fbpx 48003-002: Qingdao Smart Low-Carbon District Energy Project | Asian Development Bank

China, People's Republic of: Qingdao Smart Low-Carbon District Energy Project

Sovereign (Public) Project | 48003-002 Status: Active

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 Details

Project Officer
Lu, Lanlan East Asia Department Request for information
Country
  • China, People's Republic of
Modality
  • Loan
Sector
  • Energy
 
Project Name Qingdao Smart Low-Carbon District Energy Project
Project Number 48003-002
Country China, People's Republic of
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3358-PRC: Qingdao Smart Low-Carbon District Energy Project
Ordinary capital resources US$ 130.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Knowledge solutions
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.

Impact

Energy efficiency in district energy improved.

Cases of respiratory and heart diseases decreased.

Project Outcome
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.
Implementation Progress
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.

Geographical Location Qingdao
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
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.
Business Opportunities
Consulting Services The project implementation consultants have been engaged and were mobilized in the second week of July 2019.
Procurement

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
Executing Agencies
Qingdao Municipal Government
[email protected]
c/o Qingdao Mun.Devt.& Reform Commission
No. 11 Xiang Gang Zhong Road, Qingdao
People's Republic of China 266071
Timetable
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

Loan 3358-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
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%
Counterpart 133.60 Cumulative Disbursements
Cofinancing 0.00 09 Dec 2015 25.31 0.00 19%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

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

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

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

Contracts Awarded

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

Procurement Plan