27 Apr 2011
April 27, China, the world’s second-largest energy consumer, will choose 100 new energy demonstration cities by 2015 as a vital component of its new energy strategy outlined in the 12th Five-Year Plan.
New energy technologies to be demonstrated in the 100 cities include geothermal energy, solar energy, wind energy, biological energy, new energy vehicles and smart grids, said Hu Runqing, deputy researcher at the Center for Renewable Energy Development under the Energy Research Institute, National Development and Reform Commission (NDRC).
The cities will focus on demonstrating the application of new energy technologies, instead of equipment manufacturing and energy production.
Industry experts generally agree that China’s new energy industry is limited by underdeveloped domestic application of new technologies. Official data show China’s production of solar-cells accounted for 50% of the world’s total output in 2010, but 95% of that was exported.
“In terms of application [of new energy technologies], the demonstration cities will change the old mode of large scale transportation and emphasize distributed energy resources to produce locally and consume locally,” an official at the National Energy Bureau (NEB) told the 21st Century Business Herald.
Distributed energy resources are small-scale power generation technologies located close to where electricity is used to provide an alternative to or an enhancement of the traditional electric power system.
The central government is currently compiling an index and support policies for new energy demonstration cities, which are expected to be published before the end of this year, sources with knowledge of the matter said.
Researcher Hu said conurbations of all sizes, including metropolises and prefecture and county-level cities, are all welcome to apply.
The index will be established by CECEP Consulting, a subsidiary of the state-run China Energy Conservation and Environmental Protection Group.
The proportion of new energy in primary energy consumption will be a key indicator as it directly reflects the level of new energy development in an area, said director Guo, who is heading up the project at CECEP Consulting.
Some experts suggest setting the new energy proportion at 8%-10%, but this has not been decided, Guo said.
Meanwhile, related support policies are also being researched.
At the end of 2010, China’s Ministry of Finance, Ministry of Agriculture and NEB jointly issued a notice to start building 108 green energy demonstration counties across the nation.
Under that scheme, the central government will provide a subsidy of RMB 30 million for each participating county, with a cap of RMB 50 million, and local financial aid in central and western regions will not be less than 30% of that provided by the central government.
Based on that, local officials are expecting a similar subsidy for the 100 demonstration cities.
“The subsidy for the demonstration cities may by higher than that for counties, as cities have a higher administration level,” said an official from a local NDRC bureau.
Some cities are rushing to take part in the project, although no policy details have been finalized.
Last May, Zhang Guobao, who was then head of the NEB, said at a forum during the Shanghai 2010 World Expo that Turpan, a county-level city in Xinjiang autonomous region, had received approval to build a national new energy demonstration city.
The NEB has also approved a plan for a national energy demonstration city submitted by Dezhou, a city with a solid new energy industrial base in Shandong province, sources said.
Dunhuang, a city in China’s western Gansu province, is actively applying to participate in the NDRC’s demonstration project.
Local governments may rush headlong into the project, but their support mechanisms will decide the success or failure of the program, said Yang Fuqiang, a senior adviser on climate and energy to the Natural Resources Defense Council in China.
“What needs to be solved in the future is how to integrate distributed energy resources with power grids, construction departments and urban planning,” said researcher Hu.
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