China’s GEI Initiative Can Reshape Africa’s Power Sector

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China continues its march towards world domination with various investments in up to 80 different countries. One of their numerous technologies to aid these investments has caught my attention, their development of an Ultra-High-Voltage Cable Technology (UHV). This technology allows power to be commercially transported over vast distances with lower costs, lower transmission losses and increased loads.

UHV has been dubbed the “intercontinental ballistic missile” of the power industry by Liu Zhenya – the president of State Grid, China’s powerful transmission utility and 2nd most valuable company on the Forbes 500 list. UHV has allowed China to build hydropower dams in its mountainous hinterland, then transport the power thousands of kilometres to its wealthy, industrial east coast. By enabling this and other projects, UHV has left western China with such a glut of power that Mr Liu proposed using the technology to export power as far away as Germany.

The UHV is currently being internationally promoted through Mr Liu’s Global Energy Interconnection (GEI) initiative. It has been designated a “national strategy” and championed by China’s president Xi Jinping. The initiative feeds into one of China’s most ambitious international plans – to create the world’s first global electricity grid. Advocates stress that this does not mean China would control the resulting grid but networks would be linked to allow better cross-regional allocation of power surpluses. Some western observers see a geopolitical strategy on par with China’s Belt and Road Initiative, a grand design that seeks to boost Chinese-led infrastructure investment in more than 80 countries worldwide.

Chinese companies have announced investments of $102bn in building or acquiring power transmission infrastructure across 83 projects in Latin America, Africa, Europe and beyond over the past five years, according to RWR.  Adding in loans from Chinese related institutions for overseas power grid investments brings the total to $123bn. Throw in all power-related Chinese deals overseas, including investments and loans to power plants as well as grids, and this number quadruples.

Officials and power industry analysts in China insist that it would be too simple to assume that such investments are all slated to be rolled up into a single international grid to achieve the GEI goal. Mr Liu describes this goal as similar to the internet: global but not controlled by a single country. The first stage which is set to run until 2020, involves investment in domestic grid assets within other countries. The second phase would see the knitting together of some of those grids and their generation capacity. “From 2020 to 2030, the task will be to promote intra-continental interconnection with the interconnection of Asian, European and African grids being basically realized,” Mr Liu said recently in London. Although Chinese companies wouldn’t necessarily own or control the regional grids, via the assets they do control, would ultimately lead to regional interconnection.

The biggest boon for China’s global grid ambitions is UHV cable technology. While other companies such as Siemens and ABB also have the technology, Chinese companies have been the first to deploy it on a large scale, developing global industry standards. China has already demonstrated the technology’s performance at home. The 37,000km of UHV cable that is laid or under construction in China can carry a load of 150GW, equivalent to 15 times the maximum electricity load in Nigeria. The cables are particularly applicable to renewable energy. It’s also worth noting that China has the best transmission lines in terms of the highest voltage and lowest loss. They can transmit electricity over 2,000km and lose only 7% of the energy. The technology reshapes the way in which the world consumes power, Mr Liu told his London audience. He used the hypothetical scenario of hydropower generated in DR Congo for $0.03 (11)/kWh being transmitted to Europe through Chinese UHV cables at a cost of delivery of $0.07 to 0.08 (25 to 28).

The GEI initiative and the UHV cable technology isn’t without criticism. The percentage of power loss is lower than other transmission technologies, however, the distance over which China deploys the cables means that total power losses are still significant. The technology has also allowed China to prioritize massive projects with disproportionately high environmental impact. At the same time, State Grid has yet to win many UHV construction projects abroad. Its main success has been in Brazil, where its acquisitions have made it the country’s largest generation and distribution company. This has made it possible to install UHV cables from a hydropower dam deep in the Amazon to cities 2,000km to the south.

Currently, China’s power companies are more focused on building their international generation and transmission assets. China’s Three Gorges, one of the world’s largest electricity group, last month bid to take control of Portugal’s biggest company, the power utility Energias de Portugal (EDP). Regulators rejected the initial offer of $10.6bn but the Chinese company is expected to follow up with more suitable bids. If successful, the deal will bring a proposal to create an interconnected southern European grid one step closer. China’s Three Gorges first bought into EDP in 2011 and has invested in its renewable arm. In 2012, State Grid became the largest shareholders in Redes Energéticas Nacionais, Portugal’s national power grid. In 2014, State Grid took a stake in Italy’s CDP Reti, which owns gas and power transmission networks. In 2017, the Chinese utility completed its purchase of 24% of ADMIE, an independent grid operator in Greece.

The interconnection ambitions combined with the aggressive acquisition strategies of Chinese state-owned actors have met more opposition in northern Europe. With its great distances, hunger for energy and increasing reliance on renewables, Prof Xu believes the most likely place for the first interconnected grid is Africa. It has attracted 39 power deals since 2013, more than any other region, according to data from RWR. “There are a number of Chinese companies doing big power generation projects, which need to be connected with new transmission and distribution systems,” Prof Xu adds.

Regional power integration may be an economical and environmentally efficient solution to building numerous power plants.

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