An Assessment of the Power- Generation Sector of China
Socrates Kypreos and Robert Krakowski
International Energy Agency (IEA/AIE) Annex IX Technical Conference Energy Models Users’ Group: Global and Regional Energy Modelling.
April 4-7, 2005, Taipei, Taiwan
Paul Scherrer Institut, Switzerland
CHINA and SHANDONG
Shandong
Three Attributes Define our Scenarios
• Technology:
Present-day Coal and Advanced Technologies:
• Coal (Supercritical, IGCC, PFB)
• Gas CC
• Nuclear
• Renewable Energy (Hydro, Wind, Solar PV)
• Economy:
• - Fuel Prices (Nominal-High, N/H);
• - Demand (Low-Medium-High, L/M/H);
• - Discount Rate (Low-Medium-High, L/M/H);
• Environment (caps or taxes):
• - Sulphur Constraints (Caps or Taxes, S);
• - Carbon Constraints (Caps or Taxes, C);
• - EMI = C + S (Caps or Taxes on S and C).
and two methodological variants:
• Learning by doing and
• Partial equilibrium
Graphical illustration of learning curves
CC SC
Cost curve
Floor cost
b o
CC
tSC CC SC
−
⎟⎟⎠
⎜⎜ ⎞
⎝
= ⎛
0 t
Partial equilibrium:
Qt is the demand for power generation; p t is the price of electricity; GDP represents income;
α and ε are the income and price elasticity respectively
a t t
t
GDP GDP p
p Q
Q ⎟⎟
⎠
⎜⎜ ⎞
⎝
⋅ ⎛
⎟⎟ ⎠
⎜⎜ ⎞
⎝
= ⎛
−
0 0
0
ε
Countrywide and Regionalized SO2, NOX, and PM10 Emission Rates and per-tonne External Costs for the Seven CRETM Regions
Region Population Area Density Factor (Table I) 1000 persons 1000 km 3 persons/km 3 relative to
Shandong NO X SO 2 PM
NO 139910 1572.2 89.0 0.1610 737.0 1135.9 810.0
NE 103850 757.2 172.8 0.3126 1431.3 2205.8 1572.9
EA 268180 638.5 439.9 0.7957 3643.4 5615.1 4003.9
SA (a) 80000 153.0 552.9 1.0000 4579 7057 5032
SC 333990 1007.0 331.7 0.5999 2747.0 4233.6 3018.8
SW 190630 2317.8 82.3 0.1488 681.2 1049.9 748.6
NW 86070 3140.3 27.4 0.0496 227.0 349.9 249.5
Total 1202630 9586.0 125.5
(a) Shandong province serves as the reference (Hirschberg, 2003).
Scaled with Population Density
External Costs, $/tonne,
Time-dependence of GDP, electricity demand, and emission rates indexed to the base-year 1995
1 10 100
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 YEAR
CRT E M I NDI CE S
GDP
Demand (CRETM) CO2 Emissions SO2 Emissions
Demand [Wu et al.(2001)]
Generation by Technology BNN case; Baseline with present policy
0 1000 2000 3000 4000 5000 6000 7000
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 YEAR
ELECTRICITY PRO D UCTIO N , TW eh/yr
Nuclear Biomass Wind Solar PV Hydro Gas Oil
GCC(CRS)
Coal(CRS)
Coal(Adv)
Coal(Scrub)
Coal(Dom)
BNN Base-Case Scenario
Electricity generation mix without externalities (BPE) Electricity generation mix without externalities (BPE)
and with all externalities charged (APE);
and with all externalities charged (APE);
0 1000 2000 3000 4000 5000 6000 7000
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 YEAR
Electricity Generation, TWeh/yr
Nuclear Biomass W ind Solar PV Hydro Gas Oil GCC(CRS) Coal(CRS) Coal(Adv) Coal(Scrub) Coal(Dom) Base-Case BPE
0 1000 2000 3000 4000 5000 6000 7000
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 YEAR
Electricity Production, TWeh/yr
Nuclear Biomass W ind Solar PV Hydro Gas Oil GCC(CRS) Coal(CRS)
Scenario APE
Electricity
Electricity - - generation becomes more diversified when externalities are generation becomes more diversified when externalities are internalized
internalized
Electricity generation mix in 2050;
Electricity generation mix in 2050;
All Cases with learning and partial equilibrium All Cases with learning and partial equilibrium
Electricity
Electricity - - generation becomes diversified when externalities are internalized generation becomes diversified when externalities are internaliz ed
0 1000 2000 3000 4000 5000 6000 7000 8000
BNN BPE SPE CPE EPE LPE GPE APE
GENERATION, TWeh/y
Nucl Bio Wind Solar PV Hydro Gas Oil GCC-Seq Coal-Seq Adv Coal Dom-Scrub Dom-Coal
0 2 4 6 8 10 12 14 16 18 20
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
M t S O 2/ yr
BNN BPE SPE CPE EPE LPE GPE APE
CRETM-CHINA; Sulphur Emissions (Mt SO2/yr)
CRETM
CRETM- -CHINA; CHINA;
SO2 marginal costs or taxes in US$ /tonne SO2 SO2 marginal costs or taxes in US$ /tonne SO2
-500 0 500 1000 1500 2000 2500 3000 3500 4000 4500
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 SPE
EPE
CRETM-CHINA
Carbon Emissions in Power Generation (MtC/yr)
0 500 1000 1500 2000 2500
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 BNN
BPE
SPE
CPE
GPE
CO2 marginal costs or taxes in US$ / CO2 marginal costs or taxes in US$ / tC tC
0 10 20 30 40 50 60 70 80 90 100
2025 2030 2035 2040 2045 2050
CPN
CPE
GPN
Cumulative reduction in Demand, CO2, SO2 and Cost relative to
Cumulative reduction in Demand, CO2, SO2 and Cost relative to BNN BNN
-100 -80 -60 -40 -20 0 20
pe rc e n t
BNN BPE SNN SPE CNN CPE ENN EPE LNN LPE GNN GPE ANN APE
Cost
Demand
CO2
SO2
CRETM-Energy Cost Vs CO2 emissions in China
20 25 30 35 40 45 50
0 10 20 30 40 50 60 70 80
TOTAL CO2 EMISSIONS, MCO2(GtonneCO2) AVERAG E ENERGY CO ST, <COE>(mill/kWeh)
DISCOUNT RATE CARBON TAX CAPCOST NUCLEAR
Discount Rate (1/yr) 1100 $/kW
0.04 0.06
0.08 0.12 0.15
Capital Costs for Nuclear Plants
1600 $/kW Carbon Tax
Low High
High Carbon Tax plus Lower
Capcost for Nuclear (1200
$/kW)
MARKAL-CHINA 2050: Electricity Production Vs SO2 Tax
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
BaU S 100 S 500 S 1000 S 1500 S2000 S2500
kT W h
Nuclear Geothermal Wind
Solar PV Hydro Gas Oil
Advanced Coal
Coal/scrubbers
Domestic Coal
Conclusions
Coal is King: China will rely always on coal for electricity production
RD&D for advanced generation technology can improve economics and the environment.
Sulfur Reductions Affordable: Pollution related to SO2 emissions can be reduced for moderate investments by introducing scrubbers and/or advanced-coal technology.
Carbon Reductions Not Cheap: Carbon-emission reduction will also improve local
environments through reduced SO2 emissions, which is an important secondary benefit.
Generation Cost Increases but Demand Responds to Price Changes
Increased Power Demand: The demand for electrical power in China is projected to
increase six-fold by 2050.
Conclusions-2
The best substitutes for coal are advanced gas combined cycle systems followed by nuclear energy, and renewable energy sources (e.g., wind and small hydro)
Pollution Costs Must be Reduced: Annual outdoor air pollution costs the Chinese economy anywhere from 6-7% of GDP (Hirschberg, 2003); RD&D support and international cooperation for technology diffusion can reduce the cost of pollution control significantly.
Nuclear energy can be competitive if
• reactors have a cost below 1,800 $/kW and construction time is below 5 years,
• or at higher capital cost when local or global externalities are addressed
Electricity transmission across regions makes economic sense and reduces local pollution.
Paul Scherrer Inst./ETH, Switzerland IER, University of Stuttgart, Germany Source: EcoSense China/Asia GIS Source: ESRI Data & Maps CD
Mortality due to China's Air Emissions,
All Sectors
Years of Life Lost per yr per grid cell
< 10 10 - 100 100 - 250 250 - 500 500 - 1000 1000 - 3000 3000 - 5000 5000 - 8000
> 8000
Administrative Units Rivers
South China Sea
Sea of Japan
East China
Sea
China China Mongolia Mongolia
Thailand Thailand
Laos Laos
Japan Japan
Vietnam Vietnam Myanmar (Burma)
Myanmar (Burma)
Cambodia Cambodia
North Korea North Korea
Philippines Philippines
South Korea South Korea
India India
Malaysia Malaysia
Taiwan Taiwan
Indonesia
Indonesia BruneiBrunei
Macau Macau
Paracel Islands Paracel Islands
100°
100°
110°
110°
120°
120°
130°
130°
140°
140°
10° 10°
20° 20°
30° 30°
40° 40°
50° 50°
(Current situation)
2002 0 500 1'000Kilometers
