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Editor¡¯s
note: This article is presented by Mr. Cheng Huizhou,
Director of the Bureau of Rural Hydropower and Electrification,
Ministry of Water Resources, P.R. China on the ¡°International
Workshop on Attracting Private and Public Sector Participation
in Infrastructure (Small-Hydro and Water Supply Sectors)¡±
held on November 17-18,2003 in Kunming, Yunnan Province, China.
The workshop was jointly organised by Yunnan Provincal Government
and World Bank.
Ladies and Gentlemen:
Good morning. Thank you for your attention
t o the undertaking of rural hydropower in China and welcome
all sides of investors to develop rural hydropower. The rural
hydropower that I talk in the speech refers to small hydropower
with the capacity less than 50 MW. I would like to use this
chance to set forth several issues regarding developing rural
hydropower of China.
I. Grand Potential , Distribution
and Features of Resources
The resources of rural hydropower
of China are very abundant. According to the preliminary statistics
of recent check survey, the capacity that can be explored
amounts to 130 GW, ranking 1st in the world.
The rural hydropower resources are
distributed widely in more than 1600counties of 30 provinces
(autonomous regions and municipalities), which mainly concentrate
in western, middle part and littorals of China. Western part,
poor areas, minority areas contain over 70% of total rural
hydropower resources.
Decentralization of resources is suitable
for the strategic development direction of decentralized and
distributed power supply.
The moderate scale of rural hydropower
is fit for countryside, farmer organizations and private sectors
to explore and conducive to increasing farmer¡¯s income and
promoting the development of rural economy.
To develop rural hydropower will not
result in a large pool of water and cause resettlement or
submergence. It will also not emit GHG or any harmful gas.
Rural hydropower is a clean renewable energy.
II. Achievements of Development
When new China was established in
1949, rural areas in China have no access to power. The central
government took the guideline of ¡°walk with two legs¡± to explore
rural hydropower in order to address the power shortage. This
development was combined with control of rivers and construction
of irrigation works. Up to 1990s, most of counties in China
have been electrified by rural hydropower. The development
of rural hydropower settled the electricity supply to 600
million un-electrified Chinese people in accumulative total.
Over 1500 counties have explored rural hydropower and more
than 48000 rural hydropower stations built up altogether.
It is predicted that 2.3 GW capacity will be put into operation
at the end of 2003 while the total capacity of rural hydropower
will reach 30.8 GW and generate energy of 110 billion kWh
annually. Both the capacity and annual energy will account
for 40% of that of total hydropower in China. Rural hydropower
realizes added value from generation and supply at 50 billion
Yuan (RMB) and profits 7 billion Yuan(RMB).
According to the deployment of the
State Council, Ministry of Water Resources has continually
organized the construction of 3 batches of preliminary rural
hydropower and electrification counties from 1985 to 2000.
653 preliminary rural hydropower and electrification counties
were thus completed. The GDP, financial revenues, farmers¡¯
income and energy consumption of those counties doubled over
past 5 years and quadrupled over past 10 years. The economic
structure was conspicuously improved and the developing speed
evidently higher than national average level.
Rural hydropower has become an important
infrastructure and public establishment in vast rural areas
in China. It is playing and will play the important role in
the development of Chinese economy and society.
III. Evolvement of Investment
Structure
Before 1990 the main financial source
of rural hydropower came from national investment. The investment
from central government accounted for more than 30% of total
investment during the construction of electrification counties.
From 1990 to the end of last century,
besides the national investment, other non-public sector also
participated in the development of rural hydropower, mainly
the private cap ital, in Guangdong, Zhejiang, Fujian and other
regions. Meanwhile foreign investors started their investment
in rural hydropower.
At the beginning of this century,
more and more non-public invest ors invest in the construction
of rural hydropower station. The proportion of nonpublic investment
ranks comparatively high in Zhejiang, Guangdong, Fujian and
other littoral regions.
In this new era, with rural hydropower
listed into ¡°Six Small Projects¡± by our country, rural hydropower
needs to expand the investment scale and enrich the construction
content. ¡°Six Small Project¡± is a combination of 6 small/middle
scale of infrastructure projects in rural areas recommended
by national government. Their characteristic can be summarized
as short period of construction, short period of capital return,
wide coverage of benefited people and notable effect of income
increase. At the same time, Chinese government carries out
Project of Substituting Small Hydropower for Fuel as an important
method of consolidating ecological project of transforming
farmland into forest to meet farmers¡¯ household firewood and
production energy demand. Rural hydropower belongs to rural
infrastructure and ecological protection projects, therefore,
the government will increase the investment accordingly.
IV. Main Experience
1) Work on the basis of the
situation of China. Chinese government adopted the
policy of ¡°walk with two legs¡±. During a very long time, the
problem of power short age was addressed mainly depending
on local strength and in combination with controlling river
and building up irrigation facilities. As the development
of rural hydropower is not only solve the electricity shortage
but also become the strong productivity, complying with t
he situation of China, the enthusiasm of central government
and local people were thus aroused and the development expanded
rapidly.
2) Work on the basis of objective
rule. Combining tightly the development of rural
hydropower with river controlling, rural hydropower is a dragon-head
in the construction of irrigation works in mountainous region.
To develop rural hydropower will not only bring the comprehensive
benefits of water resources into full play, but also promote
the sustainable development.
3) Insist on the principle
of serving agriculture, rural are a and farmers.
To develop rural hydropower will make contributions to raising
rural productivity, increasing farmers¡¯ income and promoting
rural development after the energy demand of daily life and
production were satisfied by rural hydropower.
4) To tightly combine with
poverty elimination. In the vas t areas of west China,
rural electrification transforms the resources advantages
into economic advantages, promotes the poverty elimination
and realizes the double wins of economic and social benefits.
5) To tightly combine with
the ecological protection. Project of Substituting
Small Hydropower for Fuel are carried out in those key areas
where project of transforming farmland into forest also carries
out so that the energy demand for daily life and rural product
ion can be satisfied, while the results of project of transforming
farmland into forest can be consolidated.
6) National policy and investment
support. Chinese government sets up the policy of
¡°self-construction, self-management and self-utilization¡±,
¡°rural hydropower shall have its own power supply areas¡±,
¡°to feed power with power, realize the rolling development¡±.
Maintains the value added tax of rural hydropower at 6%. Government
has put into a large amount of investment in rural hydropower.
V. Development Opportunities
1) Great attention was paid to ecological
safety by each country of the world today and focus on GHG
emission. International community will attach more and more
regard to energy structure adjustment, promotion of renewable
and reduction of carbon dioxide.
2) Chinese government carries out
the strategy of sustainable development, plan the harmonious
development of human being and nature as a whole and take
measures of project of transforming farmland into forest and
other ecological protection projects. Project of Substituting
Small Hydropower for Fuel will be carried out to meet the
farmer¡¯s fuel and rural energy demand. According to the plan,
up to 2020, the capacity of small hydropower stat ion for
substituting fuel will amount to 24 GW.
3) China attaches great attention
to the issue of ¡°agriculture, countryside and farmer¡± and
plan the development of town and countryside as a whole. Rural
hydropower has been determined to be an important small and
middle scale rural infrastructure and public facility, which
will be provided with national support.
4) China implements the strategy of
developing west and plan regional development as a whole.
Rural hydropower is very abundant in western part of China.
To develop rural hydropower resources is an indispensable
part of strategy of developing west.
5) Water resources will continue getting
high attention and support from the government. Rural hydropower
as the dragon-head of irrigation works of mountainous region
will realize sustainable, rapid and healthy development.
6) The State Council has instructed
MWR to organize the construction of Hydropower and Rural Electrification
Counties to raise the electrification level and meet the energy
demand of rural economy and society. Up to 2020, 2-3 GW capacity
of rural hydropower should be put into operation annually.
7) Country will steadily push power
sector reform to decentralize the monopoly on power market.
An equal, competitive, open, orderly and healthy power market
system with a separation SHP in China between government and
enterprises will come into being. The environment of rural
hydropower market is imp roving gradually.
VI. Problems and Risks
1) Un-orderly development of rural
hydropower is very severe. Many hydropower stations do not
accord with the comprehensive planning of river basin and
hydro potential development. Some river basins are even trenched
on viciously preventing from equal competition. Some multi-purposed
projects with the benefits of irrigation, flood control and
ecological benefits have been explored as a pure commercial
power generation projects; some developers reduce the installed
capacity of stations defying the hydro potential planning
but according to their own financial resources; some developers
at will choose the site not obeying the rolling planning of
rural hydropower, therefore, resulting in a great deal of
resources waste and even affecting the safety of flood control,
irrigation, drinking and ecological water supply.
2) Severe hidden safety trouble exists
in structure of some projects which have not passed the appraisal
and approval of water resource authorities. The ¡°Four-nothing¡±
projects which disobey basic const ruction procedure without
approval, design, acceptance and management stand out seriously
and some even have caused the fatal safety accidents. Recently
MWR just finished cleaning up ¡°Four-nothing¡± hydropower stations,
and many stations were smelled out. Those stat ions t hat
have severe hidden safety trouble form a serious threat on
people¡¯s life and belongings.
3) Design market, equipment market
and construction market are in urgent need of regulating.
In recent two years, due to rapid development of rural hydropower,
sector management was kept vacant or difficult to keep in
pace with the development of rural hydropower. Some unqualified
design institutes participate in the design field of rural
hydropower sect or; some factories, workshops that are not
qualified or with a low technical capacity and even individuals
would pull a large amount of equipment manufacturing work
into arms; some unqualified construction enterprises also
took charge of rural hydropower work. All above causes severe
hidden safety trouble to construction, equipment and production
of rural hydropower. Regarding those problems above, MWR and
concerning sectors are taking effective measures to straight
en out and regulate.
4) With the steady advancement of
power sector reform, separation between transmission and distribution
is not listed in the agenda, and the monopoly of grid still
needs decentralizing. Some hydropower stations can generate
but are not allowed to do so, some are allowed to generating
but is not accepted by grid. These phenomena still exist in
some areas.
5) Although the State Council has
issued the new power price policy, the new power price mechanism
still needs time to be established.
6) Legislation of rural hydropower
lags far behind. Regulation on Rural Hydropower has not been
enacted. There is no legislation support on the development
of renewable so far.
VII. To Fully Develop the
Role of Rural Hydropower in Social and Economic Development
In the new era, Chinese government
puts forward a grand goal of building up a well-off society,
of which the difficult and crucial point is in rural areas,
especially in the vast western part where the rural hydropower
resources are rich. Therefore, it is necessary for rural hydropower
to bring it s advantages into a full play to promote the development
of economy and society, and provide the effective support
to building up well-off society.
1) To Strengthen the construction
of rural infrastructure and improve the life and production
condition of rural areas. To develop rural hydropower,
improve the facilities of power generation and sup ply gives
t he drive t o rural economy and society. Meanwhile, to accelerate
the controlling of rural hydropower and increase the controlling
level of flood prevention reservoirs for increasing the ability
of agricultural irrigation and water supply to improve the
life and production condition in rural areas.
2) To Increase the farmers¡¯
income. Farmers can increase their income by putting
money or labor into the construction of rural hydropower,
which can bring along rural product processing, local special
resources development, construction industry, tourism and
transportation industry. It can also transform the surplus
labors into useful workers. The severe poor areas can eliminate
poverty and increase farmers¡¯ income by exploring rural hydropower
with the help of increase of government financial subsidies.
3) To create more GDP and
financial revenues. To develop rural hydropower is
to transform the resources advantages into economic advantages,
which could create a great deal of GDP and financial revenues
and bring along other resources and sectors development, as
well as complete the rural economic structure adjustment,
improve its optimization and promote the rural economic development.
4) To protect and improve
the ecological environment. Rural hydropower can
fully develop its advantage of low cost and further lower
the present power price t o meet t he farmers fuel demand
and rural energy demand so as to protect forests and vegetation,
consolidate the results of t he important project of transforming
farmland into forest and other ecological projects.
5) To provide more and more
renewable energy for national economic and social development
and improve the energy structure.
Thank you.
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