China’s Power Sector Reforms: Where to Next?

Abstract At the International Energy Agency (IEA), we believe that access to modern energy services is essential for the social and economic development of every country and, more broadly, of the global system. Without reliable and affordable electricity, children have no light to study, food spoils, medical care cannot be provided, and the motors that drive industrial productivity remain idle. Making this service available, however, can be difficult – especially in a vast nation like China where more than 1.2 billion people live, dispersed over 3.7 million square miles of land covering mountains, deserts and remote rural areas. China’s rapid pace of economic growth has created a strong appetite for electricity. In the last two years alone, the country has added nearly 117 GW of capacity – approximately equal to the total electricity capacity of France or Canada. No other country has been able to mobilise its resources to achieve such astounding expansion, particularly after initiating reform and unbundling its power sector. The government of China should be commended for this impressive feat. Despite this notable progress, challenges remain. China must be able to balance the pressures of increasing electricity demand with growing concerns about energy security and environmental impact. Its regulatory framework needs to be designed to ensure investment, encourage energy efficiency, minimise cost and reduce emissions – a very tall order in any circumstance! A number of IEA countries have developed energy policies in pursuit of similar goals. Their results have been mixed, but many lessons have been learned. This book aims to draw insights from IEA countries’ experiences that may be useful for policy makers formulating China’s next steps in power sector reform. At the same time, IEA countries can benefit from this analysis of China’s experience in building one of the world’s largest power sectors. In this increasingly global society, the more we learn from each other, the better we can prepare for a sustainable energy future.
Date 2006
Publisher International Energy Agency
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7.2 Recent Structural Reforms in the Sector