Russia Eyes $6 Billion Power Export Project as Chinese Demand Grows 10.5%

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Researched by Industrial Info Resources (Sugar Land, Texas). Russia’s Federal Grid Company (FSK) is considering a possible $6 billion project to construct power transmission lines to export electricity to China. Currently, China’s Electric Grid Corporation (EGC) estimates that the country’s power generation capacity will grow at a rate of 10.5% per annum through 2010 to feed economic growth. With 75,000 MW of power generating capacity to be installed during 2007, China expects installed capacity to reach a total of 852,000 MW by 2010, of which 35% is being targeted to be generated from ‘clean’ power sources.

In 2006, the country’s generating capacity grew 20.3% year-on-year to reach a total of 622,000 MW. Power sourced from thermal (coal burning) plants was over 484,000 MW, which represented an increase of 23.7%.

The EGC reports that growth rates will be adjusted downward to 6.7% in the 2011 to 2015 period and further reduced to 4.17% for the 2016 to 2020 period. It predicts that the country will add about 520,000 MW of installed generating capacity between 2011 and 2020 with demand having grown at a rate of 9% from 2006 to 2010. The prediction of reductions in electrical power demand (5.8% in 2011/15 and 3.9% in 2016/20) must be taken with caution as efforts by the government to take the heat out of the economy have so far had marginal effect on the rate.

After critical power shortages in 2004 China boosted construction of new power projects and supply and demand was balanced in 2006 with more than 100,000 MW being added to total capacity during the year. The country’s generator manufacturing industry produced 100,000 MW of equipment in 2006 and can now produce state-of-the-art 300 MW and 600 MW units. The generator manufacturing industry and has also increased the amount of domestically produced parts in cleaner 1,000 MW generators.

Russia’s FSK is watching the situation and assessing the forward predictions as the budget for the transmission lines project will be reflected in the price at which China will buy electricity and the investment in the grids will be reflected in the income. FSK will manage the construction and operation of the power lines and will look to outside funding and/or obtain resources directly from the operator of the project as part of the contract with China. Full estimates for the investment required for each stage of the project have not yet been complete.

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