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Viewing cable 09GUANGZHOU157, Fujian: Alternative Energy Development Attractive Amid

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Reference ID Created Released Classification Origin
09GUANGZHOU157 2009-03-06 10:02 2011-08-23 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Consulate Guangzhou
VZCZCXRO1832
RR RUEHCN RUEHGH
DE RUEHGZ #0157/01 0651002
ZNR UUUUU ZZH
R 061002Z MAR 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0326
INFO RUEHGZ/CHINA POSTS COLLECTIVE 0120
RUEHBJ/AMEMBASSY BEIJING 0229
RUEHGH/AMCONSUL SHANGHAI 0069
RUEHCN/AMCONSUL CHENGDU 0069
RUEHSH/AMCONSUL SHENYANG 0069
RUEHHK/AMCONSUL HONG KONG 0095
RUCPDOC/USDOC WASHDC 0007
RHMFISS/DEPT OF ENERGY WASHINGTON DC 0006
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0059
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC 0066
RUEAIIA/CIA WASHDC 0111
RUEKJCS/DIA WASHDC 0111
RHHMUNA/HQ USPACOM HONOLULU HI
UNCLAS SECTION 01 OF 03 GUANGZHOU 000157 
 
SENSITIVE 
SIPDIS 
 
EMB BEIJING FOR DOE 
USDOE FOR OFFICE OF THE SECRETARY 
USDOE FOR INTERNATIONAL AFFAIRS 
USDOE FOR FOSSIL POLICY AND ENERGY 
STATE FOR EAP/CM AND EB 
STATE PASS TO NUCLEAR REGULATORY COMMISSION 
 
E.O. 12958: N/A 
TAGS: ENRG TRGY ETTC IAEA CH
SUBJECT: Fujian: Alternative Energy Development Attractive Amid 
Global Economic Downturn 
 
REF: A) Guangzhou 302 
 
1. (U) Summary:  Fujian's alternative energy development is picking 
up steam in spite of a worsening global economic downturn.  While 
coal will continue to be the primary source of energy in the near 
future, but major investments are being made in nuclear power (more 
than USD 20 billion at two plants already under construction), wind 
power and (to a lesser extent because of the commercial exploitation 
costs) tidal power.  The expansion of Fujian's LNG terminal is also 
proceeding.  End Summary. 
 
------------------------------------ 
Ramping Up Nuclear Power Development 
------------------------------------ 
 
2. (U) Nuclear energy is the answer to Fujian's increasing energy 
demand, at least according to experts at the Fujian Electric Power 
Test and Research Institute.  Fujian is currently constructing two 
nuclear power plants in Fuqing and Ningde.  Construction of the 
Fuqing Nuclear Power Station began in November 2008.  Fuqing, which 
was developed under the 11th Five-year plan, is the first project to 
be implemented following the unveiling of China's economic stimulus 
plan, and is expected to help boost domestic demand, and stimulate 
economic growth.  The new plant, managed by China National Nuclear 
Corporation (CNNC), will house six nuclear reactors.  Phase I of the 
project will build 2 - 1,000 megawatt reactors, using China's 
domestic CPR-1000 technology.  It will go online in 2013 and 2014. 
Total investment in the project is RMB 100 billion (USD 14.7 
billion). 
 
3. (U) Construction on Phase I of the Ningde Nuclear Power Station 
(NNPS) began in February 2008.  Operated by China Guangdong Nuclear 
Power Company (CGNPC), the plant will consist of six reactors 
constructed in three phases.  With an investment of RMB 51.2 billion 
(USD 7.5 billion), Phase I of the project (reactors 1-4) is expected 
to generate 30 billion kilowatt-hours (kwh) per year upon 
completion. NNPS's first 1000 megawatt CPR-1000 reactors will go 
online in 2012; the last will go online in 2015.  The first-two 
Phase I generators will have a 75% localization rate (i.e., 75% of 
design and equipment will be sourced locally), while the last two 
generators are expected to have a rate of 85%.  Zhang Guobao, the 
National Development and Reform Commission (NDRC) Vice-Minister told 
the press that the Ningde Power Station would significantly ease the 
strain on energy supply in the southeastern coastal area, as well as 
aid environmental protection efforts in the region. 
 
4. (U) Fujian plans to extend its nuclear capacity even further, 
with additional projects in Zhangzhou and Sanming; but these are 
still in preliminary stages.  As the various nuclear projects go 
online, Fujian hopes to export electricity to Guangdong and Zhejiang 
provinces.  Fujian's plans reflect China's desire to promote 
independent development of nuclear power and are now benefiting from 
economic stimulus efforts as well. 
 
---------------------- 
Wind Power Development 
---------------------- 
 
5. (SBU) Not surprisingly, wind power experts have a different take 
on Fujian's energy future.  Zhang Ronglin, Senior Engineer at the 
Fujian Electric Power Test and Research Institute told us wind power 
could be the answer to meet Fujian's current energy demand. 
According to Wang Yan, Director of the Fujian Climate Studies 
Center, most of the province's wind power potential is located along 
the coast or on off-shore islands.  Construction of a new wind power 
project is underway in Zhang Pu, which will include 36 850-kilwatt 
(kw) turbines in phase one, and another 36 1,250-kw turbines in 
phase two.  According to Jian Yongfeng, Xiamen Development and 
Reform (DRC) researcher, Xiamen is planning to build three wind 
power plants: Xiamen Neicuo Wind Power Plant (9,000 kw capacity), 
Xiang'an Lianhe Wind Power Plant (40,000 kw capacity), and Dadeng 
 
GUANGZHOU 00000157  002 OF 003 
 
 
Island Wind Power Plant (100,000 kw capacity).  Fujian is also 
assessing Dong Shan Island, Long Hai and Ping Tan for windmill 
project development. 
 
6. (SBU) At present, Fujian's wind power accounts for less than 1% 
of the province's power supply; Fujian has identified 41 million 
kilowatts (kw) of total wind power potential, 6 million kw of which 
can be exploited.  The provincial government's goal is to increase 
active wind power supply to 2.5 million kw by the year 2020. 
 
--------------------------- 
Hydropower and Tidal Energy 
--------------------------- 
 
7. (SBU) Fujian is one of China's leading provinces in the 
development of small hydropower facilities, according to media 
reports.  The province has five major hydropower stations, 
accounting for an estimated 32% of its total power supply (coal 
accounts for 67.5%), and over 6,000 small hydropower stations, 
located mostly in rural areas.  By the end of the 11th Five-Year 
Plan, the province plans to invest RMB 8 billion (USD 1.17 billion) 
to develop an additional 1.2 million kw of small hydropower 
capacity.  However, after proposed expansions, Fujian's hydro 
resources will soon tap out, leaving little room for expansion, 
according to Zhang Ronglin, Senior Engineer at the Fujian Electric 
Power Test and Research Institute. 
 
8. (SBU) Fujian ranks number one in China in tidal energy potential, 
with a total potential capacity of 10 million kw, almost half of 
China's 21 million kw of exploitable capacity.  Fujian's Electric 
Power Test and Research Institute, however, is not optimistic about 
tidal development in the near future due to the associated costs and 
constraints of commercial production.  Costs of tidal projects can 
average three to four times more than a conventional coal-fired 
plant, according to Huang Shulin, Deputy Director of Transportation 
and Energy - Fujian Provincial Development and Reform Commission 
(DRC). 
 
------------- 
LNG Expansion 
------------- 
 
9. (SBU) Launched in 2008, Fujian's LNG Terminal is poised to expand 
its operations (ref A).  The China National Offshore Oil Corp 
(CNOOC)-controlled project is undergoing construction of two gas 
storage tanks.  With an expected completion date of 2011, the tanks 
will increase the terminal's storage capacity to 640,000 cubic 
meters. 
 
10. (SBU) The terminal will eventually supply natural gas to three 
gas-fired power plants in Putian, Jinjiang and Xiamen.  The first 
generating unit of the Putian Gas Power Plant went online in 
December 2008.  According to Fujian Electric Power Test and Research 
Institute - Senior Engineer Zhang Ronglin, the two other gas power 
plants will begin commercial operations this year.  The Jinjiang 
site will use generators from Singapore's Jin Ying Group.  The 
terminal will also supply gas to distribution centers in Putian, 
Fuzhou, Quanzhou, Xiamen and Zhangzhou. 
 
------------------------------------ 
The Future of Fujian's Energy Sector 
------------------------------------ 
 
11. (U) Fujian is currently drafting its 12th Five-year Plan, and 
Huang, from the provincial DRC, predicts that it will focus even 
more on renewable and clean energy development, especially LNG. 
While coal will remain Fujian's primary source of energy, the 
provincial government will continue to prioritize the development of 
nuclear and wind power, according to Zhao Daobiao, Vice Dean and 
Senior Engineer at the Fujian Electric Power Test and Research 
Institute.   Professor Guo Xiangbing, Secretary General of the 
 
GUANGZHOU 00000157  003 OF 003 
 
 
Fujian Provincial Energy Research Council, predicted that in the 
coming years, coal-fired power plants would experience a downturn as 
renewable energies become more competitive. 
 
12. (SBU) Even as Fujian works to develop alternative energy, the 
province is also paying close attention to the promotion of energy 
efficiency and energy conservation.  According to media reports, the 
provincial government has established a fund to promote 
energy-efficiency in local industry; the fund will cover initiatives 
such as technical assistance, transformation of coal-burning 
industrial boilers, recycling of excess heat and pressure, 
transformation of electric and mechanical systems, and 
conservation/substitution of petroleum.  Incentives will be awarded 
to enterprises engaging in energy-saving projects.  Projects that 
save 1,000 tons of standard coal or more will receive RMB 150 for 
each ton saved, up to RMB 2 million, according to the plan.  In 
addition, power suppliers that proactively invest in 
energy-efficient projects will reportedly receive subsidies 
amounting to 10-15% of the total capital investment if the total 
project investment exceeds RMB 1 million, up to RMB 3 million. 
 
 
GOLDBERG