Advanced International Studies Unit, Battelle Memorial Institute

Combined Heat and Power Systems in China

In China, tens of millions of people are not connected to the electricity grid, and transmission systems are notoriously unreliable. If cogeneration were used to its maximum potential in China, local pollution and greenhouse gas emissions could be cut by 50% at the present time, and greatly reduced in the future. China’s natural gas resources are abundant, and the sector is being developed with the strong support of China’s government.

However, barriers to cogeneration are also abundant. Utilities are reluctant to make the electricity grid available to small, untested “competitors.” Banks are reluctant to make loans for cogeneration projects because they are not fully understood. The Chinese energy market is structured such that there are few incentives for developers to take on cogeneration projects.

This is where Battelle’s Advanced International Studies Unit (AISU) comes in. Using a combination of market surveys, business plans and demonstration projects, AISU hopes to jump-start the use of cogeneration power systems in China. Initially, the focus will be on well-known technology such as gas turbines and internal combustion generators. Over time, more sophisticated technologies, such as micro-turbines and fuel cells, could be put to use. AISU will help its Chinese counterparts identify the most promising market sectors for this technology, develop sound financial and business plans, identify financing, and launch demonstrations of the technology. The project will work in close collaboration with China’s National Development and Reform Commission, which is working to remove policy barriers to cogeneration with the support of the Energy Foundation.

©2003 blue moon fund