The new report shows that China’s five major power generation groups have hundreds of GW of thermal power plants in water-scarce areas, and they need to invest up to US$20 billion to improve technology Hong Kong, March 28, 2013 – having the second largest global China's largest power system, the "big" power generation group owns and operates thermal power plants with a capacity of more than 500 GW, most of which are coal-fired power plants. As its power plants are concentrated in moderate to severely water-scarce areas, especially in the arid northern industrial zones, the five major power generation groups, Huaneng, Datang, Huadian, Guodian, and China Power Investment, are all facing serious risks of water supply disruption.

A research report just released by Bloomberg New Energy Finance said that if we want to significantly reduce the risk of water shortages and reduce the amount of water generated in power generation, we will need major policy measures and industry efforts, costing billions of dollars and eliminating them. Number of gigawatts of non-water-saving power generation capacity. If the above measures are implemented (in fact, this point is still very uncertain), whether the results will increase or decrease China's greenhouse gas emissions will also depend on the technologies selected for alternative production capacity (such as closed cooling coal-fired power generation, open cooling and burning Coal power generation, gas power generation, or renewable energy power generation.

For decades, the pattern of China's industrial zones concentrated in the east and north has caused a sharp contrast between the demand for electricity and the distribution of fresh water resources. North China has 60% of the country's thermal power capacity, but only 20% of fresh water resources. Both coal mining and coal-fired power generation consume large amounts of water. According to an analysis by Bloomberg New Energy Finance, in 2010, a total of 98 billion cubic meters of freshwater were extracted in these two areas, accounting for about 15% of the country's total freshwater production.

If the five major power generation groups continue the current strategy, the amount of water generated by China's power generation in 2030 will exceed the Chinese government's control of the country's annual water extraction volume of 700 billion cubic meters of the target of 25%. Given that the rate of pumping from the aquifers in some areas has exceeded the speed of recovery, the increase in the amount of water generated in the power generation sector may pose greater challenges to them, as it is likely to pose a threat to the sustainability of the environment.

Fortunately, the five major power generation groups can also make some investment choices to reduce the risk of water supply, but each option also implies significant drawbacks in terms of efficiency, geographical location, and cost.

Efficiency: The five major power generation groups can adopt closed loop or air cooling systems with significantly lower water consumption than the old DC cooling systems. However, this cooling system will also reduce the efficiency of the power plant, which means that the amount of greenhouse gas generated per megawatt hour of electricity production will increase. More use of wind energy and solar power can also reduce water consumption, but because these technologies are intermittent, more new capacity needs to be built to achieve the same efficiency, resulting in higher investment.

Location: Building new thermal power plants in water-rich southern regions (such as Guangxi, Fujian, and Jiangxi) may avoid water shortages in power plants located in arid northern regions. However, these provinces do not have as much industrial load in the North, which means that power plants must transport electricity to thousands of kilometers away or wait for the load to be transferred to the south.

Cost: If the government adopts a major measure of forcing the existing DC cooling power plant to update its technology, there will be more than 100 GW of assets affected - costing up to $20 billion. This does not include the cost of compensating production capacity due to a 10 GW drop in capacity due to reduced efficiency.

Maxime Serrano Bardisa, a water treatment analyst at Bloomberg New Energy Finance and one of the authors of this report, said: “At present, 85% of China's power generation capacity is located in water-scarce areas, and 15% of them still rely on water-intensive DC cooling technology. The era of abundant water resources in China has ended, and the impact of resource competition in enterprises, agriculture, and urban centers has begun to appear."

Another author of the report, Alasdair Wilson, added: “The thermal power plant will need to adopt more efficient technologies – but doing so will push up capital and operating expenses. We also expect that the shortage of water resources will continue to promote wind power and solar power generation in China. Installed."

Michael Liebreich, CEO of Bloomberg New Energy Finance, said: “The adaptability of infrastructure has quickly been put on the agenda, which is mainly driven by high-profile droughts and floods (including Hurricane Sandy) in recent years. Resources are straining the risks that China's five major power generation groups face, but the reported information is applicable to many other power plants and companies around the world."