BRUSSELS INSIDER #1 - September 25, 2018
Should Europe sign on to the Chinese plan for a global supergrid – the Global Energy Interconnection (GEI)? Studies indicate that Europe would benefit from ultrahigh voltage cables connecting renewable energy plants with demand centres. But the project is politically sensitive. Xianzhang Lei, who represents the Chinese initiative in Europe, is optimistic: “National governments will invest in GEI when their people realise the benefits of the cheap electricity.”
China’s vision for the world’s first global electricity grid, the Global Energy Interconnection (GEI), is a bid to become “the world’s power supplier”. The GEI concept is championed by Liu Zhenya, former head of the State Grid Corporation of China (SGCC), China’s largest transmission utility and the second-largest company in the world. Liu Zhenya is now the head of GEIDCO – the Global Energy Interconnection Development and Cooperation Organization – the promotional arm of GEI.
GEIDCO is an international membership organization dominated by Chinese state-owned entities. Founded in March 2016, it marks the “transition of GEI from a concept to strategy implementation”.
“We aim to exploit the amplification of renewable energy and address the challenges of climate change and environmental pollution, as well as access to electricity,” says Xianzhang Lei, director general of GEIDCO’s European Office in Brussels, in an interview with Energy Post. “To do this, we promote everywhere the GEI concept and share our experience which we gained in China.”
The GEI global supergrid plan is inspired by China’s own success in connecting large-scale renewables installations to cities over long distances via ultrahigh voltage transmission lines. China’s two major power grid operators, China Southern Power Grid Co and State Grid Corp of China, started construction on UHV transmission lines in 2005 and have built 19 project lines to date.This while no other country has a single UHV line in full commercial operation.
Lei says: “In Shanghai right now, 46% of electricity is supplied via UHV transmission from renewables generation in remote areas. You can see the blue sky. Why? Because we largely replaced coal-fired power with clean energy by using ultra-high voltage transmission to bring renewable electricity from more than 1000 km, even 2000 km away.”
Big political support
“China’s initial development of ultrahigh voltage was started in cooperation with European suppliers but with time, it took the lead in defining this market and the Chinese continue to push technology to higher levels in order to drive their vision,” Jochen Kreusel, Market Innovation Manager Power Grids Division at ABB tells Energy Post. Kreusel is also Vice President Energy Policy of T&D Europe, the association of European technology providers for transmission and distribution networks.
A member of GEIDCO, ABB has been actively involved in China’s grid development. Current ABB projects in China include an ultrahigh-voltage direct-current (UHVDC) link setting world records for highest voltage, longest distance, and largest transmission capacity. ABB Group also continues to play a key role in interconnectors across Europe, leveraging the HVDC (high voltage direct current) technology pioneered by the company.
But does Europe need ultrahigh voltage grids? At present, within the European Union there is not currently a huge gap between electricity demand and supply in terms of distance.
However, studies made by the Desertec industrial consortium (see here and here) some years ago indicate that there is not enough regional diversity of weather conditions within Europe for a high penetration of renewables.
“One option to reach Europe’s ambitious renewable energy targets, therefore, is eventually connecting to other regions”, says Kreusel, adding “but not at least for another ten years.” Kreusel notes that “This would be a project requiring big political support and thorough preparation.”
No one doubts that the success of GEIDCO will depend strongly on political support. GEIDCO’s current activities are focused mainly on gaining global high-level political support, says Lei.“We have very strong support from the UN, IEA (International Energy Agency), IRENA (International Renewable Energy Agency) – a large number of these organizations support our work.”
GEIDCO’s European office “promotes the concept and its benefits”, Lei says, and “serves as a gateway for investors who are interested to build the UHV lines and to upgrade to the smart grid.”
Clearly there still is a lot of work to do for GEIDCO to convince European policymakers to sign on to its project. The European activities of State Grid Corporation of China (SGCC), the most prominent member of GEIDCO, have had a mixed reception.
SGCC has already invested $3.7 billion in Europe since 2008, according to a Bloomberg report published in April 2018. The same report estimates that, since 2008, total Chinese investment activity in Europe in traditional energy is $25.9 billion, in utilities $13.2 billion, in environment/new energy $8.6 billion. Holdings of Chinese state-owned entities (SOEs) include significant stakes in the Italian power grids, British gas network and Greece’s grid operator.
In July 2018, media reports highlighted Chinese investment activity in Portugal,Luxembourg, and notably Germany, when the German government intervened to block SGCC’s bid for a 20 percent stake in high-voltage transmission system operator 50Hertz. “The government has a major interest in protecting critical energy infrastructure, on grounds of national security,” the German economics ministry said.
The move came amid concerns in some countries – such as the United States, Germany, France, Australia and Britain – that China and other rivals are gaining access to key technologies via takeovers.
However, according to Lei, the activities of SGCC should be seen separately from GEIDCO. “GEIDCO’s work has nothing to do with the investments made by SGCC. SGCC’s business investment behavior is not GEIDCO’s purpose.”
That may be so, but European policymakers and citizens may see things differently.
“In my opinion, the main challenge for GEIDCO is that their strategy is to make a political deal and then implement it,”says Antonella Battaglini, who heads the not-for-profit organization Renewable Grids Initiative(RGI). “They may be able to do it elsewhere, but they will for sure have difficulties to implement it in Europe because of public opposition.”
RGI, which promotes “transparent, environmentally sensitive grid development”, has ample experience in this field. It brings together the unlikely bedfellows of environmental NGOs and transmission systems operators (TSOs) to address the lack of public supportwhich regularly delays transmission infrastructure projects.
“GEIDCO are in danger of denying local needs and local realities”, says Battaglini..
According to her, “interconnection is not the silver bullet, but it will play a role among in a mixture of solutions. I am not at all against the GEI concept, but I would recommend that GEIDCO engages in understanding local cultures and the realities on the ground, and complements them with the political processes in the UN and G20 setting.”
Even within China the State Grid’s UHV planned rollout schedule has slowed amid differences between central and provincial policymakers. GEIDCO, however, points out that “the Chinese government just approved 12 UHV projects earlier this month which shows a great support to GEI.”
Lei says that “GEIDCO is not doing any political deal but just facilitating the cooperation with different parties including intergovernmental organizations and governments as we know the GEI infrastructure construction has to be supported by governments. We also think social acceptance is quite important so that we are developing our membership all over the world and trying to do some bottom-up activities with our members to educate the audience about the GEI concept.”
He adds that “the GEI will be built step by step and public opinion will be changed gradually as most of the people in Europe agree that we have to use more renewables from afar because the Europe mainland has limited renewables especially when it becomes cheaper and cheaper.”
“The European, American and African people have the right to make their own decisions about what they want to do”, says Lei. “We just want to share our experience, to promote the idea to help people to get the improvements needed to address air pollution and achieve the sustainable development goals. We believe that national governments will support GEI when their people realise the benefits of the cheap electricity it will bring.”