1.
The three phases of development
Rural hydro in China has developed
in step with the overall social and economic progress in
China. The development of rural hydro can be divided into
three phases.
(1)The first phase: SHP is mainly
used for domestic lighting£¨1950s¡ª1970s£©
In this period from the founding
of the People¡¯s Republic of China in 1949 to the primary
period of reform and opening up, rural hydro was mainly
developed as a solution for domestic lighting for rural,
hilly and poor areas. SHP, small hydropower, was essentially
developed under the mode of a planned economy. With the
guidance and encouragement of government policy, the local
government and rural population were motivated to build
up SHP, thereby making possible substantial developments
in rural hydro.
Before 1949, the exploitation of
SHP was rather backward in China. The earliest SHP station
was the Guishan SHP Station at the Danshui River tributary
in Taiwan in 1904 with an installed capacity of 500 kW.
In mainland China, the first SHP station was Shilongba SHP
Station near Kunming in Yunnan province. Up to 1949, the
installed capacity of all the hydro power stations in China
was over 360 MW, and the installed capacity per capita was
less than 1 W, with an annual power generation of 1.2 billion
kWh. There were only 52 SHP stations each with an installed
capacity below 500 kW, totaling 5,916 kW in all.
After 1949, with the development
of agriculture and rural hydro projects, SHP advanced quickly.
The National Agricultural Development Program issued in
the 1950s pointed out£¬¡°Wherever appropriate to develop hydro
projects, try every possible way to construct medium and
small hydropower stations so as to gradually solve the problem
of rural energy supply.¡± Since the 1950s, a large number
of SHP stations were built nationwide. By the end of 1960,
8,975 SHP stations had been built, with installed capacity
of 252 MW. The 1950s were the initial period of rural hydro
and electrification. Its features were mainly to supply
energy for domestic lighting and agricultural by-products
processing. The local population called rural hydropower
a ¡°night pearl¡±. At that time, the installed capacity of
the SHP stations was very small, with an average of 28 kW
only, and most of them were in isolated operation. The equipment
was simple, mainly adopting wooden or wood-iron turbines
produced by agricultural machinery factories. These were
run by the local people, and financially and technically
aided by the government. Some SHP stations of bigger installed
capacity were essentially invested and built by local governments.
During the 1960s, the State (national)
grid developed rapidly, and extended to the suburbs and
rural areas. Some isolated SHP stations were substituted
by the State grid and others were abandoned; the total installed
capacity and rate of development of SHP therefore decreased.
However, there was still a large potential for development,
owing to the demands of industrial and agricultural growth
and improvement in people¡¯s living standards. The annual
average installed capacity reached 58 MW, and the definition
of SHP was upgraded to refer to hydropower stations with
installed capacity of 3,000 kW.
In 1969£¬the State Planning Commission
held a ¡°Meeting on Small Hydropower Projects for the Hilly
Areas in South China¡± in Yongchun county, Fujian province
and some policies were worked out including ¡°Mainly small-scale,
run by the local people and with locally-made equipment
¡±, together with the incentive policy of State assistance
in funding and materials for SHP development. Thus, SHP
exploitation was formally listed in the national development
plan. The implementation program of small basin development
and coordinated distribution of local equipment manufacturing
were proposed, thereby promoting the large-scale development
of SHP. Afterwards, the State set timely measures to protect
and assist SHP with funds, technology, key materials, and
so mobilizing everybody¡¯s initiative in constructing SHP
stations.
Then, in 1975, 1978, 1979 and 1980,
national meetings on SHP were conducted respectively in
Guangzhou, Wuchang, Beijing and Chengdu to summarize the
experience and problems in various phases, thus pushing
forward SHP development. The definition of SHP was upgraded
to 12 MW, and the average annual increase in installed capacity
was 580 MW, with a maximum of 1,120 MW in 1979. In this
period, SHP supply was used for domestic lighting, processing,
drainage, irrigation and township enterprises. In the whole
country, there were over 60 turbine and complete package
manufacturers with an annual production capacity of 1 million
kW. Serialization of the turbine products from 250 kW to
12,000 kW was prepared. Automatic regulation of turbine
speed could be performed in key stations. Some counties
with fast SHP development formed local SHP-based 35 kV grids.
SHP stations developed from isolated operation to connected
operation with unified dispatching. During this period,
overall surveys and investigations were carried out for
SHP resources, essentially clarifying the exploitable SHP
potential in China.
After some 30 years of SHP exploitation
since 1949, SHP supplied power to over half of the territory
for domestic lighting, thereby solving the electricity supply
problem for 300 million people.
(2) The second phase: SHP is mainly
used for poverty-relief in poor areas£¨1980s & 1990s£©
Since the wide application in China
in 1980 of the contract system of responsibility linked
with production, tremendous changes took place in the rural
economy and great achievements were made. Electricity demand
increased with economic development, living standards improved
and there was a boom in township enterprises. This led to
a sharp imbalance between power demand and supply. The severe
shortage of electricity became the main obstacle to the
development of the rural economy. In order to meet the needs
of rural development and to quicken the pace of poverty-relief
in the rural areas, the State decided to speed up the rural
electrification program, and to include it in the two key
strategies of national agricultural modernization and national
energy construction.
In Nov. 1982, with the personal
support of Deng Xiaoping, the central authorities proposed
that wherever SHP is available, SHP should be developed,
putting the rural electrification program at the core of
resolving the poverty-relief issue in remote, minority,
old revolutionary and hilly areas. The State Council issued
a document to publicize the 100 counties for primary rural
electrification. In all, 100 million Yuan was allocated
for subsidies every year and the 100 counties for rural
electrification were to be completed by 1990. SHP development
started to be included in the rural electrification program.
After years of efforts, the progress of the pilot counties
for rural electrification was swift. By the end of 1988,
48 counties reached the target in advance and passed inspection.
By the end of 1990, the first batch of 109 counties had
passed inspection for primary rural electrification.
With the advancement of rural electrification
counties, the rural hydropower scope increased and more
key SHP stations appeared. The definition of SHP was increased
as well, from installed capacity of 12 MW to 25 MW. Local
grids were established, with around 78% of the capacity
in connected operation. The previous defect of isolated
operation was overcome and unified dispatching set up at
the county level. Furthermore, reservoirs were built at
many cascade stations, thus increasing regulating capacity.
The management system and equipment were improved constantly.
Generally speaking, local SHP corporations at the county
level were created and efficiency increased. By the end
of 1988£¬the installed capacity of SHP in the whole country
reached 11,790 MW£¬with annual power generation 31.6 billion
kWh and 683,600 km of high voltage transmission lines£¬1.52
million km of low voltage transmission lines and total transformer
capacity of 44.413 million kVA. In the whole country, 717
counties were mainly supplied by SHP. With the development
of SHP installed capacity and expansion of the local grids,
SHP in China became a new sector with unique business features.
In the 1990s£¬to cope with the opening
up and reform policies as well as local economic development,
SHP leapt forward in scope, management, policies, science
and technology. The features were: based on the foundation
of continuous construction of SHP stations, emphasis was
placed on key medium-size hydropower stations. The definition
of SHP was increased from 25 MW to 50 MW installed capacity.
The trend was from single SHP stations to cascade developments
of a whole basin. Based on improving the county grids, local
trans-county grids started to develop. The voltage grade
increased from 35 kV to 110 kV. In some regions, substation
projects of 220 kV were constructed.
The second batch of 208 (versus
200 in the plan) counties for rural electrification was
constructed based on the experience of building the first
batch. In 1995, the implementation of the third batch of
300 counties for small and medium hydropower based on rural
electrification was started. In terms of management, a shareholding
system was adopted, setting up the modern enterprise system
of ¡°Clear ownership of property and responsibility, separation
of government and enterprise, plus scientific management¡±.
In some areas, based on local grid construction and basin
exploitation, a group of regional power corporations and
basin development groups with major ties of property linkage
and production cooperation were set up, having multi-layer
structures, and features of parent and subsidiary company
as the main entity. Funds were collected for developing
SHP stations and the capital-raising mechanism has been
transformed. The advantages of having a cluster of entities
were brought into full play, so as to realize a mutually
complementary effect, increase efficiency and consolidate
the SHP sector.
By the end of 1996, the total installed
capacity of all power stations under the Chinese Ministry
of Water Resources was 24.295 million kW, of which hydropower
accounted for 21.643 million kW. Of this total, two sites
were of large hydro with installed capacity of 1.225 million
kW, 21 sites medium hydropower with installed capacity of
1.217 million kW, and 45,174 SHP sites with installed capacity
of 19.201 million kW, representing 24.3% of the exploitable
resources. The annual power generation from SHP amounted
to 62 billion kWh. Nationwide, there were 1576 counties
with SHP stations built, of which, 780 counties representing
48% of the total land area and with a population of 300
million mainly depended on SHP supply. With the progress
of small and medium hydropower, the local grids managed
by the hydropower sector also constantly developed and were
improved.
The Water Resources Sector is responsible
for the power supply and management for 754 counties and
possesses 878,000 km of high voltage transmission line of
10 kV and above, of which 35 kV transmission lines account
for 97,000 km and 110 kV 20,000 km. There were 4,503 substations
over 35 kV, with a transformer capacity of 29.08 million
kVA. Around 800 local grids at the county level were formed
with 43 trans-county grids. In order to increase the reliability
of the local grids and increase the output in the dry period,
the Water Resources Sector made use of small local coal
mines to construct 360 medium and small thermal plants with
installed capacity of 2,416 MW. Meanwhile, 3,035 sites of
wind power plants were built to make use of wind resources
with an installed capacity of 8.8 MW. There were 1,216 sites
using other power resources with a total installed capacity
of 226.5 MW that operate in co-ordination with SHP. The
rural hydropower greatly improved the rural infrastructure
and economic structure, leading the way forward for economic
development in the hilly rural areas. The development mode
of ¡°Water generates electricity and electricity supports
electricity¡± was formed. So, the development of rural hydropower
has become an important means of boosting the rural economy,
increasing local revenues and enriching the local farmers
so they can escape from poverty.
(3) The third phase: SHP used mainly
for protecting and improving the ecological environment
and boosting the local economy (entering the 21st century)
Entering the 21st century, while
rural hydropower continues to promote local economic development,
it starts to play a more and more important role in improving
the ecology, protect the environment and promote rural modernization.
With the progress of the social economy, the ecological
environment is put into a more prominent position. The <Recommendations
for Making the Tenth Five-Year-Plan of the National Economy
and Social Development> at the Fifth Plenary Session
of the CPC¡¯s Fifteenth Central Committee pointed out that
China should strengthen ecological construction and environmental
protection, return arable land to forest and grass in a
planned and sequential way and improve the production and
environmental conditions in the western part of China. In
2001, former Premier Zhu Rongji pointed out several times
during his inspection tour in Hunan, Sichuan and Guizhou
that SHP should be developed on a large scale so as to resolve
the fuel and energy problems for the farmers. The return
of arable land to forest should be promoted to protect and
improve the environment, the local economy should be developed,
farmers' income should be increased and the process of poverty-relief
for the poor farmers should be speeded up. Support must
be provided. The refurbishment of the rural grids should
be combined with SHP development. All these instructions
by former Premier Zhu, viewed from his strategic vantage
point, pointed the way for the directions, objectives and
tasks in the new era of SHP development, guiding it towards
new areas for exploitation and broader prospects for SHP
development.
Remarkable achievements were made
in the development of rural hydro and electrification in
2002, with 1.88 million kW newly added installed capacity,
breaking the previous record. By the end of 2002, the accumulated
total hydropower capacity installed by the water resources
sector reached 35.86 million kW, representing 42.4% of the
national hydropower installed capacity. The annual power
generation was 113.4 billion kWh, representing 41.8% of
the national hydropower output. Of the 35.86 million kW,
the installed capacity of rural hydropower was 31.04 million
kW with annual output 103.7 billion kWh. In 2002, the total
annual power generation from this rural hydropower reduced
the amount of coal to be burnt, equivalent to a reduction
of emissions of 90 million tons of CO2 and other harmful
gases. There are in all 20 million households in the SHP
supply areas where the residents use electric cookers in
differing degrees, thereby reducing felling of forests over
an area of 130,000 hectares annually, saving 9 million m3
of timber, protecting the forest, and preventing soil and
water erosion, thus improving the environment. Many of the
medium and small hydropower stations together with their
reservoirs in China have become local ecological and tourist
resorts, realizing the policy of ¡°building one SHP station,
boosting the economy of one region and beautifying one area
of the State land¡±.
The installed SHP capacity and its
annual output vs. its proportion of the total installed
capacity and annual output of hydropower in China are shown
in Table 1.1 below
Table 1.1 Installed SHP capacity
and its annual output vs. its proportion of the total installed
capacity and annual output of hydropower in China
| Year |
SHP |
SHP as a percentage of total hydropower
capacity and generation |
| Installed capacity (MW) |
Yearly output (TWh) |
Installed capacity ratio
(%) |
Yearly output ratio (%) |
| 1950 |
3.70 |
|
2.20 |
|
| 1955 |
7.00 |
|
1.40 |
|
| 1960 |
251.40 |
|
13.00 |
|
| 1965 |
330.00 |
|
10.90 |
|
| 1970 |
1019.00 |
|
16.40 |
|
| 1971 |
1536.20 |
3.00 |
19.70 |
11.80 |
| 1972 |
1830.80 |
3.40 |
21.00 |
11.60 |
| 1973 |
2200.70 |
4.10 |
21.40 |
10.40 |
| 1974 |
2593.50 |
4.90 |
21.90 |
11.80 |
| 1975 |
3083.20 |
6.70 |
23.00 |
14.10 |
| 1976 |
3601.40 |
7.10 |
24.60 |
15.70 |
| 1977 |
4315.20 |
8.50 |
27.40 |
17.90 |
| 1978 |
5266.50 |
10.00 |
30.50 |
22.40 |
| 1979 |
6239.50 |
11.90 |
33.10 |
23.80 |
| 1980 |
6925.50 |
12.70 |
34.10 |
21.90 |
| 1981 |
7573.60 |
14.40 |
34.50 |
22.10 |
| 1982 |
8079.70 |
17.20 |
35.20 |
23.20 |
| 1983 |
8504.70 |
19.90 |
35.20 |
23.10 |
| 1984 |
9066.60 |
20.80 |
35.40 |
24.00 |
| 1985 |
9521.00 |
24.10 |
36.00 |
26.10 |
| 1986 |
10095.10 |
24.40 |
36.60 |
25.90 |
| 1987 |
11106.30 |
29.10 |
36.80 |
29.00 |
| 1988 |
11792.30 |
31.60 |
36.10 |
29.00 |
| 1989 |
12934.30 |
34.70 |
37.40 |
29.30 |
| 1990 |
13180.00 |
39.30 |
36.60 |
31.10 |
| 1991 |
13853.40 |
37.30 |
36.60 |
29.80 |
| 1992 |
14419.10 |
44.20 |
35.40 |
32.20 |
| 1993 |
15055.30 |
47.00 |
33.80 |
35.70 |
| 1994 |
15776.60 |
50.90 |
32.20 |
30.50 |
| 1995 |
16646.10 |
55.40 |
32.70 |
32.60 |
| 1996 |
19201.80 |
62.00 |
34.50 |
33.20 |
| 1997 |
20519.60 |
68.34 |
34.36 |
35.13 |
| 1998 |
22024.18 |
71.34 |
33.85 |
34.92 |
| 1999 |
23480.69 |
72.01 |
32.18 |
33.82 |
| 2000 |
24851.72 |
79.98 |
31.32 |
32.90 |
| 2001 |
26262.40 |
87.10 |
31.70 |
33.80 |
2. The Ecological Protection
Programme to Replace Firewood with SHP.
In 2002£¬the State Council and CPC
Central Committee issued <Opinions on Doing Agriculture
and Rural Work Well in 2002> (Document No. 2 in 2002),
in which rural hydropower was listed as part of the basic
small and medium scale infrastructure that should be accessible
to the majority of rural households and bring direct benefits
to farmers. Therefore, more investment was needed in this
sector. That was the first time that rural hydropower had
appeared in the CPC Central Committee¡¯s documents, and reflects
the new tasks and requirements set in the new era for rural
hydro development. It also shows the full confirmation given
by the Party and the State for the position of rural hydropower
in the national economy and social development. In 2003£¬another
document issued by the central authorities <Opinions
on Doing Agriculture and Rural Work Well in 2003> (Document
No. 3 in 2003) further emphasized that more investment be
given to construction of the medium and small infrastructure
of the farmers, increase the items of construction, start
pilot projects to replace firewood with SHP and consolidate
the work of returning arable land to forest.
China has very abundant SHP resources.
According to the latest statistics, the exploitable SHP
potential in China is 120 GW, No.1 in the world. By the
end of 2002, 31.04 GW had been exploited, representing 26%
of the total, and providing advantageous conditions for
implementing the Ecological Protection Programme to Replace
Firewood with SHP. Currently, residents who use firewood
for cooking and for heating are mainly distributed in the
central and western parts of China, especially in the upper
reaches of the Yangtze River and mid reaches of the Yellow
River where areas have been designated for ¡°returning the
arable land to forest¡±, natural resources protection zones,
natural forest protection areas, and key areas of water
& soil loss treatment. These areas essentially are also
in the regions of SHP resources. These resources and their
zonal distribution could stably meet the needs of fuel supply
for the farmers living in the planned areas for a long period
of time. Over 1,600 counties have developed SHP in China
and more than 40,000 SHP stations have been built, with
over 800 rural hydropower local grids capable of self-generation
and self-supply at the county level. With the rural grid
reform, the rural grids could meet the requirements of SHP
for the Ecological Protection Programme. Experiments have
been made in some areas for exploring the ways of replacing
firewood with SHP and some achievements have been made.
These have laid a good foundation for the implementation
of the Ecological Protection Programme.
The Ecological Protection Programme
is a new historic mission of SHP conferred by the new era.
It has strategic significance in the adjustment of the rural
energy structure, ecological protection and sustainable
development.
(1) The Ecological Protection Programme
is a strategic measure to consolidate the work for returning
arable land to forest.
Felling at will or felling at hill
slopes caused severe natural disasters like erosion of water
and soil, barren land, drought and water logging. The central
government made the decision to carry out ecological construction
with the focus on returning arable land to forest. After
the implementation of the decision, the problems of felling
by forest enterprises and felling at the hill slopes by
the local farmers were basically solved. However, the problem
of felling by the farmers for firewood was not solved. In
2001£¬the amount of firewood burnt by the farmers reached
228 million m3, far exceeding 64 million m3, the quota for
farmers¡¯ firewood consumption set by the State Council,
and also far exceeding 223 million m3, the quota for felling
in the whole country. To solve the problem of chopping firewood
by the farmers, one must solve the problem of fuel for the
farmers. The practice of replacing firewood with SHP for
the farmers would reduce the amount of firewood consumed
by at least 149 million m3 every year, a 65% reduction of
the firewood previously consumed by the farmers. The amount
of firewood chopped by the farmers was reduced to close
to the quota of 64 million m3 set by the State Council to
protect 340 million mu (15 mu is equal to 1 ha) of forest
stably over a long period of time. So, the Ecological Protection
Programme could fundamentally solve the firewood problem
of the farmers and consolidate the work of returning arable
land to forest.
(2) The Ecological Protection Programme
is a great contribution to the alleviation of the greenhouse
effect that attracts global attention
According to the<Kyoto Protocol>£¬the
amount of CO2 emission of the industrialized countries worldwide
in 2012 should be decreased by 5 percentage points based
on the amount of 1990. In case of failure, penalties would
be imposed. The amount of CO2 emission in China represents
13.2% of the world total, listed as the second largest after
the USA. In 2002 China ratified the<Kyoto Protocol>.
Presently, the emission amount of CO2 in China is 3.13 billion
tons every year. After the implementation of the Ecological
Protection Programme, a reduction of 200 million tons of
CO2 emissions could be realized yearly, i.e. a reduction
of 6%. The benefit, which is equal to 34 billion Yuan, is
very evident. Recently, an UNEP, United Nations Environment
Programme, report pointed out that at 14 km above the earth¡¯s
surface in Asia there was a layer of brown cloud 3 km thick,
which was called ¡°Asian Brown Cloud¡±. The UN organized over
200 scientists all over the world and reached two important
conclusions after 5 years of research. One was that the
layer was composed of dust, smoke, acid elements and other
harmful aerosols, most of which were from the smoke and
dust created after burning firewood by farmers in the Asian
region. Thus, the main reason for the ¡°layer of brown cloud¡±
above the Asian area was the burning for cooking and heating
by the Asian farmers. The second conclusion was that the
¡°layer of brown cloud¡± caused climate abnormality, diseases
and severe natural disasters in some areas of Southeast
Asia. This ¡°layer of brown cloud¡± now endangers global environmental
security. In reducing the greenhouse effect and securing
global environmental safety, the implementation of the Ecological
Protection Programme is a concrete measure put in practice
to realize the commitments made when China solemnly declared
its ratification of the <Kyoto Protocol> to the world
and is China¡¯s significant contribution to global environmental
safety.
(3) SHP stations for fuel ecological
protection are scattered here and there, covering thousands
of rural households to benefit the numerous farmers directly
The farmers may directly participate
in the implementation of the Ecological Protection Programme.
That will create job opportunities as well as increase the
income for the farmers. It could reduce stably and for the
long term the hardship of suffering from smoke while burning
firewood -- a way of living since ancient times -- and it
can change the conditions of production and life. Out of
2400 counties in China, 1,600 counties have built SHP stations,
among which, there were 886 counties with plans for SHP
stations for fuel ecological protection already compiled.
There were 25 provinces (regions and cities) and the Xinjiang
Production and Construction Corps that have compiled the
provincial plans. The Chinese Ministry of Water Resources
has compiled the national plan, involving a population of
300 million, an area of 3.5 million km2, and installed capacity
of 24.04 million kW to be newly increased.
(4) SHP stations for fuel ecological
protection have significance in increasing domestic demand
and developing the rural market
The implementation of SHP stations
for fuel ecological protection could stimulate the development
of machinery, construction, electronics, materials, steel
and iron, transportation, electric goods etc. It would increase
farmers' income, create job opportunities and stimulate
the rural consumption market.
(5) The building of SHP stations
for fuel ecological protection forms part of the infrastructure
which could develop the hilly water resources industry with
rural hydropower as the ¡°dragon head ¡° enhancing the ability
to prevent floods and fight against drought
Rural hydro is an inseparable and
the most vigorous part of water resources infrastructure.
It is an important part of comprehensive utilization of
water resources and comprehensive treatment of the rivers.
The implementation of the Ecological Protection Programme
would newly construct SHP stations with an installed capacity
of over 20 million kW, forming the new developing structure
of water resources with rural hydro as the ¡°dragon head¡±,
electricity supplementing water, as well as water resources
and hydropower promoting each other. That will push forward
the comprehensive treatment of medium and small rivers,
but also promote cascade development, increase the ability
to prevent floods and droughts as well as lead to comprehensive
water resources utilization. Thus, the comprehensive capacity
of the water resources to serve agriculture and the rural
economy is considerably augmented.
The planning area for implementing
SHP stations for fuel ecological protection involves 25
provinces, autonomous regions and the 886 counties with
a total area of over 3.5 million km2 and 80.8 million households
with 273 million inhabitants, of which, SHP stations for
fuel ecological protection could be implemented for 28.3
million households, 104 million people with a total installed
capacity of 24.06 million kW and annual energy consumption
34 billion kWh. According to the planning, the implementation
of this project could save the consumption of 189 million
m3 of timber, and protect 340 million mu (15 mu equals 1
hectare) of forest area, so that an ecological benefit of
36 billion Yuan could be achieved, creating enormous social
and economic benefit.
3. Facing new challenges
As rural hydro plays an important
role in the supply of rural energy, improving the environment,
poverty-alleviation and promotion of the rural economy,
it has been gradually developed to cover half of the land
and one fourth of China¡¯s population, with over 40,000 SHP
stations, an installed capacity of 26.26 million kW, and
an annual output of over 90 billion kWh, representing 30%
of China¡¯s rural electricity market share.
However, SHP is small in production
scale, with the contradiction between the rainy and dry
periods, and sometimes with inadequate technical facilities
and low-level management. Meanwhile, there are occasionally
difficulties in selling out electricity, unsatisfactory
electricity tariff mechanism, slow market development, constraints
of public benefit and other unfavourable external factors,
under the condition of the power reform and market competition
with ¡°separation of power plant and the grids, competitive
bidding for selling to the grids¡±. During the transition
period of China¡¯s planned economy to a market one, SHP is
confronted the following new issues, mainly:
First, the existing management mechanism
is not in agreement with the development of the market economy.
In the whole country, 80% of rural hydro adopts a management
system with the county level as the main force, and assisted
and guided at the province level. Policy and measures were
usually made by various administrations. There was a great
deal of difference among the SHP entities in the extent
to which they enjoy many of the preferential policies. As
there are multiple main investors, it is difficult to optimize
the allocation and restructuring of resources that definitely
leads to inability to compete or reduce risks in the market.
Quite a few of the local SHP companies depend on the large
grids to subsidize them so as to continue to survive.
Secondly, there is a shortage of
funds. The rural hydropower potential in China is rich and
after decades of SHP exploitation, by means of attracting
foreign funds, financing or fund mobilization etc in particular,
a great deal of funds has been mobilized for construction.
However, the current proportion of SHP exploitation is only
around 20% and there is a severe shortage of funds for exploitation.
Rural hydropower is constrained by the region and large
grids, the financial rate of return is not high, and is
hardly likely to become a hot spot for investment in society.
Thirdly, management methods are
backward. Presently, rural hydropower enterprises in many
of the areas adopt a traditional and crude means of management.
The phenomenon of stressing construction and ignoring management
is prevalent. The quality of the working staff still has
to be improved and over-staffing in a large number of rural
hydropower enterprises exists. Due to the demerits of the
management, costs are increased and the efficiency low,
prolonging the period for capital accumulation and circulation
and causing slow development and expansion through self-generated
funds.
The present monopoly will be broken
after the restructuring of the power market. After restructuring,
the potential and market competitiveness of rural hydropower
will be demonstrated. It could become a powerful competitor
in the power market in a new way. The restructuring of the
power market not only offers rural hydropower opportunities
for development, but also presents it with serious challenges.
