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News Release

May 7, 2014

Establishment of technical investigation committee on deployment of distributed energy systems in China’s five southern provinces
— Joint research by Japanese companies and China’s second largest power transmission and distribution company, China Southern Power Grid —

 The Japan Research Institute, Limited (JRI), China Southern Power Grid Co., Ltd. (*1) and a group of Japanese suppliers of advanced distributed energy systems technology last month formed a technical investigation committee (“the Committee”), and began considering the best options for distributed energy systems in the five southern provinces of China (*2). The Committee will pool the technologies and equipment in which each of the participating companies has particular strengths, and will consider distributed energy systems with a view to entering the distributed energy market in China’s five southern provinces.

Background: Expanding plans to install natural gas-fired distributed energy systems in China

 Owing to concerns over severe atmospheric pollution, the Chinese government is promoting reduced consumption of coal, one of the biggest sources of pollution, and a shift to natural gas, which produces fewer atmospheric pollutants. China plans to install natural gas-fired power generation equipment on a large scale: the National Development and Reform Commission plans to install 50,000 MW of capacity by 2020 (around 10 times the current capacity; Japan’s target is 30,000 MW by 2030) and the State Council plans to install gas-fired equipment at 1,000 locations by the end of 2015.

 However, the disadvantage of natural gas-fired power generation is that is that power generation costs are higher than for coal. For this reason, most of the gas-fired power generation equipment to be installed is designed for use in distributed energy systems. Unlike large-scale centralized systems, distributed systems involve the installation of power generation equipment in locations close to users. This has cost merits, among other advantages: (i) waste heat produced during power generation, which in the past has simply been allowed to escape, can be used efficiently in local households, factories, etc, in the form of hot water, air conditioning, steam, etc, (ii) transmission and distribution loss is low, and (iii) the local area is able to achieve energy security.

Committee activities

 The Committee will consider standard systems and business models for distributed energy projects in China’s five southern provinces, using Japan’s advanced technology and know-how.

 Distributed energy systems are already being installed in factories and for district heating and cooling purposes in Japan. To assess the potential for their wider use in China, the Committee will begin by comparing market characteristics, the structure of industry, and technology in Japan and China, and will then analyze demand for and profitability of distributed energy in each sector of industry.

 Ultimately, the Committee is aiming to enter the integrated energy market, including energy-saving services, with a focus on distributed energy projects in the five southern provinces of China, in which China Southern Power Grid Synthesis Energy Company operates.

Participating companies

 The Committee is made up of energy systems-related companies including Yokogawa Electric, whose business centers on industrial measurement equipment and control systems, NEC, which develops BEMS and other energy management systems, Tokyo Electric Power Company, which provides energy-saving services and consulting services overseas, and Meidensha, whose business includes heavy electrical machinery and environmental systems. Members will pool the technologies and equipment in which they have particular strengths, and examine the best options for distributed energy systems in China’s five southern provinces.


(*1): China Southern Power Grid Synthesis Energy Company
Established as a subsidiary of China Southern Power Grid (*), in 2010, China Southern Power Grid Synthesis Energy Company promotes energy-saving, renewable energy and distributed energy. On November 29, 2013, the company signed a memorandum of understanding with JRI on technology and projects relating to distributed energy and energy-saving services.
China Southern Power Grid Synthesis Energy Company website:http://ny.csg.cn/

(*) China Southern Power Grid
A state-owned power transmission, transformation and distribution company operating in China’s five southern provinces. It is China’s second largest power transmission and distribution company, after the State Grid Corporation of China.
China Southern Power Grid website:http://www.csg.cn/

(*2): Five southern provinces
An area consisting of Guangdong, Yunnan, Guizhou and Hainan provinces, and the Guangxi Zhuang Autonomous Region. Together, these cover a total of 1 million square kilometers (10.4% of China’s overall land area) and have a population of 230 million (17% of China’s overall population).

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