HOT|COOL NO. 3/2019 - "Big Markets: China and Poland


National Energy Agency (NEA) and Ministry of Finance (MoF) published the “Guiding opinions on the deployment of gas- fired distributed energy”, which accelerated the deployment of Co- and Tri-generation (gas CHP and CCHP) projects in China and implementation of subsidy schemes. In recent years, after subsidy schemes for gas CHP and CCHP projects have been removed (not renewed or never enforced), the implementation of these distributed energy projects has declined in many places across China. Despite this development, DH has become recognized as an important energy infrastructure to achieve low-carbon economies across China. As an example, NXITY was recently engaged to develop Smart Energy City (SEC) projects for Xiangtan municipality (the home town of Chairman Mao) in Hunan province. On its own initiative, Xiangtan municipality has already issued a citywide heat plan and are implementing local policies. This is a trend in several cities across central and southern China. DISTRICT COOLING DEVELOPMENT Energy consumption for building space cooling has tripled in China during the last decade. Today, this represents an annual electricity consumption of over 400 TWh. During a market study for the Asian Development Bank in 2016, we identified district cooling (DC) projects corresponding to a cooling supply of more than 4 GW or 6 TWh. This equals to approximately twice the DC supply in Europe, and just below the DC supply in Japan. However, this is a very conservative figure as many DC projects are defined as centralized cooling/air-conditioning systems which are not included in this figure. The development of DC suffers frommultiple misperceptions in China. DC is often defined as city-wide or district-wide cooling systems – similar to DH. DC is also often deemed inefficient due to the irregular and limited utilization by end-users cooling supply for i.e. hospitals, airports, CBD (central business district) areas, hotel clusters or even industry clusters (which are most feasible for DC), are often defined as centralized cooling/ air-conditioning (instead of more appropriate “distributed DC”, “small-scale DC” or simply “DC”). The term centralized cooling/air-conditioning is also used for an individual building with centralized cooling production, which makes it difficult to identify and extract statistics on DC. In the last decade, many DC projects have unfortunately failed in China. Professional gaps along the entire project value chain has resulted in over-dimensioned, poorly implemented and bad managed systems. In many cases, projects have been fully implemented despite slow load ramp-up, resulting in systems with low efficiency or even systems unable to operate properly. This has resulted in a wide-spread skepticism for DC in China. However, despite the challenges for DC in China, there are successfully implemented DC projects as well. Most of these projects are part of gas CCHP/Tri-generation schemes.

Qingdao HTDZ CCGT CCHP project Tri-generation/CCHP project with cooling supply for a data center and industries in Qingdao high-tech development zone.

Project owner:

Qingdao Kaiyuan Group

Implementation period:


Owner’s Engineer: Design institute:



Project information: i) Implementation of; - 86 MWel CCGT CCHP.

- 40 MWcool (DC network and substations). - 111 MWheat (DH network and substations). - 11 MWsteam (Steam network and substations). ii) Cooling supply to local Data Center (200 TWhcool/a). iii) Steam supply for local industries. iv) DH supply for comfort heating in the industry zone. WHAT IS THE FUTURE OF DISTRICT ENERGY IN CHINA? District energy will ultimately play a different role in an electrified and digitalized energy sector. Utilization of low- grade industrial excess heat, distribution of low-temperature heat from solar and geothermal sources, integration of RE- driven compressor heat-pumps and production & consumption flexibility (storage) for MES, are likely to become main features of DH systems in the future. We believe DH - and DC - systems to a great extent will be represented by relatively small-scale distributed systems, integrated with electricity grids and gas infrastructure. DC can furthermore play an important role in reducing the GHG-emissions by efficiency gains due to scale advantages and as a not-in-kind solution for HFC (refrigerant) phase-out. Even though the transition towards “smart” integrated district energy systems has begun, 2nd generation DH systems (with supply temperatures in the range of 100-130 C) will still be developed in China in the coming decades. There is still lack of cross-sectoral planning, regulations and policies for a rapid transition of the district energy sector. However, the market is huge so there will still be plenty of opportunities to develop technical and financially feasible modern district energy schemes.

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