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

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

China: State Grid Corporation of China Profile

―Over the next 5 years, SGCC
expects to invest just over $400
billion in power grid construction,
of which about $100 billion will be
directed towards Smart Grid
technologies.‖
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.


The Worlds Largest Electric Utility Total SGCC Customers Served
2006 - 2011 (in millions)
(figure 1, source: 2011 SGCC CSR Report)
350
The State Grid Corporation of China’s (SGCC) size is mind-
300 286
boggling. It supplies power to 88% of China and serves an 258
244
area populated by over 1 billion people. At the end of 250
2011, SGCC had 286 million customers. Leveraging its huge
200 181
size and ability to start building Smart Grid technology into 170
145
its transmission infrastructure from scratch rather than 150
retrofitting an antiquated system, it is not only the driving
100
force behind China’s efforts to build a nationwide Smart
Grid, but also for China’s push to be the world leader in 50

developing a large-scale Smart Grid system. According to 0
the SGCC, only 36 million smart meters have been installed 2006 2007 2008 2009 2010 2011
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 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
300
Grid development in the world.
250 221
Over 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 150
technologies, and about one-sixth of the capital on 86
100
developing a transmission network across China.1
Additionally, China’s government expects to spend on the 50 33
36

order of $473.1 billion over the next 5 years on 2.2
0
developments to incorporate renewable sources of 2009 2010 2011 2012 2013 2014 2015
energy, 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).



SGCC Key Operation Metrics, 2006 – 2011
figure 3

Utility Metric Unit 2006 2007 2008 2009 2010 2011 CAGR
Number 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/a
Electricity 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/a
Peak 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/a
Total 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




SGCC Profile Total SGCC Electricity Sales
2006 - 2011 (in TWh)
(figure 4 , source: 2011 SGCC CSR Report
3,500
3,093
With just over 1.5 million employees, the SGCC is the
3,000
largest electric power transmission and distribution 2,689

company in the world. It is headquartered in Beijing, in 2,500 2,275
2,124
China’s Xicheng District. Formed in December, 2002 when 2,000
1,974
the State Electric Power Company was dissolved and 1,710

broken into separate companies according to function, 1,500

SGCC operates power transmission, distribution and other 1,000
assets previously belonging to the former giant, the State
Electric Power Company. For distribution, it has its five 500

subsidiaries: Northern China, Northeastern China, Eastern 0
China, Middle China and Northwestern China. The mission 2006 2007 2008 2009 2010 2011

of the company is to provide safe, economical, clean and
sustainable electric power for social and economic
development.

The world’s largest transmission company, transmitting
energy 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)
$300.0
influence over not only the development of Smart Grid $265.0
infrastructure, design, and management in China but also $250.0
$242.2

throughout the world. This is partly because China aspires $198.9
to emerge as the global leader, not only across the entire $200.0 $180.3

Electric Vehicle (EV) value chain, but in Smart Grid $159.8
$150.0 $135.1
development and implementation overall.
$100.0
Electricity Sales and Peak Load
$50.0

From 2006 to 2011, SGCC’s electricity sales have increased
$0.0
by 12.6% a year, on average. Electricity sales have grown 2006 2007 2008 2009 2010 2011
from 1,710 terawatt-hours (TWh) to 3,093 TWh during this
time period. In 2011, SGCC’s peak load in their service
area reached a staggering 535.5 GW.



Revenues Organizational Structure

The SGCC’s 2009 total revenues were $199 billion. In 2011, The SGCC runs power transmission and distribution
SGCC announced revenues of about $265 billion. Pre-tax networks in 26 of China's 31 provinces, municipalities and
profits reached $8.4 billion. SGCC ranked seventh in the autonomous regions.
2011 Fortune Global 500 list of the world's largest
companies by revenue. SGCC is comprised of 5 regional power grid companies,
26 provincial electric power companies, 5 scientific
Transmission and Substation Capacity research institutes and 22 affiliates. The smaller companies
include two electric power grid operators, five electric
In 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 generation
655,131 kilometers (407,080 miles). Its substation capacity companies owns less than 20% (32 GW of electricity
was 2.39 billion KVA. generation capacity) of China's market share for electric
power generation.
Renewable Energy
China's power transmission system remains under-
In 2010 installed wind power capacity in China reached developed. There is no national grid. Instead there are six
41.9 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 an
grid is a bottleneck to using this energy, as much of this independent grid (south) managed by SGC (covering the
capacity was unable to be integrated and thus was light manufacturing hub around Guangzhou-Shenzhen
excess capacity. In order to support the massive grid and the inland areas of Guangdong, Guangxi and
power integration, in 2011 SGCC announced that they will Guizhou). The lack of a unified national grid system
increase efforts in developing the power grid and that by hampers the efficiency of power generation nationwide
2015 they will have completed the Smart Grid, bringing the and heightens the risk of localized shortages.
smart gird to international high-tech levels, and increasing
its ability to integrate power from wind farms to 100 GW The central government has made creation of a unified
and solar farms by 5 GW. national grid system a top economic priority to improve
the efficiency of the whole power system and reduce the
At the end of 2011, SCGG had a total of 40.0 GW of risk of localized energy shortages. This will also enable the
renewable energy capacity. country to tap the enormous hydro potential from western
China to meet booming demand from the eastern coastal
provinces.




SGCC Regional Power Companies and Provincial Electric Power Companies
figure 6

North China Power Grid Company, Ltd East China Power Grid Company, Ltd Central China Power Grid Company, Ltd
Hubei Electric Power Company
Beijing Electric Power Company Shanghai Electric Power Company
Hunan Electric Power Company
Tianjin Electric Power Company Zhejiang Electric Power Company
Henan Electric Power Company
Hebei Electric Power Company Jiangsu Electric Power Company
Jiangxi Electric Power Company
Shanxi Electric Power Company Anhui Electric Power Company
Sichuan Electric Power Company
Shandong Electric Power Company Fujian Electric Power Company
Chongqing Electric Power Company
Northeast China Power Grid Company, Ltd Northwest China Power Grid Company, Ltd
Shaanxi Electric Power Company
Liaoning Electric Power Company Gansu Electric Power Company
Jilin Electric Power Company Qinghai Electric Power
Heilongjiang Electric Power Company Ningxia Electric Power
East 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 of
Philippines.




SGCC 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 manufacturers
power grid based on a strong information and to drive down the cost of smart meters through economies
communication platform, with a UHV grid backbone and of scale, much of the technology inside the meters will
subordinate grids coordinated at all levels. Furthermore come from Taiwan and Silicon Valley based companies.
the subordinate grids must be IT-based, automatic and
interactive. SGCC has divided the development of a The SGCC’s focus right now is on distribution networks -- in
Smart 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 strong
and Phase 3: Enhancement (2016 – 2020). supply chain internally, making its own specifications and
standards, manufacturing equipment, and integrating the
At the end of 2011, SGCC has implemented 238 Smart equipment into its own grid. To position itself better to
Grid pilot projects to solve technical issues, test designs, benefit from the coming Smart Grid boom, SGCC
and develop management systems. These projects acquired electrical-equipment makers Pinggao Electric
covered the entire gamut of Smart Grid implementation, and XJ Electric, early in 2010; it is very likely that they will be
ranging from connecting wind power plants to on the lookout for other value-adding acquisitions or
automating distribution networks to metering households. mergers.
The projects were implemented across different regions of
SGCC Investment in Power Grid Construction
China, 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)
$60.0
the experience gained from these projects, SGCC
released a set of industry rules, standards, and favored $47.9 $47.7
$50.0
technologies for 22 criteria of Smart Grid technology in $41.8
June 2010. $40.0
$39.5

$33.7
In April of 2011, an expert from the Energy Research $30.0 $28.0
Institute of the State Grid indicated that SGCC will invest
about $400 billion from 2011 to 2015 in their power grid.3 $20.0
Of this amount, about 25% or $100 billion will be directed
towards Smart Grid equipment and technologies. In 2011, $10.0
SGCC invested $47.7 billion in power grid investments, an
increase of $6.0 billion from 2010. $0.0
2006 2007 2008 2009 2010 2011

3 www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1102&MainCatID=&id=20120228000008



Summary of SGCC Smart Grid Pilots, Projects, and Demonstrations
figure 8
Technology 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 be
Overall 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% coverage

Advanced 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 points
Infrastructure

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 2011
Smart Cities and
Communities
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 Smart
Grid 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 and
Online 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 Power
Equipment Testing SGCC smart power consumption testing center (Nanjing)
Centers
8 SGCC metering center (Beijing/Wuhan Zpryme Smart Grid Insights | March 2012

Source: SGCC Presentation, Practice of Smart Power Consumption in Chinese Smart Grid, February 8, 2012


SGCC’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, and
two special topic sub-plans: 1) an R&D plan for key Smart Within the time frame of the 12th Five-Year Plan, the State
Grid equipment and 2) a sub-plan for Smart Grid technical Grid Corporation plans to build a backbone of ultra-high
standards. voltage power transmission infrastructure, connecting
large coal, hydro and nuclear plants, as well as large scale
By 2015, the proportion of installed clean energy power new energies projects with key load centers, bringing
generation capacity in China is expected to reach 32%. energy allocation to a new level, and pushing forward
Zpryme estimates that China will lead the world in the large scale wind power development and usage. Experts
hydro and other renewable electricity generation, estimate that 100-200GW transmission capacity will be
accounting for 24% (581 GW) of world capacity by 2035. required for delivering electricity over long distance from
Moreover, 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 based
According to Yimin Wang, Director of Smart Grid for on 500KV AC and ±500KV DC backbones, is insufficient for
SGCC, in order to support the nation's wind power serving the purpose.
development plan, SGCC aims to integrate 100 million KW
of 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 of
Through 2010, SGCC has invested $6.3 billion to construct China. For example, GE, the Chinese Academy of
23,200 kilometers of power lines for wind power integration Science and SGCC have embarked together on a
and integrated over 28.26 million KW of wind power Standardization Project in January, 2011. The project
installed capacity, with maximum overall grid load of 4.2%. covers electricity charging and discharging technology for
This translates to a two-fold increase each year, for five EVs, large-capacity storage systems and network
consecutive years. technology, as well as other related Smart Grid
technology systems. Kandi, a player in the Electric Vehicle
The SGCC’s recent launch of the world’s largest battery – industry, has announced plans to form a strategic alliance
storing 36 megawatt hours of energy and taking up the with SGCC.
size of a football field –also marks a significant step in
Smart Grid development. The battery, fed by a 100 In conclusion, any company with ambitions to enter or
megawatt wind farm and a 40 megawatt solar farm, is gain market share in China’s Smart Grid space would be
predicted to increase renewable integration efficiency by remiss not to carefully follow the plans and actions of
5-10 percent, as it can store energy during peaks in SGCC.
production and the supply power when demand is
highest. China’s energy storage capacity will only
increase as more of these batteries are built and as



SGCC Enterprise Standards Relevant to Power Consumption
figure 9
Technology Area Standard Short Description

Q/GDW 376.1 Communication protocol between master station and terminals

AMI 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 criterion
Smart Consumption
Service 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 charger

Electric 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 grid
Distributed 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




Zpryme Credits
Editor Managing Editor Research Lead
Tibor Sarlos Sean Sayers Stefan Trifonov

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

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