According to a Chinese government source, China intends to install over 300 million smart meters in 2015, a massive increase of 730% from the 36 million smart meters installed in 2011.  China’s utility giant, the State Grid Corporation of China (SGCC), will invest $47 billion in power grid construction over the next five years.  About $100 million of this amount will be used to advance the smart grid technology.

The news media only supplies numbers, so it’s hard to know what the Chinese players are actually doing now.  I feel that the real story behind China’s smart grid program would be even more impressive than the published figures.

Chinese players are engaging across all aspects of the smart grid space: power generation, transmission, substation, distribution and consumption, by adopting advanced information-gathering and intelligent information-processing technologies.  While there are many different views in China’s development in smart grid, my focus is on the utilization of information technology, automation, and intelligent interactivity in components of the power grid infrastructure from utilities to consumers.

The overall goal of the Chinese smart grid effort is to enhance the capabilities and levels of existing elements, including:

• Power transmission equipment utilization
• Network security and reliability
• The quality of electricity service
• Power grid efficiency

More specifically, on the transmission side, the major goal is to implement sensors to achieve real-time monitoring of transmission lines.  At the substation level, Chinese parties believe that smart grid technology can automatically adjust power levels and achieve rapid fault resolution in intelligent substations, through intelligent switches and transformers.

On the distribution side, Chinese players expect that real-time monitoring, intelligent power distribution, and other networking applications can achieve more rapid failure restoration, a more reliable electricity supply, and visualized operations management tools.  Eventually, these elements could offer advanced functionality in information collection and analysis, intelligent electricity load shifting, and remote meter reading applications to link two-way smart meters.

Recently, a bunch of Chinese players, including RXPE Sieyuan NARI, XJ Electric, Clou Electronics, Holley, and Ningbo Sanxing, have shifted their business focus to pursue huge market potential in the domestic smart grid markets.  At the same time, it’s clear that China could be more aggressive on the global stage.  Huawei announced that it will launch in the U.K. smart meter market after signing a joint venture deal with technology provider Landis + Gyr.  SGCC, meanwhile, has signed smart grid deals in the Philippines, Brazil, and Portugal.    China has also stepped up efforts to become part of the global community in seeking smart grid standards.  For example, China recently insisted on establishing a new committee under the International Electrotechnical Commission (IEC), with the U.S. and European representatives approving this request.  China is signaling its intent to get off the sidelines and instead become directly engaged on the standards front.  That’s an appropriate move, as China becomes a center of global smart grid innovation.

Earlier this month, the government of Hawaii and Korean partners (the Republic of Korea Ministry of Knowledge Economy and the Korea Smart Grid Institute) signed a letter of intent to pursue mutual interests in smart grid development in the Hawaiian Islands.  While the project scope and specific practices for the Hawaii project are not clearly defined in the announcement, it’s safe to assume that projects included in the Jeju Island smart energy program, including smart meters, renewable energy development, and electric vehicles, would be implemented in Hawaii.

Hawaii comprises more than 120 scattered islands and is far from the nearest mainland (1,860 miles).  Electricity is expensive, and Hawaii is the most fossil fuel-dependent state in the nation.  Thus, the need for switching to renewable sources of energy is as much an economical imperative as it is an environmental one for the islanders.

With regards to policy, Hawaii is deeply committed to developing a clean-energy economy.  The island state has made great progress in aligning regulatory policies with clean energy goals; encouraging development of next generation, clean energy technologies; and deploying renewable generation and grid infrastructure.  As a result, the state has been building energy efficiency, increasing photovoltaic capacity, and creating green jobs.  The following figures show how much Hawaii has been deploying clean-energy technologies relative to the other 49 states.

Further, the state has bold goals: to achieve 70% of its energy from renewable sources by 2030.  Hawaii aims to serve as a clean energy model for the U.S. and for the world. As the graph below indicates, 66 renewable energy projects are currently in progress and more are in development in bio-energy, geothermal, hydro, solar, and wind, etc.

I’ve written several blogs about the Jeju projects.  As of now, over 170 Korean companies are engaging in specific projects, including advanced metering infrastructure (AMI), electric vehicles, solar and renewable generation, and energy storage test beds.  In the case of AMI, 6,000 household are participating in a smart meter test. The Ministry of Knowledge and the Smart Grid Institute are leading the project with investments totaling more than $240 million between 2009 and 2013.

In fact, South Korea is an exceptional country. With a sole utility service provider – KEPCO – and its current advanced electricity grid capabilities, South Korean camps are targeting oversea markets, rather than domestic markets, from the first phase.  Focusing on overseas smart grids markets will help Korean players find more lucrative opportunities.  Thus the partnerships with Hawaii should help Korean providers gauge their current capabilities by applying Jeju’s outcomes in a similar environment in the United States.  Jeju and Hawaii both have clean, year-round, and renewable energy resources, including abundant sun and wind.  Tourism is the major industry in both places, and Hawaii and Jeju both hope to maintain their unique ecosystems with clean energy sources.

Japanese partners already initiated a joint U.S.-Japanese smart grid demonstration project in November, 2011 on Maui. Those two projects with Asian players could make progress to achieve Hawaii’s goals.

Japan’s commitment to the smart grid has been impressive, in that Japan has aggressively unfolded its Smart Community projects around the globe, working through close collaborative relationships.  In the Smart Community vision, an energy management and control hub (known as the control center) facilitates and directs energy flows in a given domain (typically a community comprising homes, commercial buildings, and EVs).  The main purpose of the system is to efficiently manage demand and supply and demands to ensure a steady and reliable power system, by applying information and communication systems.

At the recent Asia Smart Grid 2011 and Singapore International Energy Week events, held in Singapore, many speakers from Asian countries presented national plans and affirmed their commitment to realizing an energy-efficient, intelligent grid.  Governments and businesses in Asia now find themselves struggling to keep pace with the new trends in global clean energy development.  I was most encouraged by the Smart Community efforts now moving forward in several countries, most notably Japan.

The Smart Community emphasizes the utilization of renewable energy sources.  For instance, renewable energy sources from solar PV-generated power is the main contributor to cut CO2 emissions, and plays a key role in charging EVs at residences.  This integrated power generation and management structure lies at the core of the Japanese Smart Community.  As a result, sophisticated and calibrated weather forecasts for solar power generating stations are married to analysis of energy demands and consumption patterns, all coordinated through the control center.

After the Japanese earthquake and tsunami disaster in March, 2011, Japan has been reforming its national energy policy based on the pillars of energy security environmental protection, and efficient supply.  Thus, smart grids and cleantech are a straightforward rationale to achieve Japan’s goals.  Constructing a more energy-efficient environment, less vulnerable to natural disaster, is a crucial target for Japan. While the country is attempting to solve its domestic energy issues brought forth by the disaster, Japanese businesses also see an opportunity to lead in tapping new opportunities by deploying smart grids on a global scale.  Several South East Asian countries as well as China and India are now working closely with Japanese partners.

Below are the Smart Community projects implemented by Japanese companies and agencies across the region.

• China: Eco-city and Smart City projects in Tianjin, Guangzhou, and Gongqingcheng / Smart Home projects in Beijing and Shanghai
• Vietnam: BEMS and water treatment projects
• Malaysia: Smart City projects in several urban areas
• Singapore: EV Charging Systems, Building Energy Management Systems, and comprehensive energy management services
• Indonesia: PV for homes and industrial parks, Energy Storage Systems, and Gas cogeneration

In the West, NEDO and Japanese smart grid operators are launching Smart Community projects in the United States (New Mexico and Hawaii) and France (Lyon).  These projects have the potential to expand the global presence of Japanese companies through a bold and innovative approach to Smart Communities.

China is one of the strongest proponents of electric two-wheel vehicles, mainly electric bikes.  Sales have been gradually taking off since 2004, when the sales were about 40,000 units per year.  Since then, over 100 million have been sold, and more than 20 million are sold each year.  E-bikes have become the most popular mass-produced alternative vehicles in China.

Nevertheless, many Chinese cities have decided to ban these machines.  Shenzhen city instituted an e-bike prohibition last June and plans to continue it through at least December.  The trial ban could be extended after reviewing the effect on safety for pedestrians – the most salient reason for the law.

Traffic accidents involving e-bikes have been worsening.  There are over 500,000 e-bike riders in the city, and according to the Shenzhen traffic bureau, 64 people were killed and 233 were injured in 268 accidents caused by e-bikes in 2010.  The vehicles accounted for 15.7% of all road accidents.

This number indicates that e-bikes are more dangerous than other vehicles.  But that’s not necessarily true.  The driving habits of e-bike owners are one reason for the high level of accidents.  Riders are notorious for ignoring traffic regulations, riding without helmets, and breaking the speed limit.

What’s more, scooters are often sold as e-bikes, which do not require registration or licensing.  Many of the victims involved in e-bike crashes are vulnerable, subject to hit-and-run riders and often unprotected by laws or by health insurance.

Many blue collar workers, couriers, deliverymen, laborers, and students rely on e-bikes for their primary means of transportation.  Given the conditions and usage patterns, e- bike bans have a heavy impact on their daily lives and their livelihoods.  According to Chinese news reports, e-bike riders are reluctant to criticize the bans because policymakers don’t consider their circumstances and their needs.

Riders have also complained about unrealistic traffic laws affecting their machines.  The speed limit of 20 kilometers per hour (12 mph), and weight restriction of 40 kilograms (88 lbs), were set as national standards in 1999.  Compared with other nation’s regulations, Chinese people strongly feel that 20 km/hr is too slow.  (Other limits include 30 km/hr in Singapore, most of Europe at 25 km/hr, 31 km/hr in the U.S., and 24-25 km/hr in Japan and Korea)

Chinese experts also point out that 40 kg is also behind current capabilities and components added in the current fleet of e-bikes produced in China.

Chinese consumers will likely continue to ride heavier e- bikes with higher speeds.  In general, bikes at 35-40 km/hr and 50 kg in weight, at a price of around RMB 2,500 ($390), are the popular levels that consumers in China are seeking.  In the meantime, a realistic effort to create effective norms would help to achieve the government’s original goals for e-bike penetration.  With public hearings and listening to public opinion, I expect that the re-designed program could be the step to be user-friendly and eco-friendly machines that also ensure public safety. 

Pike Research’s upcoming report, “Electric Two Wheel Vehicles in Asia Pacific,” will examine these issues along with market trends and forecasts for the region.