China to Upgrade Rural Power Networks

The Chinese government has announced plans to comprehensively upgrade the nation's rural power networks in the coming few years. While some energy experts as well as economists see this as yet another government attempt to boost rural area development and narrow the gap between cities and rural areas, they are also concerned whether the plan will achieve its goals. Zhao Jianfu has more.

The plan, adopted at a recent executive meeting at the State Council, aims to launch a new round of power grid expansion and upgrade China's rural areas in the next five years to further promote economic development.

Premier Wen Jiabao said environmentally friendly and technologically advanced rural power networks should cover most of the nation's rural areas to improve power supplies for residents during China's 12th Five-Year Social and Economic Development Plan period which starts this year.

Participants at the meeting also hope the plan will reduce rural power prices which are higher than those in cities.
Liu Boqiang, Director of the China Center for Energy Economics Research at Xiamen University, says the government has put a lot of effort into lowering rural power prices, but high building and maintenance costs for power grids in rural areas has prevented more affordable ones.

"Setting a unified electricity price in all sectors of the urban and rural areas should be realized as soon as possible in the near future since it's been put forward in a serious manner. In fact, the cost of electricity in rural areas is much higher than in cities, because the networks are scattered across a vast area. The implementation of a unified price is a great support for rural area development."

Lin Boqiang believes increasing the capacity of power supply in the country's remote interior is necessary, because it will guarantee energy for the development of underdeveloped areas.

"As a result of the overall economic development, the power grid must be adequately upgraded to meet the growing demand. Modernization in rural areas cannot be realized without electricity. The increased demand for electricity has positive effects on the electricity industry as a whole. Also, modern, advanced and energy-efficient power use will contribute to China's effort to transform itself into a low-carbon economy in the future."

But other experts doubt if the plan will be policy efficient and actually help China's rural development.

Han Xiaoping, Chief Information Officer of the China Energy Network, is one of them.

"We have actually done similar things in the recent past. For example, we have carried out "upgrading" plans to stimulate domestic consumption and to ultimately boost the economy. We have even issued incentive policies to encourage rural residents to buy home appliances in the hope of "activating" consumption. But the fact on the ground turned out to be that there were not many supposed potential consumers out there except some elderly people. These are traditionally the group of people who don't spend much even on things that are designed to make their lives easier and more comfortable. By the time those incentives were offered to them, they already had the appliances they needed, so, obviously, those plans did not reap as much as expected."

Han is also concerned that large-scale power grid expansion may be challenged by financial problems.

According to the power upgrade plan, up to 80 percent of the 300-billion-yuan investment will come from bank loans.
Han says based on market prospects in the intended rural areas, it would be extremely difficult for the state-owned power companies not to operate in the red.

"The state power grid is already in huge debt. The result of upgrading grids will be that there is no way companies can pay back the loans. Spending money may not be a question, but paying back the loans surely is."

Given the high cost-low usage bottleneck, Han suggests other less costly but environmentally friendly energy sources such as wind power, small-scale hydropower and any other renewable energies.

For CRI, I'm Zhao Jianfu.