be moderate. The most significant threat comes from rising sea levels, and no specific design modifications were required or justified since this will not affect the project during its life span.|
|Involuntary Resettlement||The project is classified as category C for involuntary resettlement and indigenous peoples. The project does not entail permanent land acquisition, restrictions on land use, the demolition of any structure, or involuntary resettlement. Installing underground heating pipelines will affect only publicly owned roads and sidewalks for a maximum of 6 months.|
|Indigenous Peoples||The project is not expected to have adverse impacts on ethnic minorities. It will be implemented in a large urban area where a vast percentage of people are members of the Han ethnic majority, and where no significant differences exist between the lifestyles and socioeconomic status of the Han majority and ethnic minorities. The project site is not close to any ethnic minority towns or villages.|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||Meaningful consultation for the project has been conducted during feasibility study and environment impact assessment (EIA) in accordance with the PRC Interim Guideline on Public Consultation in EIA (2006) and ADB''s Safeguard Policy Statement. The project initial environmental examination was disclosed at the ADB website on 3 August 2015. And the latest EMP was disclosed in May 2018.|
|During Project Implementation||During construction, the affected people will be consulted through formal questionnaire surveys and informal interviews by the environmental management unit and/or the external environmental monitor. The local environmental protection bureau and ADB shall disclose the project''s environmental information, as follows: (i) the domestic Chinese EIA are disclosed on the website of QEG; and (ii) the semiannual environmental management plan progress and monitoring reports, as well as the annual environmental management plan verification reports, will be disclosed at the ADB website. QEG will establish the grievance redress mechanism and procedures in accordance with the proposed project grievance redress mechanism to address environment and social issues associated with the project. Public disclosure of all project documents will be undertaken by QEG and on ADB website including the project data sheet, design and monitoring framework, initial environmental examination, and the report and recommendation of the president to the Board of Directors. Disclosure of social and environmental monitoring reports will be undertaken during project implementation. There has been delays in project implementation due to (i) the adoption of the national procurement policy to engage the Public Resource Trading Platform in the procurement processes affecting the bidding of packages scheduled for 2017; (ii) deferred implementation plans of certain subprojects due to slow infrastructure and community developments; and (iii) inexperienced PMO staff in undertaking the procurement processes. ADB is closely monitoring the project in coordination with the PMO, consultants, and the tendering agency. Teleconference is conducted every two weeks to update on the project's progress. Capacity enhancements such as workshops/training/coaching are ongoing. The loan implementation consultants and a procurement expert are onboard to support the implementing agency (QEG) in the preparation of bid documents and bid evaluation reports. The Special Portfolio Review Meeting was held on 9-10 September 2019 among ADB, MOF, and implementing agencies. The meeting between ADB and Qingdao Energy Group (implementing agency) identified issues and challenges faced during implementation and these issues were addressed as follows: (i) replacement assigned project site/s (from new to existing lands) for Binhai subprojects as a result of the new law (specify the law and agency approver), approved in 2018, which targeted new lands; (ii) expedited approval of funding source/s to compensate relocation requirements for Houhai subproject; and (iii) faster land turnover. As advised by QEG, bidding processes and delivery of goods for some packages will be delayed due to COVID19 crisis. A virtual loan review mission was undertaken in August 2020 to update the progress of the project. The mission met with representatives from Qingdao Development and Reform Commission, Qingdao Finance Bureau, and Qingdao Energy Group.A loan review mission was held virtually on 5 February 2021 which (i) discussed the overall project implementation progress; (ii) updated the procurement plan and identified the packages for award in 2021; (iii) defined the contract awards and disbursements projections and targets for 2021 and onwards; (iv) discussed safeguards compliances, and (v) discussed reporting requirements.|
|Consulting Services||The project implementation consultants have been engaged and were mobilized in the second week of July 2019.|
All procurement of goods will be undertaken in accordance with ADB's Procurement Guidelines (2015, as amended from time to time). Taking into consideration the maturity of district heating equipment market in the PRC and experiences from past district heating projects, ADB-financed goods contracts estimated at $10 million and above will be procured through international competitive bidding and contracts estimated at below $10 million will be procured through national competitive bidding, using approved national standard bidding documents. The relevant sections of ADB's Anticorruption Policy (1998, as amended to date) will be included in all documents and contracts.
The cumulative contract award is $24.4 million (13 goods and consulting services contracts), and the cumulative disbursement is $15.99 million. About $30 million contract is expected to be awarded in 2020.
Bidding processes and delivery of goods for some packages are expected to be delayed due to COVID19 crisis.
|Responsible ADB Officer||Lu, Lanlan|
|Responsible ADB Department||East Asia Department|
|Responsible ADB Division||PRC Resident Mission|
Qingdao Municipal Government
c/o Qingdao Mun.Devt.& Reform Commission
No. 11 Xiang Gang Zhong Road, Qingdao
People's Republic of China 266071
|Concept Clearance||13 Mar 2014|
|Fact Finding||26 Jun 2015 to 03 Jul 2015|
|MRM||30 Jul 2015|
|Approval||09 Dec 2015|
|Last Review Mission||-|
|Last PDS Update||25 Mar 2021|
|Approval||Signing Date||Effectivity Date||Closing|
|09 Dec 2015||13 Apr 2016||02 Aug 2016||30 Jun 2021||08 Dec 2023||-|
|Financing Plan||Loan Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||263.60||Cumulative Contract Awards|
|ADB||130.00||09 Dec 2015||31.14||0.00||24%|
|Cofinancing||0.00||09 Dec 2015||25.31||0.00||19%|
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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
Evaluation Documents See also: Independent Evaluation
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ADB to Help PRC’s Qingdao Cut Coal, Create Smart Energy Use ModelADB is providing a $130 million project loan to help Qingdao in the People’s Republic of China tap low carbon power sources for its energy needs.
|Tender Title||Type||Status||Posting Date||Deadline|
|Loan 3358-PRC: Qingdao Smart Low Carbon District Energy Project [Package 12]||Invitation for Bids||Closed||19 Feb 2019||18 Apr 2019|
|Project Implementation Consulting Services||Firm - Consulting||Closed||01 Jun 2018||07 Jun 2018|
|3358-PRC: Qingdao Smart Low-Carbon District Energy Project [Supply of Gas Engines, Boilers, Heat Pumps, and Attachment #1]||Invitation for Bids||Closed||14 Jun 2017||11 Jul 2017|
|Contract Title||Approval Number||Contract Date||Contractor||Contractor Address||Executing Agency||Contract Description||Total Contract Amount (US$)||Contract Amount Financed by ADB (US$)|
|SUPPLY OF BOILERS, HEAT PUMPS, AND ATTACHMENTS (FO R LICANG AND SHIBEI PART 1)/PACKAGE 28||Loan 3358||24 Nov 2020||CHINA VOLANT INDUSTRY CO., LTD.||RM 703,7TH FLR. BLDG.1, NO. 11,CHANGCHUN QIAO RD.,HAIDIAN DIST., PRC CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||3,300,214.54||3,300,214.54|
|SUPPLY OF CONTROL SYSTEM FOR BUILDING, AND HEAT EXCHANGE STATION #1 (PCKG 8)||Loan 3358||11 Nov 2020||CHINA IPPR INTERNATIONAL ENGG. CO., LTD.||5, XISANHUAN N. RD, HAIDIAN DIST.M, BEIJING, PRC CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||2,571,398.14||2,571,398.14|
|SUPPLY OF BOILER, HEAT PUMP & ATTACHMENTS#2 (LICAN G & SHIBEI)/PACKAGE 23||Loan 3358||16 Jan 2020||JV SHANDONG HUIDA INTEL & ZHEJIANG TEFU BOILE||RM94,NO.9,BAOYING RD., SHIBEI DIST, QING DAO CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||1,250,660.01||1,231,967.31|
|SUPPLY OF HEAT PUMP & BOILERS#1 (FOR LICANG, SHIBE I, AND SHINAN)/PACKAGE 25||Loan 3358||05 Dec 2019||NORTH CHINA POWER ENG'G INTL (BEIJING) CO LTD||1620,FLR16,BLD5,YARD 1, SHANGDISHI ST.,H AIDIAN DIST., BEIJING, PRC CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||1,975,288.20||1,975,288.20|
|CONSULTING CONTRACT B:INSTITUTIONAL CAPACITY BUILD ING-TRAINING, STUDY TOUR, AND SEMINAR||Loan 3358||05 Nov 2019||NXITY (BEIJING) ENERGY TECHNOLOGY CO., LTD.||BEIJING, PRC CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||CONSULTANCY||342,075.01||341,794.03|
|SUPPLY OF BOILERS, PUMPS, ATTACHMENTS, AND PLASTIC PIPES (FOR SHIBEI, JIDONG)/PACKAGE 14||Loan 3358||25 Sep 2019||LIAONING LVYUAN ENERGY AND EVNTMTL PROTECTION||121 XINLIAN ST., YINGKOU DIST., CHINA LIAONING FREE TRADE PILOT AREA CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||1,812,143.94||1,797,744.95|
|SUPPLY OF HEAT EXCHANGERS, BOILERS, HEAT PUMPS,ATT ACHMENT, AND PIPES (FOR SHIBEI-HEAT EXCHANGE STATI ONS, & SHIBEI-BINHAI)/PCKG 10||Loan 3358||24 Sep 2019||CHINA IPPR INTERNATIONAL ENGINEERING CO, LTD||NO. 5 XISANHUAN NORTH RD., HAIDIAN DIST PRC CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||6,042,585.57||5,998,545.13|
|SUPPLY OF CONTROL SYSTEM FOR HEATING NETWORK, BUIL DING, AND HEAT EXCHANGE STATION/PCKG 4||Loan 3358||23 Jul 2019||JV CHINA AEROSPACE CONST GRP CORP LTD & SHUAN||83 WEST 4TH RING RD., FENGTAI DIST., BEI JING/LIGANG TOWN,JIANGYIN CITY, JIANGSU CHINA,PEOPLE'SREP.O||Qingdao Municipal Government||SUPPLY OF GOODS||2,540,660.75||2,487,760.45|
|PROJECT MANAGEMENT CONSULTANT QEG-ADB-00-201906||Loan 3358||28 Jun 2019||NXITY (BEIJING) ENERGY TECH. CO., LTD||BEIJING, PRC CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||CONSULTANCY||852,109.68||850,860.56|
|SUPPLY OF BOILERS AND HEAT PUMPS (FOR LICANG, SHIB EI)||Loan 3358||28 Mar 2019||CHINA IPPR INTERNATIONAL ENG CO., LTD||5 XISANHUAN NORTH RD., HAIDIAN DIST, BEI JING CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||1,772,140.58||1,771,506.90|
|SUPPLY OF GAS ENGINES, BOILERS, HEAT PUMPS, & ATT# 1 (SHIBEI-HESS, SHINAN UNIT BASED HEATING & COOLIN G SYSTEM)/PACKAGE 3||Loan 3358||19 Nov 2017||CHINA AVIATION PLANNING AND DESIGN INSTITUTE||PRC CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||2,486,610.00||2,486,610.00|
|SUPPLY OF BOILERS AND PIPES (LICANG-HOUHAI) PACKAGE 21||Loan 3358||06 Nov 2017||CHINA AVIATION PLANNING AND DESIGN INST. CO||CHINA CHINA,PEOPLE'SREP.OF||Qingdao Municipal Government||SUPPLY OF GOODS||2,498,743.00||2,498,743.00|
|Package 2 Lot 2: Supply of Gas Burners, Boilers, Pumps, and attachment/NCB/GMEQD-TN-2017-04||Loan 3358||29 May 2017||China National General Machinery Enggg Corp.||A2 Taiping St. Xicheng Dist, Beijing, China, People's Rep. of||Qingdao Municipal Government||Supply of Goods||2,428,415.00||2,428,415.00|
|Title||Document Type||Document Date|
|Qingdao Smart Low-Carbon District Energy Project: Procurement Plan||Procurement Plans||May 2021|