SMALL HYDROPOWER IN CHINA

China is well known for its large hydropower
schemes, such as the Xaolangdi power station
on the Yellow River, which generates 1,800
megawatts (MW) of electricity, and the planned
power station of the newly completed Three
Gorges Dam on the Yangtze River, which will
generate up to 16,000 MW. However, China
has also attracted international attention due
to its small hydropower (SHP) development,
focusing on rural electrification.

Approximately one half of all commissioned SHP

plants worldwide are located in China. Although

the total feasible development potential of SHP

is approximately 100,000 MW throughout China,

the majority of the rapid recent development
has been located in the southeast and
southwest of the country. By the end of 2002,
China had installed 28,489 MW of capacity
through building 42,221 SHP plants. 

The unique features of China’s SHP policy can
be characterized by the following features:

■ its decentralized approach

■ its use of local grid structures (or mini-grids)

■ the specific policies and strategies it adopts,

particularly the overarching SHP policy of selfconstruction,

self-management and selfutilization

■ the popularization of a share-holding

investment system

■ its utilization of cost-effective SHP technology

and equipment, the use of indigenous

equipment manufacturers, and the

prioritization of training.

SHP now accounts for about 30 percent of
China’s overall hydropower capacity. Three
hundred million people in China now use SHP derived
electricity. The improvement in access
to electricity in remote rural areas has been
dramatic: 28 million people in China had no
electricity in 2000, and that figure had
dropped to 10.15 million by the end of 2002.
Nearly half of China‘s SHP generators are linked
to local mini-grids (especially in mountainous
areas), while only 10 percent are connected to
the national grid. The remainder of SHP stations
operate in isolation. Forty-four percent of
China‘s SHP projects fall into the sub-category
of micro-hydro, with capacity of less than 100
kW. Another 46 percent are mini-hydro, with a
capacity up to 500 kW. The larger SHP projects –
with a capacity between 500 kW and 25 MW –
make up the remaining 10 percent of the
projects, but account for 75 percent of the
electricity output.

The construction of SHP-based local grids to

serve specific rural supply areas is a unique

electricity supply system developed by China.

The rate of electrification in villages and rural

households rose from 78.1 and 65.3 percent

in 1985 to 97.7 and 97.5 percent in 2002,

respectively. The quality of electricity supply
was improved, and tariffs were reduced to be
equal with that of urban centres. There are
two types of SHP stations: those invested,
owned and managed by local government
and small Independent Power Producers (IPPs)
developed with private investment.

The rapid development of SHP in China can be
attributed to the following:

■ Preferential policies: The Chinese

Government introduced many preferential

policies for SHP, such as tax reductions,
soft loans/grants from government,
encouragement of private firms to invest
in SHP stations and policies protecting
water supply areas and property ownership.
The ratio of central government investment
in SHP to that of the private/individual
contribution is only 1:24.

■ Indigenous manufacturing capability: In

view of the fact that equipment costs form

the largest percentage of the total cost of SHP

development – unlike in large hydro, where
civil works generally takes a higher proportion
– the Chinese government decided to promote
local manufacturing in order to reduce the
overall cost of developing SHP stations.

■ Recognizing the advantages of SHP over
large hydropower: China has known for a
long time that SHP has its own peculiar
advantages that cannot be achieved
through large hydropower generation.

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Source: International Networking on Small Hydropower
International Networking on Small Hydropower
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