Guangdong Province in the south of the People's Republic of China (PRC) is proving to be a fertile testing ground for efficient and environmentally friendly alternatives to fossil fuels.

By the numbers

power generated
175,813 tons/year
coal use projected reduction
415,560 tons/year
carbon dioxide emissions projected reduction
1,785 tons/year
suspended particulates emissions projected reduction

Source: Guangdong Energy Efficiency and Environment Improvement Investment Program. Report and Recommendation to the President (2008).

Dong'ao Island, Zhuhai City, Guangdong Province - Xu Jian, a 33-year-old electrical engineer, is an unlikely celebrity on the island of Dong'ao. Wherever he goes, people greet him - after all, it was he and his team that brought a stable power supply to the island; and it is he and his team that restore the power supply when anything goes wrong.

Dong'ao is 45 minutes by ferry from the mainland city of Zhuhai (on the border with Macau, China) in Guangdong Province in the People's Republic of China (PRC). Xu is team leader of a group of eight technicians who have operated and maintained the power plant there since 2010.

The plant operates a 1 megawatt (MW), independent smart-micro-grid. A smart-micro-grid is a modern, small-scale version of a centralized electricity system. This scalable, automated system is capable of monitoring energy availability and consumption. Its flexible base system allows for easy expansion. It reduces environmental impact, and is ideal for isolated areas such as islands.

The Dong'ao plant is powered by renewable energy (solar and wind) with diesel as backup. About 80% of the electricity is generated by solar power, which provides power for around 200 households, as well as a wireless base station.

Efficiency first

Dong'ao is a demonstration project developed by Zhuhai Singyes Green Building Technology and backed by a loan from ADB's ordinary capital resources, as part of the first tranche of the three-tranche Guangdong Energy Efficiency and Environment Improvement Investment Program.

The aim of the three-tranche investment program - approved in 2008 - was to finance an efficiency power plant (EPP) equivalent to 107 MW in Guangdong. An EPP is a virtual power plant. Instead of constructing a conventional fossil fuel-fired power plant, it invests in a series of efficient technology solutions that result in energy savings.

This $100 million investment program is the first ADB-supported EPP project in the PRC. To date, the program has financed 19 projects, ranging from upgrading old power grids and industrial boilers to promoting light emitting diode (LED) street lighting, and integrated photovoltaic systems.

Investment recovery and gains from EPP projects mainly come from electricity bill savings and other reduced energy costs. An EPP has many advantages over traditional power plants: shorter construction period, low operation costs, and close to zero pollution. An EPP can also be developed at about half the cost of a coal-fired power plant.

Clean power for all

"With stable electricity, we now have refrigerators and air conditioners. Our island has become a tourist attraction; people come here on holidays. We even provide bed and breakfast accommodation."

- He Huaquan, fisherman

He Huaquan, an elderly fisherman, has seen the changes on his island. From 1995 to 2009, Dong'ao had a power plant that burned 200 tons of diesel oil annually. The tariff was CNY6 ($0.96) per kilowatt hour (kWh). Since the arrival of the micro-grid, the tariff has dropped 50% to CNY3 ($0.48) - and the environment has improved.

"With stable electricity, we now have refrigerators and air conditioners," says He. "Our island has become a tourist attraction; people come here on holidays. We even provide bed and breakfast accommodation."

Development has come at an environmental price that makes nearby holiday getaways a rarity in this part of the country. Long the fastest developing province in the PRC, with average GDP growth of 14% per annum since 1995, Guangdong Province has seen electricity consumption dominated by energy-intensive heavy industries. Industry and manufacturing represent more than 70% of total electricity use. Power demand often outpaced supply, and Guangdong has experienced severe power shortages since 2001, particularly during the summer peak periods. Meanwhile, more than 75% of capacity is coal-fired, which causes serious air pollution and acid rain.

This makes energy efficiency a priority for the Guangdong authorities, as it addresses both energy security and environmental issues. The province is also a good platform to test the EPP model, due to its vibrant economy and the visible impact of energy savings.

Going mainstream

The ADB-backed energy efficiency program has a broader focus than establishing small smart-micro-grids for isolated communities, such as the one on Dong'ao.

Guangdong Zhiguang Electric, for example, provides integrated energy-saving services and solutions featuring the latest developments in intelligent, computer-control systems and power electronics. As one of the main 19 ADB-financed projects, it has received about $10 million in ADB loans to promote variable-frequency, speed-control systems - which provide considerable efficiency savings compared to traditional fixed-control systems. Zhiguang Electric has provided high-voltage, variable-speed-control retrofits for two 300MW subcritical thermal power generating units in the Shunde Wusha Thermal Power Station.

In the lobby of Zhiguang Electric, an LED board flashes figures generated by the company's projects, including the efficiency of installed capacity, and the total electricity savings through products and services.

"This shows the contributions our company is making to [the People's Republic of] China in energy savings, motivating our employees to work harder for our vision," says Rui Dongyang, Zhiguang Electric president.

Meanwhile, in Foshan, a sprawling city half an hour's drive from the provincial capital of Guangzhou, Guangdong Real Faith Lighting, a sub-borrower of the program, has replaced sodium bulbs with LEDs for 137 kilometers of street-lighting. According to Zhang Xiaojun, director of the company's engineering department, the LED uses half as much energy as sodium bulbs.

"LED bulbs save energy, and also light the streets with less than 90 degrees of radiation," he says. "A sodium lamp, on the other hand, radiates over 270 degrees, which is not efficient for street-lighting."

"The successes in Guangdong are now being replicated in Shandong and Hebei provinces, with ADB's financial support."

- Hamid L. Sharif, ADB country director, PRC

It is estimated that the annual energy savings from implementing the ADB-backed energy efficiency program in Guangdong Province is about 626 GWh - equivalent to the power generated by a 125 MW coal-fired power plant burning over 200,000 tons of coal per year. The program will collectively reduce carbon dioxide (CO2) emissions by more than 488,000 tons, sulfur dioxide (SO2) emissions by over 5,600 tons, and nitric oxide and nitrogen oxide (NOx) emissions by about 1,250 tons every year.

"The successes in Guangdong are now being replicated in Shandong and Hebei provinces, with ADB's financial support. ADB will continue supporting the PRC's commitment to energy efficiency and hence augment global public goods," says Hamid L. Sharif, ADB PRC country director.