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Booming market for China's smart grid

June 10, 2010 at 4:25 PM   |   Comments

BEIJING, June 10 (UPI) -- Western companies are competing with Chinese firms for a share in China's booming smart grid market.

China's state-owned State Grid Corp. plans to invest $586 million in smart grid construction, including incorporating and storing power generated from wind and solar energy, monitoring power transmissions, intelligent substations, power storage and smart meters, China Daily reports.

Such construction will contribute 1 percent to the growth of China's gross domestic product annually over the next five years, said Wu Jiandong, chief energy expert of the Chinese Academy of Sciences.

Power equipment industry and intelligent electric meter makers will be among those who will reap the greatest rewards, said Wang Peng, an analyst with China Merchants Securities.

Demand for smart meters, for example, could reach 240 million units in five years.

China's electricity network, straining to accommodate the country's expansion, is losing an estimated 8 percent of its power in transmission, analysts say, compared with a loss of about 2.5 percent in industrialized countries.

The smart grid would send electricity a longer distance with less waste and is a key enabler for the use of renewable energy sources such as solar and wind power.

Smart grid projects support China's target to increase the proportion of non-fossil energy use to 15 percent of primary energy consumption by 2020 as well as its target to reduce carbon intensity by 40 to 45 percent in 2020 from 2005 levels.

GE has already signed an agreement with Yangzhou Beichen Electric Equipment Co., a unit of State Grid, to explore a joint venture to make smart-grid equipment.

"It will be a real differentiator if we can build a strong alliance with State Grid," Robert Gilligan, vice president of transmission and distribution at the company's GE Energy unit, told The Wall Street Journal. State Grid controls electricity distribution in all but five of China's 31 provinces and territories.

Siemens AG, Cisco, Accenture, Hewlett-Packard, ABB, Westinghouse and Oracle are also said to be vying for a piece of China's smart grid boom.

While smart grid plans in the United States focus more on power distribution, China's projects equally target power transmission and distribution, said Hu Zhaoguang, deputy director of State Grid's energy research institute.

Hu said that gives domestic companies an upper hand in the competition for a share in smart grids. They are used to the Chinese model of exporting electricity to areas far away, while Western smart-grid models are based on local power plants distributing power within a community.

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