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China's five power giants, including China Huaneng Group and China Huadian Corp. among others, are mulling over natural gas-fueled power plant projects in Tianjin. By the end of 2015, there would be no less than five natural gas-fueled power plants built up in Tianjin, according to report by China Securities Journal on Thursday.
Insiders believe that the gas-fueled power generation is to phase in fast development stage during the 2011-2015 period on a growing share of natural gas in primary energy consumption, the advantage of gas-fueled power generation in environmental protection, and intensive incentive policies released by the central government since the end of 2012.
The massive construction of gas-fueled power plants is also expected to create large demand for gas turbines and heat recovery boilers, which are estimated to have market value of 15 billion yuan.
-- Five power giants gather in Tianjin for gas-fueled power projects
Tianjin is vigorously promoting gas-fueled power generation projects with one project under construction and four approved, among which one project is operated by Huaneng Group and the other three by China Huadian Corp., said ICIS C1 Energy.
Apart from this, there are 7 more gas-fueled power projects that have got the government permission, and all are invested by China's five power giants, including China Huaneng Group, China Datang Group, China Huadian Corp, China Guodian Corp, and China Power Investment Corp.
The project under construction in Tianjin is reconstruction of the Tianjin Chentangzhuang thermal power plant. It is designed with two sets of 900MW gas-fueled co-generation units, and expected to complete construction in the first quarter of 2014.
Insider from Tianjin Development and Reform Commission noted that the gas source for the power projects would mainly come from natural gas transmitted from CNPC's pipelines, and would have supplementary gas resource of liquefied natural gas imported by CNOOC, the parent of CNOOC Ltd. (CEO.NYSE; 0883.HK) at Tianjin port.
-- Gas-fueled power generation opens huge market
As China's domestic natural gas output increases year by year, the stable gas supply has made natural gas an important supplementary to thermal power generation. Compared to traditional thermal power generation, the carbon dioxide emission of gas-fueled power plants is 42 percent of that in a thermal power plant, and its nitrogen oxide emission is less than 20 percent of that in a thermal power plant. Besides, a gas-fueled power plant usually occupies 54 percent land area of a thermal power plant, and therefore is suitable to be built in power-thirst downtown area for on-site power supply.
Since the end of 2012, China intensively released policies to encourage gas-fueled power generation. The amended Natural Gas Utilization Policy released in December of 2012 gives allowance to gas-fueled power generation, which was forbidden in the 2007 policy.
In January of 2012, the State Council, China's cabinet, put up in the 2011-2015 Energy Development Plan to focus on gas-fueled power generation. By the end of 2015, China targets to have 56 million kilowatts of gas-fueled power generating capacity with an average annual growth of 16.2 percent during 2011-2015. Meanwhile, China plans to add gas-fueled power plants with combined capacity of 30 million kilowatts in 2011-2015.
Xiangcai Securities pointed out that China may offer on-grid electricity price subsidy and favorable tax rate to support expansion of gas-fueled power generation in the country.
China International Capital Corp. believed that construction of gas-fueled power plants would create huge demand for gas turbines and heat recovery boilers with market value estimated to reach 15 billion yuan during the 2011-2015 period, benefiting domestic gas turbine prodders like AVIC Heavy Machinery Co., Ltd (600765.SH) and Shanghai Electric Group Co., Ltd (601727.SH) and heat recovery boilers producers like Dongfang Electric Co., Ltd (6001875.SH) and Suzhou Hailu Heavy Industry Co., Ltd