Patricia Adams & Grainne Ryder

October 26, 1998

Technological advances in world’s energy markets have turned mega-power projects like the Three Gorges into modern-day dinosaurs. Energy analysts believe that China would provide a generating capacity two to six times of that of Yangtze dam by cancelling the project, reforming the energy section, and allowing investments instead in cleaner energy alternatives.

According to the article by Patricia Adams and Gráinne Ryder of Probe International which appears in the coming issue of International Journal (53/4, autumn 1998), the super dam is "costly" and "uneconomic" in generating electricity. Based on a recent study by United States and Chinese energy research institutes, which compared conventional sources with advanced generating technologies, the authors argue that cleaner alternatives, such as smaller gas turbines or cogeneration plants are actually more economical for power generation than big hydro dams. Below is an excerpt of the first part of their article. – Editor

Large, conventional steam turbines (whether their fuel is coal, oil, gas, or nuclear) convert only 30 to 33 per cent of their fuel’s heat into electricity. The rest is released as waste heat into the atmosphere or into an adjacent body of water. The new breed of smaller gas turbines reliably convert over 40 per cent of their fuel into electricity. Thus, large cost-conscious power consumers around the world are encouraged to install their own gas turbines and reduce environmental damage while boosting economic output. Cogeneration plants generally turn 60 to 80 per cent – sometimes 90 per cent – of their energy into electricity and commercially useful heat.

Gas-fired combined cycle units – in which a gas turbine generates electricity and drives a second electricity-producing steam turbine – achieve energy efficiencies of 50 per cent or higher. Such systems have already replaced aging coal and nuclear plants in Britain and North America and are expected to dominate the market for new power plants in Asia and Latin America into the next century. Combined cycle gas turbines could provide power with lower capital costs and greater reliability than Three Gorges and with far fewer emissions than conventional coal plants.

Combined cycle plants are commonly fuelled with natural gas which burns more thoroughly than solid or liquid fuels, and, unlike coal, it contains no heavy metals or sulfur emissions that cause acid rain. Gas-fired combined cycle plants therefore produce no particulates or sulfur dioxide, 90 per-cent less nitrous oxide, and 60 per-cent less carbon dioxide emissions than coal-fired plants.

A combined cycle gas turbine costs about $650 per kilowatt, roughly 15 to 40 per cent of the cost per kilowatt for Three Gorges, depending on the dam’s final budget. If the project was cancelled and the budget invested in combined cycle plants, China could have 43,078 megawatts (MW) to 118,461 MW of new generating capacity, which would provide two to six times the generating capacity and displace two to six times as much coal, about 300 million tons a year, as Three Gorges.

With gas supplies coming on-line, researchers at the Battelle Memorial Institute – a Washington-based energy policy think-tank – the Beijing Energy Efficiency Center, and China’s Energy Research Institute predict the cost of electricity from combined cycle plants in southeastern China would be less than 4 cents per kilowatt-hour, compared to 4 to 5 cents for new coal plants, 6 to 7 cents for large hydro, over 7 cents for nuclear power, and at least 8.4 cents for Three Gorges.

Combined cycle plants can be installed and generating power reliably within nine months to two or three years for the larger units. Three Gorges is scheduled to take 17 years. Fast installation reduces the interest costs and allows plants to repay lenders sooner. While combined cycle plants produce power 85 to 95 per cent of the year, the Three Gorges dam is expected to operate at full capacity for only about half the year.

Another major advantage of combined cycle plants – particularly combined heat and power systems – over Three Gorges is flexibility. Combined cycle plants can be switched on and off as needed and are therefore well suited to satisfying peak or intermittent power demands. Large hydro dams, on the other hand, generate the most power in spring when demand is low. Three Gorges has the added difficulty of operating its 600-kilometre reservoir for flood control and navigation which means that the dam won’t always be able to meet power demands. Combined cycle plants have no such competing demands. The gas turbine can be run independently of the steam turbine, and both can be run either for electricity or for electricity and steam. Turbines can be plugged into new or existing transmission systems to suit varied industries, factories, university campuses, commercial buildings, municipal heating systems, apartments, shopping malls, and rural co-operatives.

Although China has abundant gas reserves, it has lagged behind other countries in exploration and development. Natural gas accounts for less than 2 per cent of the country’s energy supply. The government has begun to increase natural gas availability, through the construction of major new gas pipelines in Guangdong and Sichuan provinces, a natural gas pipeline that supplies over 300,000 users in Beijing, and a recently signed deal with Russia to transport gas from Siberia to China’s eastern coast. The country’s huge reserves of coal bed methane, which can be used to fire combined cycle gas turbines, are also being developed. And, the government plans to import liquefied natural gas, which has become more readily available since the Asian financial crisis lowered demand in Japan and South Korea.

Natural gas is critical for China’s energy future, according to energy experts such as William Chandler, the director of the Battelle Memorial Institute. He and Chinese energy researchers estimate that by 2020 China could meet up to one-third of its power generation needs with natural gas by manufacturing gas turbines domestically and developing low-cost natural gas sources. The cost would be less than if coal were used. Suppliers of combined cycle plants are also expecting a boom within the next five years, once gas supplies are adequate.

In the booming province of Guangdong, bordering Hong Kong, ABB, a Swiss manufacturer of combined cycle plants, has installed three combined cycle plants, all of which run on alternate fuels. ABB’s 280-MW Foshan plant, owned by the Shakou Power Plant Company and financed by a group of Hong Kong banks, supplies electricity to Foshan city. Near Shanghai, ABB’s 150-MW combined cycle cogeneration plant provides electricity and steam to the Bao Shen Steel Corporation.

The obstacles to cleaner, affordable energy alternatives are not technical, economical, or environmental; they are bureaucratic and political. With every five-year plan, well-entrenched hydro, coal, and nuclear power bureaucracies do battle with one another for expansion funds – despite the growing evidence of poor performance and public opposition. Jeff Logan of Battelle’s Advanced International Studies Unit reports that significant barriers exist, including artificially low prices for natural gas, which inhibit further exploration and development of gas supply infrastructure, biased leasing of potential fields, and perverse allocation of gas to favoured industries.

"Market reform is China’s most powerful policy tool," the Batelle study concludes and recommends that the government "take advantage of the current period of restructuring bureaucracies to establish an even more rational and market-based power system. Competition in the power supply sector is becoming more common in many countries because it lowers prices and allocates resources efficiently. China could also begin to consider a pathway to further competition in the generation of electric power."

Researchers at the Lawrence Berkeley Laboratory at the University of California and the Chinese State Planning Commission came to the same conclusion. In a 1996 study of China’s cogeneration development and market potential, they found that the primary market barriers for cogeneration were institutional and a direct result of a monopolistic utility sector and regulated heat prices that are too low to cover production costs. They concluded that China needs an energy policy that allows independent power producers to receive a fair price for their heat and power.

Three Gorges Probe welcomes submissions. However, it is not a forum for political debate. Rather, Three Gorges Probe is dedicated to covering the scientific, technical, economic, social, and environmental ramifications of completing the Three Gorges Project, as well as the alternatives to the dam.

Publisher: Patricia Adams Executive Editor: Mu Lan ISSN 1481-0913