Identifier
Created
Classification
Origin
09CHENGDU114
2009-06-29 11:54:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Chengdu
Cable title:  

SOUTHWEST CHINA: SICHUAN OFFICIALS ON GREEN ENERGY

Tags:  ECON ENRG EINV SENV CH 
pdf how-to read a cable
VZCZCXRO1536
RR RUEHGH RUEHVC
DE RUEHCN #0114/01 1801154
ZNR UUUUU ZZH
R 291154Z JUN 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 3274
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 3949
UNCLAS SECTION 01 OF 03 CHENGDU 000114 

SENSITIVE
SIPDIS

DEPT FOR EAP/CM, EEB/ESC

E.O. 12958: N/A
TAGS: ECON ENRG EINV SENV CH
SUBJECT: SOUTHWEST CHINA: SICHUAN OFFICIALS ON GREEN ENERGY

REF: BEIJING 1521, CHENGDU 062, CHENGDU 110

CHENGDU 00000114 001.2 OF 003


UNCLAS SECTION 01 OF 03 CHENGDU 000114

SENSITIVE
SIPDIS

DEPT FOR EAP/CM, EEB/ESC

E.O. 12958: N/A
TAGS: ECON ENRG EINV SENV CH
SUBJECT: SOUTHWEST CHINA: SICHUAN OFFICIALS ON GREEN ENERGY

REF: BEIJING 1521, CHENGDU 062, CHENGDU 110

CHENGDU 00000114 001.2 OF 003



1. (SBU) This cable contains sensitive but unclassified
information - not for distribution on the internet.




2. (SBU) Summary: Sichuan has rich developed and potential
hydro and biogas power resources, but far fewer solar and wind
energy development opportunities, according to a recent
presentation on "new energy" by the Sichuan Development and
Reform Commission (SDRC). Nonetheless, Sichuan is expanding its
alternative power generation capacity to include solar and wind
projects concentrated in a few select areas. Although
hydropower provides the majority of the electrical power output
in the province, the SDRC says that biogas power generation is
increasingly important in rural areas, and is emphasized in both
national economic stimulus plan and quake reconstruction
investments. What Sichuan's alternative energy expansion means
for potential investment opportunities remains unclear. The
Sichuan New Energy Promotion Association, established in
December 2008, is -- according to its statutes -- mandated to
assist with linkages between potential investors and local
partners but, to date, we have seen little evidence of
substantive action. End summary.



Hydropower will remain primary energy source

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3. (SBU) During a recent meeting with us, Wu Jianzhong,
Deputy Director of the Energy Division of the Sichuan
Development and Reform Commission, provided an overview of
Sichuan's "new energy" projects, noting that the province's
strengths lie in hydro and biogas electric power production. He
stressed Sichuan's extensive potential hydropower capacity, with
781 rivers that individually each could produce more than 1
gigawatt (GW) of power. In total, he said, the province has 144
GW of potential (yun cang liang) hydropower, 120 GW of which can
be technically exploited, and 103 GW that can be economically
exploited. Wu said Sichuan exploited 35 GW of electric power in
2008, of which 22.5 GW came from hydropower. Provincial
statistics show that these numbers are roughly unchanged from
the previous year. Sichuan, however, is actively expanding

hydropower production. In addition to about 50 small-medium
hydropower projects specified in the current Five Year Plan
(2005-2010),two major additional hydropower stations on the
Jinsha River, Xiluodu and Xiangjiaba, are currently under
construction. When completed, their combined capacity is
estimated at 18.6 GW. (Note: China's Ministry of Environmental
Protection on June 11 ordered the suspension of two other
hydropower stations on the Jinsha River, at Ludila and
Longkaikou, citing inadequate review of their environmental
impact.)



~but emphasis on bio-gas power generation is increasing

-------------- --------------


4. (U) Although still occupying a very small proportion of
Sichuan's overall electricity production, Wu emphasized the
expansion of biogas energy projects throughout the province. Wu
said biogas is particularly beneficial to Sichuan's farmers who
can, with an 8-10 cubic meter biogas pit, save 800 to 1,000 RMB
(USD 117-147) on fuel and 150 RMB (USD 22) on fertilizer
annually, significant amounts in rural Sichuan where per capita
incomes average just over USD 600 annually. By the end of 2008,
Wu said that roughly 30 percent of the 14.3 million rural
households that could set up biogas have already done so. A
separate consulate contact who has installed biogas power
generation on his farm in Sichuan told us that an individual
farmer could install a pit big enough for his needs, about 12
kilowatts (KW),for between 2,000 - 4,000 RMB (USD 293 - 585).




5. (U) The May 2008 earthquake caused damage to 520,000 biogas
pits, about 200,000 of which have been repaired to date, Wu
reported. Beyond these immediate repair needs, the $586 billion
national financial stimulus plan and earthquake reconstruction
funding are both playing a role in Sichuan's biogas expansion.
Out of the 3 billion RMB (USD 439 million) allocated by the

CHENGDU 00000114 002.2 OF 003


central government for national biogas development, Wu said,
Sichuan is receiving support for an additional 120,000
households to benefit from biogas, but did not provide further
specifics. He also cited a $1.2 billion World Bank, French
Development Agency and International Agricultural Development
Fund project for quake reconstruction, of which $85 million is
for biogas development.




6. (U) Sichuan has set up larger-scale biogas distribution and
power production, Wu noted. Many townships have biogas service
stations that are able to provide sufficient biogas for 300-500
households. Additionally, Sichuan has five biogas electric
power stations that each produce 24 - 30 megawatts. These power
stations can be transmitted electricity to the power grid. Wu
said that economic electric power generation will help encourage
development of biogas power that utilizes some of the province's
11.5 million tons of animal waste and approximately 5 million
tons of wheat straw.



Ethanol Plans Still on the Books

--------------




7. (U) In addition to biogas, Sichuan is developing its
biodiesel and ethanol fuel capacity, Wu reported. On the
biodiesel front, the province relies on two types of trees grown
in Panzhihua and Liangshan in the south for feedstock. He
referenced a plan by the provincial government and China
National Petroleum Corporation (CNPC) to jointly produce 100,000
tons of bio-diesel and 600,000 tons of ethanol fuel annually.
Wu said this would include a new forestry base with an area of 9
million mu (600,000 hectares). (Note: This plan appears to be
based on an agreement that the state-run China Daily newspaper
reported was signed with CNPC in late 2006.) He also said that
Sichuan enjoys "good conditions" for expanding ethanol fuel
production. Annually, 30 percent of the 17-18 million tons of
annual sweet potatoes produced in the provinces rot before they
can be consumed.



Solar and wind potential relatively weak, but still expanding

-------------- --------------
--------------




8. (SBU) Wu emphasized that despite Sichuan's relatively
limited potential for solar and wind power generation, they are
nonetheless putting efforts into development. He said the
autonomous prefectures of Ganzi, Aba, Liangshan, and Panzhihua
each have 1,500-2,700 hours of sunshine annually. Sichuan
currently has 46 photovoltaic power stations, but Wu did not say
how much power these stations generated. He noted that 109,000
households in Ganzi benefited from solar power in 2008, while
11,000 households in Aba utilized solar stoves. Several local
press reports in recent months have reported on new solar power
station projects, including one in Xichang, Liangshan's main
city, and another in Daying. (Note: Wu's discussion of areas
with solar energy potential was somewhat more expansive than
that described by a Dongfang Electric executive to Congenoff and
reported in reftel B.)




9. (U) Local media have also reported on Sichuan's increasing
involvement in producing inputs for the solar industry. A June
19 China Commercial News report describes Leshan, south of
Chengdu, as having become "China's Silicon Valley" due to the
large number of factories there producing poly-silicon for use
in photovoltaic technology. According to the article, Tongwei
Company is the biggest producer there, currently producing 1,000
tons annually and with plans to expand to 6,000 tons within
three to five years and become China's biggest poly-silicon
producer. Leshan's annual output of poly-silicon is expected to
more than double this year from 4,560 tons in 2008 to about
10,000 tons in 2009, the article continued.




CHENGDU 00000114 003.2 OF 003



10. (SBU) Sichuan has 3 GW of potential wind-generated electric
power, Wu said. The areas which are rich in wind include the
Anning River region in Liangshan autonomous prefecture, areas
along the Min River in central Sichuan, and the Ruoergai area of
Aba autonomous prefecture. A demonstration wind power station
is to be set up in Dechang County, Liangshan, with a capacity of
50 megawatts. If successful, similar projects will be
introduced in the other appropriate areas of Sichuan, Wu told
us.



Sichuan New Energy Promotion Association unimpressive so far

-------------- --------------
--------------




11. (SBU) Separately, a provincial New Energy Industry
Promotion Association (Sichuan Sheng Xin Nengyuan Chanye
Cujinhui),was registered as a non-government organization in
December, 2008, with the approval of the provincial government's
Economic Commission (Sichuan Sheng Jingji Weiyuanhui). (Note:
The Association's advisory and expert commissions' membership,
heavily represented by party leaders, government officials,
official research institutes, and state-owned enterprises,
indicates that it is "non-government" in name only.) According
to its statutes, it is tasked with providing consulting services
to both domestic and foreign enterprises to supply information
on Sichuan's overall new energy situation and assisting with the
establishment of cooperative linkages with potential local
partners. However, while its establishment is indicative of the
new priority placed on these industries, it remains unclear
whether it will play an active or substantive role. Its main
activities to date seem to have consisted of arranging visits by
several of its leaders to local energy enterprises, and its
leadership has so far remained unwilling to engage with our
Foreign Commercial Service, for example. It is possible that
the Association was set up by provincial leaders to help
position Sichuan to take advantage of central government
resources in support of green energy, rather than as a genuine
conduit for private sector investment.
BOUGHNER