On May 4, 2012, the Chinese Ministry of Science and Technology (MOST) released the Special Planning of 12th Five-Year Plan (2011-2015) on Smart Grid Major Science and Technology Industrialization Projects (hereinafter referred as “the plan”). The plan clarifies the overall objectives for smart grid construction during the 12th Five-Year Plan period as well as the industries that China will mainly focus on supporting. China’s smart grid construction will accelerate during the 12th Five-Year period.

The smart grid is an important platform for China to implement new energy strategies and optimize their energy resource allocation. It covers all sectors such as power generation, transmission, distribution, consumption and control. It makes use of advanced information and materials to realize universal access to and utilization of clean energy in order to improve the operational efficiency of energy and ensure a safe, reliable, and high-quality supply of power.

Six Industries Affected

Compared to the process of building smart grids with various regions of the world, China’s smart grid perspective includes: large-scale renewable energy grid connection technology, the joint operation of large-scale energy storage technology, large-scale grid interconnection, long-distance transmission control technology, distribution automation, microgrids, smart meters and demand response technology.

The plan determines the following six industries for China’s smart grid layout:

1. Clean energy generation manufacturing industry such as wind power generation, solar power generation, etc.
2. New materials industry such as photoelectric conversion materials, energy storage materials, insulation materials, superconducting materials and nano-materials.
3. Infrastructure manufacturing industry such as new electrical and electronic devices, transformers, etc.
4. Information and communication, instrumentation, sensors, software, etc.
5. Alternative energy automotive industry
6. Home appliances and the consumer electronics industry

Dr. Honghang Song from the High-Tech department of MOST established that the plan goal is to break through with key core technologies. These breakthroughs will help to bridge large-scale intermittent energy and distributed networks, coordinated power grid and electric vehicle charging facilities, followed by smart distribution and intelligent scheduling and control. These technologies will be showcased by the completion of a number of smart grid demonstration projects representing independent intellectual properties and standards which can form a smart grid industry chain.

Nine Key Tasks

We see that the plan puts forward nine key tasks which will be key technological breakthroughs necessary in the 12th Five-Year Plan period in order to achieve the construction of the industrialization demonstration projects.

The nine key tasks include:

1. Large-scale grid-connected intermittent renewable energy technology
2. Grid technology for supporting electric vehicles
3. Large-scale energy storage systems
4. Intelligent distribution technology
5. Intelligent grid operation and control
6. Intelligent transmission technology and equipment
7. Grid information and communication technologies
8. Flexible power transmission technology and equipment
9. Smart grid integrated comprehensive demonstrations

Dr. Song said the "Smart grid is not only a key to develop large-scale intermittent renewable, but also an important supporting role of developing new energy strategy in emerging Industry”. He also mentioned that the main technical direction of the plan is to design a technical model of renewable energy generation and friendly connection to the grid. The model can be divided into large-scale centralized access and high-density dispersed access. In other words, it is large-scale grid-connected intermittent renewable technology.

Regarding electric vehicles (EV) supported by the smart grid, the plan clearly indicates that China will build integrated monitoring systems and demonstration projects for EV battery charging stations. Energy storage stations and the coordinating control systems for intelligent vehicle terminals also add the ability for EVs to interact with the grid. China will also study the business model of EV battery charging facility operation systems and smart charging service network management systems based on the Internet of Things.

Large capacity battery storage and the integrated applications will become the core technological breakthroughs for large-scale energy storage systems. The plan points out that China will focus on some key issues such as:

• - large-capacity lithium battery energy storage technology
• - monomer sodium-sulfur battery products
• - advanced sodium sulfur battery industrialization preparation techniques
• - integrated application technology based on megawatt-class sodium sulfur battery energy storage stations

According to the plan, China will build 20-30 special smart grid technology demonstration projects, 3-5 smart grid integrated demonstration projects, 5-10 smart grid demonstration cities and 50 smart grid demonstration parks during the 12th Five-Year period. Currently, China is planning two smart grid integrated demonstration projects at Chongming Island in Shanghai and at Hainan Island in Hainan province. 

On December 25, 2011 China’s first integrated wind-solar power demonstration project was completed and put into operation in the Zhangbei county of north China’s Hebei province. The project is the largest new energy project in the world that integrates wind and solar PV power generation, power storage and intelligent power transmission. With an initial investment of RMB 3.3 billion yuan, the project has an installed capacity of 100 megawatt (MW) wind power, 40 MW solar PV power and a 20 MW storage capacity.

Ultra High Voltage Attenuated

SGT Research observed that the plan focuses mainly on the guidance of smart grid technology development and rarely mentioned Ultra High Voltage (UHV). Large-scale energy saving runs through the full text of the plan which brings uncertainty to the UHV project.

Unlike the State Grid Corporation of China’s (SGCC) previous focus on investment in UHV development in the past, this plan emphasizes the construction of renewable energy grid connections, stable transmission technology, as well as consumers and utilities interactive technology.

Furthermore, the UHV development progress did not reach SGCC’s expectations. Early this year only one UHV AC transmission line and two UHV DC transmission lines got permission from the National Development and Reform Commission (NDRC) while SGCC submitted a total of seven UHV AC/DC projects to NDRC for approval last year.  

Zhengling Zhang, head of the UHV department of SGCC, said that most of the UHV AC demonstration project equipment are supplied by domestic enterprises and the integrated localization rate of parts and components has reached 90 percent.

2012 Smart Grid Speeds Up

In 2010-2011, the overall smart grid investment was lower than expected, which led to suspicion of the necessity for China’s smart grid construction. The introduction of the planning phase highlights the national strategy of investment in the smart grid. We expect that smart grid investments will accelerate in 2012 and the percentage of smart grid investment will rise from 5 to 11 percent.

For more information about China’s smart grid investment, please refer to SGT Insights of “2012 China Smart Grid Construction Investment Outlook”.

About SGT Research

SGT Research is a global market research and advisory firm serving the smart grid industry value chain including electric power infrastructure, renewable energy, clean technologies and capital investment. SGT Research provides strategic consulting services including analysis of market drivers, business models and technology trends for smart grid development. SGT Research also provides market entry services for smart grid firms seeking opportunities in China. With SGT Research’s local and international experience, clients will have added competitive advantages of bringing high-value products and services to the Chinese market faster.