[Smart Grid Market Research] China: State Grid Corporation of China Profile, March 2012

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The State Grid Corporation of China’s (SGCC) size is mind-boggling. It supplies power to 88% of China and serves an area populated by over 1 billion people. At the end of 2011, SGCC had 286 million customers. Leveraging its huge size and ability to start building Smart Grid technology into its transmission infrastructure from scratch rather than retrofitting an antiquated system, it is not only the driving force behind China’s efforts to build a nationwide Smart Grid, but also for China’s push to be the world leader in developing a large-scale Smart Grid system. According to the SGCC, only 36 million smart meters have been installed as of 2011, but they have an ambitious plan to install over 300 million smart meters by the end of 2015. The sheer enormity of the state-owned transmission company, coupled with streamlined regulatory processes designed to promote rapid construction without barriers typical in further developed countries are among the key reasons that China is the largest, most important market for Smart Grid development in the world.

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[Smart Grid Market Research] China: State Grid Corporation of China Profile, March 2012

  1. 1. CHINA:State Grid Corporation of China Profile Zpryme Smart Grid Insights | March 2012 | China: State Grid Corporation of China Profile | Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved
  2. 2. China: State Grid Corporation of China Profile―Over the next 5 years, SGCCexpects to invest just over $400billion in power grid construction,of which about $100 billion will bedirected towards Smart Gridtechnologies.‖Source: State Grid Corporation of China’s (SGCC) announcement January 2011 and April of 2011 1 Zpryme Smart Grid Insights | March 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  3. 3. China: State Grid Corporation of China ProfileThe Worlds Largest Electric Utility Total SGCC Customers Served 2006 - 2011 (in millions) (figure 1, source: 2011 SGCC CSR Report) 350The State Grid Corporation of China’s (SGCC) size is mind- 300 286boggling. It supplies power to 88% of China and serves an 258 244area populated by over 1 billion people. At the end of 2502011, SGCC had 286 million customers. Leveraging its huge 200 181size and ability to start building Smart Grid technology into 170 145its transmission infrastructure from scratch rather than 150retrofitting an antiquated system, it is not only the driving 100force behind China’s efforts to build a nationwide SmartGrid, but also for China’s push to be the world leader in 50developing a large-scale Smart Grid system. According to 0the SGCC, only 36 million smart meters have been installed 2006 2007 2008 2009 2010 2011as of 2011, but they have an ambitious plan to install over300 million smart meters by the end of 2015. The sheerenormity of the state-owned transmission company,coupled with streamlined regulatory processes designed Total SGCC Installed Smart Meters (in millions)to promote rapid construction without barriers typical in 2009 to 2011 actual | 2012 to 2015 ptojections*further developed countries are among the key reasons 350 (figure 2, source: SGCC Smart Meter Plans, February 2012)that China is the largest, most important market for Smart 300 300Grid development in the world. 250 221Over the next 5 years, SGCC expects to invest just over 200$400 billion in power grid construction, of which about 146$100 billion will be directed towards Smart Grid 150technologies, and about one-sixth of the capital on 86 100developing a transmission network across China.1Additionally, China’s government expects to spend on the 50 33 36order of $473.1 billion over the next 5 years on 2.2 0developments to incorporate renewable sources of 2009 2010 2011 2012 2013 2014 2015energy, such as wind and solar power.2 *SGCC AMI reported data for 2009 - 2011, and target installations for 2015. Projections for 2012 – 2014 estimated by Zpryme.1 State Grid Announcement January 2011 and April of 2011.2 Planned Investment from China’s 12th Five-Year Plan for Economic and Social Development (2011 -2015).2 Zpryme Smart Grid Insights | March 2012Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  4. 4. China: State Grid Corporation of China Profile SGCC Key Operation Metrics, 2006 – 2011 figure 3Utility Metric Unit 2006 2007 2008 2009 2010 2011 CAGRNumber of customers served million 145 170 181 244 258 286 14.6%Smart meters installed million n/a n/a n/a 2.2 33 36 n/aElectricity sales TWh 1,710 1,974 2,124 2,275 2,689 3,093 12.6%Revenue billion USD $135 $160 $180 $199 $242 $265 14.4%Total assets billion USD $192 $215 $260 $291 $329 $349 12.7%Investment in power grid construction billion USD $28 $34 $39 $48 $42 $48 11.3%Centralized tendering volume billion USD $19 $26 $30 $29 $28 $37 14.2%Market share % 87.1 88.1 90.0 90.7 93.7 95.6 n/aPeak load in the service area MW 306,516 342,755 370,224 424,900 484,100 535,460 11.8%Length of transmission line [110 (66) kV and above] km 413,219 457,104 496,332 561,456 618,837 655,131 9.7%Transforming capacity [110 (66) kV and above] MVA 1,137,790 1,342,700 1,601,420 1,886,540 2,131,930 2,391,620 16.0%Line loss % 6.40 6.29 6.10 6.12 5.98 6.53 n/aTotal on-grid electricity in the service areas TWh 1,840 2,540 2,280 2,430 2,880 3,240 12.0%Connected capacity from renewable energy generator units MW 2,285 4,076 8,030 14,308 25,530 40,030 77.3%On-grid power from renewable energy generator units TWh 3.4 6.2 14.6 27.4 49.2 115.4 102.7% Source: SGCC Corporate Social Responsibility Report, 2011 3 Zpryme Smart Grid Insights | March 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  5. 5. China: State Grid Corporation of China ProfileSGCC Profile Total SGCC Electricity Sales 2006 - 2011 (in TWh) (figure 4 , source: 2011 SGCC CSR Report 3,500 3,093With just over 1.5 million employees, the SGCC is the 3,000largest electric power transmission and distribution 2,689company in the world. It is headquartered in Beijing, in 2,500 2,275 2,124China’s Xicheng District. Formed in December, 2002 when 2,000 1,974the State Electric Power Company was dissolved and 1,710broken into separate companies according to function, 1,500SGCC operates power transmission, distribution and other 1,000assets previously belonging to the former giant, the StateElectric Power Company. For distribution, it has its five 500subsidiaries: Northern China, Northeastern China, Eastern 0China, Middle China and Northwestern China. The mission 2006 2007 2008 2009 2010 2011of the company is to provide safe, economical, clean andsustainable electric power for social and economicdevelopment.The world’s largest transmission company, transmittingenergy to over 88 percent of China and serving an area SGCC Total Revenues 2006 - 2011 (in U.S. billions)with over 1 billion inhabitants, SGCC has enormous (figure 5 , source: 2011 SGCC CSR Report) $300.0influence over not only the development of Smart Grid $265.0infrastructure, design, and management in China but also $250.0 $242.2throughout the world. This is partly because China aspires $198.9to emerge as the global leader, not only across the entire $200.0 $180.3Electric Vehicle (EV) value chain, but in Smart Grid $159.8 $150.0 $135.1development and implementation overall. $100.0Electricity Sales and Peak Load $50.0From 2006 to 2011, SGCC’s electricity sales have increased $0.0by 12.6% a year, on average. Electricity sales have grown 2006 2007 2008 2009 2010 2011from 1,710 terawatt-hours (TWh) to 3,093 TWh during thistime period. In 2011, SGCC’s peak load in their servicearea reached a staggering 535.5 GW.4 Zpryme Smart Grid Insights | March 2012Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  6. 6. China: State Grid Corporation of China ProfileRevenues Organizational StructureThe SGCC’s 2009 total revenues were $199 billion. In 2011, The SGCC runs power transmission and distributionSGCC announced revenues of about $265 billion. Pre-tax networks in 26 of Chinas 31 provinces, municipalities andprofits reached $8.4 billion. SGCC ranked seventh in the autonomous regions.2011 Fortune Global 500 list of the worlds largestcompanies by revenue. SGCC is comprised of 5 regional power grid companies, 26 provincial electric power companies, 5 scientificTransmission and Substation Capacity research institutes and 22 affiliates. The smaller companies include two electric power grid operators, five electricIn 2011, SGCC’s total length of the transmission lines [110 power generation companies and four relevant business(66) kV and above] it owns and operates was greater than companies. Each of the five electric power generation655,131 kilometers (407,080 miles). Its substation capacity companies owns less than 20% (32 GW of electricitywas 2.39 billion KVA. generation capacity) of Chinas market share for electric power generation.Renewable Energy Chinas power transmission system remains under-In 2010 installed wind power capacity in China reached developed. There is no national grid. Instead there are six41.9 GW, overtaking the U.S. for the first time, and regional grids—five managed by the (giant) SGCC (north,becoming the world leader. However, the state-run power north-east, east, central and north-west) and angrid is a bottleneck to using this energy, as much of this independent grid (south) managed by SGC (covering thecapacity was unable to be integrated and thus was light manufacturing hub around Guangzhou-Shenzhenexcess capacity. In order to support the massive grid and the inland areas of Guangdong, Guangxi andpower integration, in 2011 SGCC announced that they will Guizhou). The lack of a unified national grid systemincrease efforts in developing the power grid and that by hampers the efficiency of power generation nationwide2015 they will have completed the Smart Grid, bringing the and heightens the risk of localized shortages.smart gird to international high-tech levels, and increasingits ability to integrate power from wind farms to 100 GW The central government has made creation of a unifiedand solar farms by 5 GW. national grid system a top economic priority to improve the efficiency of the whole power system and reduce theAt the end of 2011, SCGG had a total of 40.0 GW of risk of localized energy shortages. This will also enable therenewable energy capacity. country to tap the enormous hydro potential from western China to meet booming demand from the eastern coastal provinces.5 Zpryme Smart Grid Insights | March 2012Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  7. 7. China: State Grid Corporation of China Profile SGCC Regional Power Companies and Provincial Electric Power Companies figure 6North China Power Grid Company, Ltd East China Power Grid Company, Ltd Central China Power Grid Company, Ltd Hubei Electric Power CompanyBeijing Electric Power Company Shanghai Electric Power Company Hunan Electric Power CompanyTianjin Electric Power Company Zhejiang Electric Power Company Henan Electric Power CompanyHebei Electric Power Company Jiangsu Electric Power Company Jiangxi Electric Power CompanyShanxi Electric Power Company Anhui Electric Power Company Sichuan Electric Power CompanyShandong Electric Power Company Fujian Electric Power Company Chongqing Electric Power CompanyNortheast China Power Grid Company, Ltd Northwest China Power Grid Company, Ltd Shaanxi Electric Power CompanyLiaoning Electric Power Company Gansu Electric Power CompanyJilin Electric Power Company Qinghai Electric PowerHeilongjiang Electric Power Company Ningxia Electric PowerEast Inner Mongolia Electric Power Company Xinjiang Electric Power Tibet Electric Power Company*Note: The SGCC also holds a 100% stake in State Grid Brazil Holding, which consists of seven transmission companies in Brazil, and a stake in the National Grid Corp ofPhilippines. 6 Zpryme Smart Grid Insights | March 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  8. 8. China: State Grid Corporation of China ProfileSGCC Smart Grid Plan Because of these investments, China is predicted to become by far the world’s largest Smart Grid market.SGCC’s definition of a ―strong and smart‖ grid is a modern Although the SGCC is looking for domestic manufacturerspower grid based on a strong information and to drive down the cost of smart meters through economiescommunication platform, with a UHV grid backbone and of scale, much of the technology inside the meters willsubordinate grids coordinated at all levels. Furthermore come from Taiwan and Silicon Valley based companies.the subordinate grids must be IT-based, automatic andinteractive. SGCC has divided the development of a The SGCC’s focus right now is on distribution networks -- inSmart Grid into three phases: Phase 1: Planning and Pilots an attempt to prevent it from splitting from the transmission(completed in 2010); Phase 2: Construction (2011 – 2015); network. In the meantime, SGCC is also building a strongand Phase 3: Enhancement (2016 – 2020). supply chain internally, making its own specifications and standards, manufacturing equipment, and integrating theAt the end of 2011, SGCC has implemented 238 Smart equipment into its own grid. To position itself better toGrid pilot projects to solve technical issues, test designs, benefit from the coming Smart Grid boom, SGCCand develop management systems. These projects acquired electrical-equipment makers Pinggao Electriccovered the entire gamut of Smart Grid implementation, and XJ Electric, early in 2010; it is very likely that they will beranging from connecting wind power plants to on the lookout for other value-adding acquisitions orautomating distribution networks to metering households. mergers.The projects were implemented across different regions of SGCC Investment in Power Grid ConstructionChina, including a highly publicized Smart Grid 2006 - 2011 (in U.S. billions)demonstration project at the Shanghai World Expo. Using (figure 7 , source: 2011 SGCC CSR Report) $60.0the experience gained from these projects, SGCCreleased a set of industry rules, standards, and favored $47.9 $47.7 $50.0technologies for 22 criteria of Smart Grid technology in $41.8June 2010. $40.0 $39.5 $33.7In April of 2011, an expert from the Energy Research $30.0 $28.0Institute of the State Grid indicated that SGCC will investabout $400 billion from 2011 to 2015 in their power grid.3 $20.0Of this amount, about 25% or $100 billion will be directedtowards Smart Grid equipment and technologies. In 2011, $10.0SGCC invested $47.7 billion in power grid investments, anincrease of $6.0 billion from 2010. $0.0 2006 2007 2008 2009 2010 20113 www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1102&MainCatID=&id=201202280000087 Zpryme Smart Grid Insights | March 2012Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  9. 9. China: State Grid Corporation of China Profile Summary of SGCC Smart Grid Pilots, Projects, and Demonstrations figure 8Technology Area As of Year Ending in 2011 Future Plans 298 pilots, projects, and demonstrations will be operation 238 pilots, projects, and demonstrations are in operation across 25 different technological segments across 29 different technological segments (to beOverall SCGG Smart completed by 2015)Grid Pilots/Projects Pilots cover 88% of China taking place in 26 of 31 provinces 26 provinces and 2.2 million users (2009) 300 million smart meters (2015), realize 100% coverageAdvanced Metering 33 million smart meters (2010)Infrastructure 36 million smart meters (2011) Full SGCC service area network coverage (to be 26 provinces and 108 public charging/swapping stations complete by 2015)EV Charging and EV 7,245 AC charge pointsInfrastructure EV charging networks constructed in Qingdao and Hangzhou Enhancements such as green power options, home 6 smart communities constructed in Beijing, Chongqing, and Langfang energy management, and additional smart buildings 25 new smart communities started in 2011Smart Cities andCommunities 3 smart parks constructed in Jiangsu, Shandong, and Gansu 4 smart building construction started in Shanghai, Chongqing, Beijing, and Zhejiang Yangzhou Economic& Technical Developing Zone (to be Shanghai Expo Smart Grid Demonstration (completed in 2010) completed in 2012)Large-Scale SmartGrid Demonstration Sino-Singapore Tianjin Eco-City (completed in 2011) Jiangxi Gongqingcheng city (to be completed in 2012)Projects Beijing Future Tech City (to be completed in 2013) 2 centralized service centers built in Jiangsu and Shanxi All provincial level service centers complete (by 2015)Customer Service andOnline Consumer 9 interactive service websites/portals covering North China 17 additional service websites (to be completed in 2012)Portals 3 interactive service halls in Shanghai, Jiangsu, and 3 interactive service halls build in Anhui, Zhejiang, and Fujian Gansu (to be built in 2012) National Smart Grid R&D (testing) center (Beijing/Nanjing)Smart PowerEquipment Testing SGCC smart power consumption testing center (Nanjing)Centers 8 SGCC metering center (Beijing/Wuhan Zpryme Smart Grid Insights | March 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. Source: SGCC Presentation, Practice of Smart Power Consumption in Chinese Smart Grid, February 8, 2012
  10. 10. China: State Grid Corporation of China ProfileSGCC’s Smart Grid Plan includes a sub-plan for each China’s electric vehicle fleet is integrated into the grid.subsidiary regional and provincial power company, andtwo special topic sub-plans: 1) an R&D plan for key Smart Within the time frame of the 12th Five-Year Plan, the StateGrid equipment and 2) a sub-plan for Smart Grid technical Grid Corporation plans to build a backbone of ultra-highstandards. voltage power transmission infrastructure, connecting large coal, hydro and nuclear plants, as well as large scaleBy 2015, the proportion of installed clean energy power new energies projects with key load centers, bringinggeneration capacity in China is expected to reach 32%. energy allocation to a new level, and pushing forwardZpryme estimates that China will lead the world in the large scale wind power development and usage. Expertshydro and other renewable electricity generation, estimate that 100-200GW transmission capacity will beaccounting for 24% (581 GW) of world capacity by 2035. required for delivering electricity over long distance fromMoreover, China’s wind generation capacity will grow by west to east and from north to south in the next 15 years.1200% from 2010 to 2035, when it will reach 533 GW. The existing grid structure in China, which is primarily basedAccording to Yimin Wang, Director of Smart Grid for on 500KV AC and ±500KV DC backbones, is insufficient forSGCC, in order to support the nations wind power serving the purpose.development plan, SGCC aims to integrate 100 million KWof wind power and 5 million KW of solar power by 2015. Companies are starting to team up with SGCC in order to get their feet in the door in the developing markets ofThrough 2010, SGCC has invested $6.3 billion to construct China. For example, GE, the Chinese Academy of23,200 kilometers of power lines for wind power integration Science and SGCC have embarked together on aand integrated over 28.26 million KW of wind power Standardization Project in January, 2011. The projectinstalled capacity, with maximum overall grid load of 4.2%. covers electricity charging and discharging technology forThis translates to a two-fold increase each year, for five EVs, large-capacity storage systems and networkconsecutive years. technology, as well as other related Smart Grid technology systems. Kandi, a player in the Electric VehicleThe SGCC’s recent launch of the world’s largest battery – industry, has announced plans to form a strategic alliancestoring 36 megawatt hours of energy and taking up the with SGCC.size of a football field –also marks a significant step inSmart Grid development. The battery, fed by a 100 In conclusion, any company with ambitions to enter ormegawatt wind farm and a 40 megawatt solar farm, is gain market share in China’s Smart Grid space would bepredicted to increase renewable integration efficiency by remiss not to carefully follow the plans and actions of5-10 percent, as it can store energy during peaks in SGCC.production and the supply power when demand ishighest. China’s energy storage capacity will onlyincrease as more of these batteries are built and as9 Zpryme Smart Grid Insights | March 2012Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  11. 11. China: State Grid Corporation of China Profile SGCC Enterprise Standards Relevant to Power Consumption figure 9Technology Area Standard Short Description Q/GDW 376.1 Communication protocol between master station and terminalsAMI Q/GDW 376.2 Interface for local communication module of concentrators Q/GDW 377 Technical specification for security and protection GB/T 50314-2206 Smart building design criterionSmart ConsumptionService Functional requirements of smart community; Specification for information exchange interface between Q/GDW Z 620 home appliance and power grid; Technical specification for communication interface of smart home Q/GDW 235 Communication protocol for EV off board chargerElectric Vehicles Q/GDW 397 Technical requirements of EV off board charging/discharging devices Q/GDW 400 Technical specification for EV charging/discharging billing devices Q/GDW 480 Technical specification for integration of distributed energy source to power gridDistributed Generation Q/GDW 564 Technical specification for integration of energy storage system to distributed grid Source: SGCC Presentation, Practice of Smart Power Consumption in Chinese Smart Grid, February 8, 2012 10 Zpryme Smart Grid Insights | March 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
  12. 12. China: State Grid Corporation of China Profile Zpryme Credits Editor Managing Editor Research Lead Tibor Sarlos Sean Sayers Stefan Trifonov Disclaimer These materials and the information contained herein are provided by Zpryme Research & Consulting, LLC and are intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). Accordingly, the information in these materials is not intended to constitute accounting, tax, legal, investment, consulting or other professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. These materials and the information contained herein is provided as is, and Zpryme Research & Consulting, LLC makes no express or implied representations or warranties regarding these materials and the information herein. Without limiting the foregoing, Zpryme Research & Consulting, LLC does not warrant that the materials or information contained herein will be error-free or will meet any particular criteria of performance or quality. Zpryme Research & Consulting, LLC expressly disclaims all implied warranties, including, without limitation, warranties of merchantability, title, fitness for a particular purpose, noninfringement, compatibility, security, and accuracy. Prediction of future events is inherently subject to both known and unknown risks, uncertainties and other factors that may cause actual results to vary materially. Your use of these and the information contained herein is at your own risk and you assume full responsibility and risk of loss resulting from the use thereof. Zpryme Research & Consulting, LLC will not be liable for any special, indirect, incidental, consequential, or punitive damages or any other damages whatsoever, whether in an action of contract, statute, tort (including, without limitation, negligence), or otherwise, relating to the use of these materials and the information contained herein.11 Zpryme Smart Grid Insights | March 2012Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.
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