Acknowledgement

This study is the outcome of a meticulous and consistent group work by me and my team members

where we spent days and used numerous approaches to plan and structure our analysis. We used

trustworthy and validated data from various sources to support our inferences and all those sources

are provided in the references section at the end of this report. I would like to thank my mentor Dr.

Chihiro Watanabe for providing me the necessary insight on how to approach a problem with

mathematical as well as multidimensional methodology, and how to draw necessary conclusion based

on facts and not only the predictions. His indispensable inputs on how to refine this analysis have been

taken very seriously and every measure has been taken to accommodate all the additions and

suggestions he made during the presentation session. I thank my parents, wife and siblings for their

understanding as they realized the time and other necessary constraints surrounding me and remained

supportive all the way.

Thank you!

Amrit Ravi

Index

The Introduction

Background

China’s Hydropower Policies

Impact of Hydropower

China’s Energy Demand

Comparison: Other Sources

Hydropower Technology Overview

Composition: China’s Energy

Hydropower Production Function & Growth Rate

Impact on Other Industries

Innofusion of China’s Hydropower

Future Scope of Improvement

Impact due to Foreign Direct Investment

Comparisons and Alternatives

Technology Spillover

Effects Observed and Impact of Migration

Conclusion

References

China, today, remains the world’s largest population and world’s second largest economy ferociously in

the direction of possibly becoming the leading one in the coming future. It has contributed in every

possible sphere of economy at a global level ensuring its speedy assent to where it stands today. If we

talk about energy sector alone, China dominates several aspects globally which we will see in the

coming sections of this report. However, at the same time it also remains a nation which leads among

all in contributing to the carbon emissions in the environment and that is something China is not proud

of at all. China faces a glaring need to reduce the emission it produces through all its practices and it

faces a global challenge of silencing its critic and going easy on the environment at a rapid rate through

innovating and transforming its conventional energy sources into something far more acceptable.

If we see the gap between China and the next leading

CO2 emitting nation, i.e. United States of America, we

would be nothing less than surprised by the huge gap

of magnitude.

China’s Plan and Commitments

There are certain targets that China has put up for

itself amidst the global pressure of reducing emissions

and in response to the initiatives taken at G20 and UN

Climate Change guidelines. China pledges to reduce

the emissions it produces by 15% by the end of 2025. United States on the other hand has promised to

cut down 17% emissions by 2020 and 28% by the end of 2025. Now, this is not so difficult to

understand that any such transformation would not only require policy and infrastructural changes,

but also changes in the mindset of people both and personal and social levels. China feels she is ready

to embrace the inevitable and vows to take whatever actions necessary in achieving the target.

Today Hydropower remains the most widely scalable and usable source of power next to Solar Power.

The Asia Pacific region specifically generated 32% of the global hydro power in 2010, and China’s total

capacity is 22% higher than any other countries’ install base. Infact, China’s capacity exceeds that of

Brazil, the USA and Canada combined. China’s hydro power installations are targeted to reach around

430 GW by 2020 which in itself is a very remarkable progress in achieving China’s Millennium

Development Goal targets.

A Quick Glance into the History

Some of the earliest innovations in using water power were conceived in China during the Han Dynasty

between 202 BC and 9 AD. Early waterwheels (earliest forms of hydropower) were used for a variety

of purposes such as but not limited to pound grains, break ore, and to make paper. By 1771, Richard

Arkwright of England set up Cromford Mill at Derwent valley to spin cotton and so set up one of the

world’s first factory systems. The energy source he used to power his factory belonged to hydropower.

Some of the key developments in hydropower technology happened in the first half of the 19th

century. The core of hydropower technology lies with the turbines, and in 1827, French engineer

Benoit Fourneyron developed a turbine capable of producing around 6 horsepower – the earliest

version of the Fourneyron Reaction Turbine. In 1849, British–American engineer James

Francis developed the first modern water turbine – the Francis turbine – which remains the most

widely-used water turbine in the world today. American inventor Lester Allan Pelton next developed

the Pelton wheel, an impulse water turbine, which he patented in 1880. Lastly, Austrian professor

Viktor Kaplan created the Kaplan turbine in 1913 – a propeller-type turbine with adjustable blades. It

was in 1882 that the first hydropower plant serving a system of private and commercial customers was

opened in Wisconsin, USA. The honor of the world’s first three-phase hydropower electric system

belonged to the Germans in 1891. In 1895, the world’s largest hydroelectric development of the time,

the Edward Dean Adams Power Plant, was created at Niagara Falls. In the first half of the 20th century,

the US and Canada led the way in hydropower engineering. From the 1960s through to the 1980s,

large hydropower developments were carried out in Canada, the former USSR, and in Latin America.

In Asia, a hydroelectric station was built on the Xindian creek near Taipei in 1905, with an installed

capacity of 500 kW, which was quickly followed by the first station in mainland China, the Shilongba

plant in the Yunnan province, operational in 1912. The Itaipu Dam, straddling Brazil and Paraguay,

opened in 1984 at 12,600 MW. It has since been enlarged and upgraded to 14,000 MW. Today, it is

only eclipsed in size by the 22,500 MW China’s Three Gorges Dam, which opened in 2008.

Growth in Economy

The rapid rise of the Chinese economy has lifted hundreds of millions of people from poverty and

transformed an agrarian nation into a manufacturing powerhouse. Economic growth is always

constrained by biophysical limits, and electricity production—needed to power everything from

industrial factories to consumer goods—is proving to be one crucial limit. Approximately two-thirds of

China’s electricity demands are met by coal-fired power plants, giving China the dubious distinction of

being home to some of the world’s most polluted cities, costing hundreds of thousands of lives and

mounting economic losses. This is not an easy problem to solve, particularly without compromising

economic growth. Chinese leaders, like their counterparts in developed and less-developed countries,

are often forced to choose from a set of bad options when it comes to electricity production.

Policymakers in Beijing are actively discussing alternative energy sources, sometimes referred to as

“clean energy” or “green energy” in the push to establish a “low-carbon economy”. A major part of this

discussion focuses on hydroelectricity produced by large-scale dams on nearly all of China’s major river

systems. Government documents report (with a measure of pride) that hydroelectricity output, which

currently accounts for 16% of the nation’s electricity

portfolio, grew at an annual rate of 12.9% throughout the

eleventh five-year plan period (2005–10) and will continue on a

similar pace for the foreseeable future. This means that China

now has another yardstick by which to measure its progress:

home to half of the world’s 50,000 large dams, China has far

outpaced all other countries and continues to add dozens of dams

to its portfolio each year. While such projects bring considerable

benefits reliable electricity irrigation water, enhanced navigability,

flood protection, and the prospect of decreased reliance on fossil

fuels. They also entail a unique set of environmental and social

cost.

Great Leap Forward Policy

It was an economic and social campaign by the Communist Party of China (CPC) from 1958 to 1961.

The campaign was led by Mao Zedong and aimed to rapidly transform the country from an agrarian

economy into a socialist society through rapid industrialization and collectivization. The Great Leap

Forward policy advocated that each of China’s 1,465 counties build at least one dam. As a result, tens

of thousands of dams were built in China, mainly by peasant-led teams with limited equipment,

materials and training.

West - East Electricity Transfer Project

The distribution of hydropower supply and demand poses significant geographic and technical

challenges. Most hydroelectric dams provide power to large coastal cities, such as those in Guangdong

Province, that have grown into global manufacturing hubs. But the requisite conditions for hydropower

production, high-volume Rivers with steep gradients—are found far inland. The West - East Electricity

Transfer Project, initiated in the Tenth Five-Year Plan (2000-2005), was designed to bring investment

and development to China’s lagging west while satisfying the growing electricity needs of the country’s

eastern provinces. This policy put in place high-voltage direct-current transmission lines, which is a

cutting-edge technology that Chinese engineers helped develop that allows electricity to travel long

distances with minimal losses. But while the benefits of hydroelectricity accrue to comparatively

wealthy coastal cities, the costs are largely borne by inland communities that have long endured

economic marginalization. Though the West-East Project brings energy security to the east coast, it

exacerbates water and food insecurity in the fragile ecosystems of the west. Because China’s eastern

economic powerhouse provinces rely on western-made electricity, the energy sectors in the west take

priority over local residential and agricultural water users. These conflicting demands are creating

vulnerabilities – or choke points – that China must address to sustain its current growth.

Dissolution of State Electric Power Corporation

Rapid hydropower development entails complex political, economic, and institutional arrangements. In

2002, amidst economic reforms, the State Electric Power Corporation was dissolved. Its assets and

responsibilities were distributed among two groups of newly reconfigured state-owned enterprises:

those responsible for electricity generation and those responsible for electricity transmission and

distribution. The group responsible for power generation comprises five state-owned enterprises;

often called the “big five electricity giants”, they hold diverse energy portfolios including coal, wind,

solar, and hydropower. Several are Fortune 500 companies with major subsidiaries publicly traded on

the Hong Kong, Shanghai, and New York stock exchanges. These kinds of public-private ventures

present a complex institutional problem in which the entities pushing for hydropower development are

often more powerful, and better funded, than the regulatory agencies overseeing them.

Environmental Impact Assessment Law

Meanwhile, there are only a few reasons for optimism about the future of hydropower development.

In 2004, then premier Wen Jiabao, citing the newly promulgated Environmental Impact Assessment

Law, halted a series of dam projects on the Nu River. A decade of conflict and controversy ensued, and

while the outcome of that case is still uncertain, the heightened public scrutiny has caused developers

to scale back their plans for the Nu River projects, at least in the short term.

Social Risk Assessment Directive

Additionally in 2012, the State Council passed a new directive on “social risk assessment,” providing a

stronger administrative mandate for considering the social effects of large development projects,

including dams, before they are initiated. Government agencies are also increasingly calling for public

hearings and other forms of participation in the approval process for dams, while working to improve

standards of monetary compensation for displaced people. If urban Chinese residents have cleaner air

to breathe a generation from now, such improvements will have been driven by the demands of a

rising middle class weary of dealing with the environmental and health consequences of fossil fuels.

And it will require public and private investment in renewable energy of all kinds, including

hydropower. The question is whether hydropower development can be undertaken with better

scientific and legal standards and a demonstrated willingness to address the environmental and social

costs.

Environmental Impact

Although energy production through hydropower does not emit any greenhouse gases but building of

huge dams on the rivers and blocking them can have serious environmental and social effects in the

form of altering the normal flow of river, blocking of migratory fish passage, sudden occurrence of

floods, increase in number of earthquakes and displacing of local communities. This all contribute to

the disruption in normal course of fossilization, rainfall, eventually affecting sources of other forms of

energy.

Drought

One of the biggest issues that can happen with hydroelectric power is a drought. Power and energy

costs are specifically identified with the amount of water that is accessible. A dry spell could

conceivably influence this and make it so people cannot get the power that they need. Hence one can

never really be sure if it can be relied upon with 100% certainty, thus increasing dependence on

conventional alternatives, e.g. coal.

Flooding in Low Lying Areas

People living along low lying areas are often in the danger of floods as they areas might get swept away

when water is released in full force from the dam. Apart from this, these people are forcibly moved out

so that construction of these dams can continue. Also flooding may cause heavy prolonged rain

manipulating and affecting the normal tidal concentration.

Other Impacts

Loss of wildlife, Wetlands and other habitat affecting impacts exist. There is reduced Biological activity

downstream. Anaerobic decomposition of vegetation and further formation of greenhouse gases is

another impact. Change in water quality because of lack of dissolved oxygen near the bottom of the

reservoir creates toxins harmful for the flora and fauna. Migration of animals to new ecosystems

causing disruption may be another possible impact.

Financial Impact

Hydropower generation implies high cost of set-up. However once the system starts generation of

power, the cost per unit power generated eventually lowers down with increasing consumption and

time. This is a positive effect and would change the dependency factor on other forms of energy.

Damage to Land & Productivity

In certain cases the nearby vicinity of a hydropower dam causes damage to the land mass and

productivity. This would lead to loss of potential biomass which will shrink the possible production

potential of natural gases.

Five years ago, the Chinese government initiated its twelfth five-year plan. This plan provides goals and

direction for the country’s national economic development vision aiming to reduce its greenhouse gas

emissions, while meeting a rising energy demand. China dedicated to develop renewable energy

resources, such as wind energy, solar PV, hydropower, biomass and so on. Below is a trend showing

the total renewable electricity net generation for the year 2012 that gives an insight to how China is

growing at a healthy rate in the renewable energy sector, especially in the Hydropower domain.

Hydropower Progress in China

China pledged to increase its hydropower capacity to 284 GW and its pumped storage capacity to 41

GW by 2015. At the end of 2014, China had almost reached this goal a year early. Hydropower capacity

totalled 282 GW after 21,250 MW came online in 2014, and a further 600 MW of pumped storage was

added to the mix. Hydropower generation in China has occupied the greatest potion in Chinese

renewable energy structure. The key reason for this rapid upward development in the hydropower is

attributed to the abundance of potential geographical stretches that can generate huge amount of

electricity via wide network of Rivers. Below is the statistics and geographical distribution.

valley The installed

capacity (million kW)

Annual Generating

capacity ( billion kWh)

Nationwide

(%)

Nationwide 378.53 1923.3 100.0

Yangtze River 197.24 1027.4 53.4

Yellow River 28.00 116.9 6.1

Pearl River 24.85 112.4 5.8

The Luanhe River 2.13 5.18 0.3

The River of Northeast 13.70 43.9 2.3

The River of southeast 13.89 54.7 2.9

coast The River of 37.68 209.8 10.9

Southwest International

Brahmaputra River and 50.38 296.8 15.4

other rivers in Tibet

Northern inland and river 9.96 53.8 2.8

of Xinjiang

Other Factors Influencing Hydropower Development

• China’s vast Engineering Experience

• Sophisticated Equipment Industry

• Strong State Command over Land Resources and Investment Capital

• Favourable Local Political Support

When compared with other forms of energy sources, Hydropower has several inherent and exclusive

advantages.

Low Cost

Hydropower is the cheapest way to generate electricity.

No Pollutant Emission

Fuel is not burned when energy is produced through hydropower.

It is reliable when compared to Solar Power and Tidal Power

Many forms of renewable energy are not reliable, but hydroelectric power is. Availablility of constant

water stream is highly more likely than availability of continuous sunlight and wind in tropical and

moderate climatic conditions.

Readily Available

Engineers can control the flow of water through the turbines to produce electricity on demand. In

addition, reservoirs may offer recreational opportunities, such as swimming and boating.

High Efficiency

Conventional hydropower efficiency is about 80%. The thermal efficiency of thermal power plants is

only 30% - 50%.

On the other side there are certain limitations and disadvantages as well.

A Mighy Blow to the Fishery Industry

Fishery can be impacted if fish cannot migrate upstream past impoundment dams to spawning grounds

or if they cannot migrate downstream to the ocean.

Water Quality & Flow

As pointed before, Hydropower plants can cause low dissolved oxygen levels in the water, a problem

that is harmful to riparian (riverbank) habitats and is addressed using various aeration techniques,

which oxygenate the water.

Affects the Local Environment

It actively competes with other uses for the land. Those alternative uses may be more highly valued

than electricity generation.

Loss of Habitat

Humans, flora, and fauna may lose their natural habitat.

Other Sources – A Glance

Wind Energy

With its large land mass and long coastline, China has exceptional wind resources: it is estimated China

has about 2,380 gigawatts (GW) of exploitable capacity on land and 200 GW on the sea. At the end of

June 2015, there were 105 GW of electricity generating capacity installed in China, more than the total

nameplate capacity of China's nuclear power stations. In 2014 it generated 138 TWh of electricity,

2.6% of the total. This is up from the 2012 figure of 99 TWh of wind electricity provided to the grid.

Wind Energy Capacity (By Province) Year 2014; China

Key Development Challenges: Wind Energy

One of the main concerns pertinent to Tidal Energy is that transmission capacity of the grid hasn't kept

up with the growth of China's wind far. There is immense need of contruction of grid lines and power

distribution infrastructure in order to utilize the true tidal potential. However physical lack of grid

capacity has limited wind energy's ability to reach customers.

Solar Energy

Solar power in China is a growing industry with over 400 photovoltaic (PV) companies. In 2013, China

was the world's leading installer of solar photovoltaics reaching a total installed capacity of 35.78 GW

by end-June 2015. Solar water heating technology in China is seen to be extensively implemented as

well.

Solar Energy Capacity (By Province) Year 2014; China

Key Development Challenges: Solar Energy

Low Conversion efficiency remains the vital challenge in the development of Solar Infrastructure in

China. Although China receives a fairly decent amount of sunlight for about good 70% of the year, its

ability to tap the resources makes it weak in reaping the optimum benefits. Even today’s most efficient

solar cells only converts just over 20% of the sun’s rays to electricity. With increased advances in solar

cell technology this number is likely to increase.

How Hydropower Works

Hydropower projects use the kinetic energy of flowing water to produce electricity. When the stored

water is released, it passes through and rotates turbines, which spin generators to produce electricity.

When the stored water is released, it passes through and rotates turbines, which spin generators to

produce electricity.

v

A Technical Potential Overview

Possible Technology Improvements

Higher turbine efficiency and performance

It would resut in Increase power output and better efficiency with a possibility of greater flexibility in

unit operation to suit the market needs. This will lead to increased availability and lower maintenance

costs.

Newer materials

Materials like Stainless Steel and Graphene can be used to develop effective coatings. They will have

higher efficiency against corrosive actions and would amount to a major cost savings as replacements

costs a lot.

Reduction in Cost of Civil Works

Improve methods, technologies and materials for new hydropower project construction.

Variable-Speed Pump-Turbine Units – Economically advantageous for a pumped-storage facility

Conceivable to create fully artificial reservoir on flat lands along with the ability to design entirely

artificial seawater or freshwater systems in the absence of natural declivity.

China’s electricity consumption has shown a tremendous spike. Its not only the riing population that

attributes to this immense demand, but the exponential rise in the development rate of quality of life,

rapid industrialization, higher dependence of power consuming technologies and extensive

automations are several added factors. Experts say that the rise in the GDP of China has direct effect

on the demand for more and more power supply. Below is the projection of Growth Rate of China’s

GDP versus Electricity Consumption.

China’s Installed Electricity Capacity

As the demand grew, the Installed capacity in China doubled from 630 GW in 2006 to 1260 GW in

2013. Installed capacity rose by 90 GW alone in the FY 2014. Below is the graph that show the growth

in the Installed Capacity between the year 2000 to 2013.

China became the world largest energy producer in 2013 with Coal and Hydropower being the major

two components. Since the beginning of twenty first century China is trying to diversify its energy

portfolio into something that could strike the perfect balance between changes required to maintain a

sustainable energy suppy model and providing adequate energy security to its rapidly enhancing

industrial needs.

China is world’s largest Coal Consumer as well as Coal Producer and that remains a main hurdle in

China’s pathway of achieving its world clean energy production goals. Below is a pie chart showing the

global consuption of coal by China as compared to some of the leading consumers in the world.

Seeing this fact, China has diverted to a new route by involving itself in extensive investments in other

non conventional sources of renewable energy, as it remains certain that longer dependency on

conventional sources, like Coal, is not painting a brighter picture for China’s future. In 2013 itself, of 19

Hydro Station under construction around the globe, 8 are from China.

Hydropower output represented by the following production function incorporating labor input,

Capital investment in hydropower infrastructure and the Technology Stock

It is projected that there would be continued growth of Hydropower at the least till the year 2050.

Below is the analysis of positive Hydropower Growth Rate by Contribution of Labor Input, Capital

Investment and Technology Contribution.

Positive Growth Projection

Conttibution by Labor Input

China has seen the assimilation of mega structure construction capability aided by fast GDP growth in

the past two decades. Along with spikig up its domestic infrastructure China has invested in

construction projects internationally as well in the regiones like Africa, South East Asia, Central Asia,

Silk road project. With the technological learning and time, China has developed an expertise in the

Dam Building Capacity.

China’s Investment in Hydropower

Contribution by Capital Investment

As we aready know China by far the largest CO2 emission country. By 2020, China has committed to

reduce its CO2 emissions per unit of GDP by 40 to 45% from 2005 levels and use non-fossil fuels for

about 15% of its energy during Copenhagen Climate Change Summit in 2009. However, China energy

demand is growing annually by over 10% since 2000.

Hydropower is the main contributor to China’s non-carbon target pledged in Copenhagen. Of the 15%

non-carbon final energy (total energy, including consumption by motor vehicles) target for 2020, at

least 9% will have to come from hydropower, 4% from nuclear, and less than 2% from wind, solar and

other energy sources. China has second largest still untapped hydropower potential with 1259

TWh/year. Key player in both financing and building the hydroelectric power infrastructure in

Southeast Asia. China invested more than US$6.1 billion in neighbouring SEA countries between 2006

and 2011 for 2,729 megawatts of capacity additions. Much of the future hydropower generated in

Myanmar and Laos to be exported to China. Three Georges dam in China is only worth US$22.5 billion.

Global Distribution of future hydropower dams (under construction or planned)

Contribution by Technology Stock

As we know that TFP is a multiplication of MPT (marginal productivity of technology) and R&D

intensity. MPT increases with the new functionality development along with ICT. Hydropower

technology is a mature technology with the key focus on dam’s basic architecture and turbine design.

Technology improvement in other industries has positive impact on hydro technology. Some of such

improvements and advancements are shown below:-

– Dramatic improvement in Mega Structure Construction Efficiency aided by software Simulation

– Advances in Better Efficient Turbine Technology

– Advances in Material Technology

– Advances in Water Management Simulation Software

Some other advancements that would affect the TFP:-

Advances in water turbine technology, particularly the invention of adjustable rotor blades and

inlet guide vanes, providing greater operating range and efficiency.

Materials: Turbines have benefitted from advances in materials science, which includes new

alloys, such as tungsten carbide, which are more resistant to erosion and abrasion from

sediments.

Environmentally Conscious Designs: oil-free turbines and bio-degradable lubricants.

Water Management Optimisation: Stored water is a fuel to be utilized when its value is high

and stored when it is low. Yet, unlike fossil fuels, its supply depends on climate conditions and

storage is a function of a variety of constraints such as operating regimes, minimum and

maximum water levels and required environmental flows. The optimisation of reservoir

management is crucial to maximizing revenues for power producers. Advances in mathematical

modelling have led to the development of highly sophisticated optimization software and

decision-support tools which help inform operational decision making.

China’s HP Growth Rate Summary

Based on the below mentioned components, and their variations, the overall Hydropower Growth Rate

will vary in the future.

Labour Component: Assimilation of mega structure construction capability and expertise

hydropower plants construction

Capital Investment Component: China’s continue growing energy demand and commitment to

reduce CO2 emission, investing large in hydropower projects not only in China but also in

neighbouring countries

Technology Component: Advancement in other technologies has positive impact on

hydropower industry

With this analysis, we can conclude that China’s hydro power output growth rate will remain positive

for the foreseeable future.

Favorable Conditions in China for Adoption and Development

There are certain factors that distinguish China from the rest of the world, and provide advantage over

the others in terms of technology adoption. They could be:-

Quality of Labor Improvement

Hydropower development will also provide opportunities for local economic development and poverty

reduction (Yang, 2001). For instance, some % of the investment will be spent locally on creating jobs,

improving infrastructure and on the consumption of local materials. Local governments will benefit

from additional revenue from hydropower developments. This additional revenue can then be

deployed to support improvements in living standards, and on poverty reduction and environmental

conservation. The electricity produced will supply local residents and can partially substitute for wood

fuel, which will yield positive environmental consequences.

Effective Learning Cycle for Knowledge Transfer - (Tacit & Explicit Knowledge Cycle)

Even though Hydropower grows at a very impressive rate in China, experts have predicted that even by

2025, China will be 70% dependent on Coal as a primary source of power generation.

There are five key areas where China can keep its focus when they think of Hydropower Infrastructure

Enhancements and Sustainability. They are:-

2050 roadmap

Nationwide Smart Grid Network by 2020

More Efficiency, Less Power Target

Mid-Term Action Items for China

Use of ICT in Relay and Automation

China’s hydro geology is such that the regions with remaining potential for large scale hydropower

dams are in the country’s southwest, whereas demand for electricity in eastern regions of the country

continues to grow, and they need to diversify away from their current reliance on coal-fired power.

This transition requires extensively huge investments. Still many remote rural areas in China have little

prospect of accessing grid-based electricity, which usually only extends till the urban areas. This gives a

huge opportunity to the global level players to pool in and invest in the cause, which provides the

investor an option to gain profits along with the good-will of promoting green energy and cutting

carbon emission from the world’s most populated nation. The country has set a 350 GW target for

2020. Due to China's scarcity of fossil fuels and the government's preference for energy independence,

hydropower is an attractive option and FDI is elementary for China in achieving this target in time.

What China Gains?

What Global Economy Gains?

With the charts and comparitive data above we can safely assume that China’s reliance on hydropower

when compared to the rest of the leaders in the world, is far more extensive. China has the capacity of

almost equivalent to 50% when compared to half of the world’s combined capacity.

As we can see, 22% OF China’s electricity is of renewable nature and out of that, Hydropower

contributes almost half of it, 43.5% to be precise.

Some Parallel Potential Alternatives

GeothermalEnergy and Shale Gas has been two key areas where China is focusing at the moment.

China has found huge reservoirs of Shale, and it intends to exploit the capacity to the fullest as a

parallel source of energy.

Geothermal Energy

The Chinese Government is culling together plans for comprehensive geothermal development in

cunjunction with its 13th FYP, which covers the years 2016-2020. As a paart of this plan, it hopes to

develop 100 MW of Geothermal Energy by 2015 end, in northern, central and south wwestern regions.

It will Initially focus on high temperatire resources, then move to low and medium temperature

applications.

Shale Gas Energy

According to resource prediction models from a number of institutions, China’s total shale gas

geological resource ranges from 20-166 Trillionn cubic meters, while technically recoverable reserves

are 7-45 Trillionn cubic meters. These estimates are expected to rise with the development of new and

existing technlogies. To get an accurate assessment of technically recoverable shale gas resources,

China will invest 4 Bilion USD to conduct a nationwide survey of shale gas during 2013-20.

China currently has the largest hydropower capacity in the world and has an insatiable demand for

energy as a developing big nation. It has huge natural resources to deploy hydropower technology.

Global capacity at the same has reached almost

1,055GW till 2014. One can see from the plotted

graph that there is an excess of more than 40%

spillover to external technology. This entire graph was

from a subsample of 47,677 energy patents that have

been cited subsequently. Together, these patents

represented 164,062 cited citing patent pairs which

characterize the technological relationship between

two inventions. For each cited-citing pair, if they were

of the same technology class, they would be

categorized into intra-technology spillovers; if they

are broadly related to power generation , they would

be categorized into inter-technology spillovers; or if they are neither, they are categorized as external

technology spillovers. Limitation of this report by Joelle and Victoria is that we have not been able to

elucidate which hydropower patents they had specifically looked, in a topic that is extremely difficult

to research. Effects to areas beyond power generation from hydropower technology, as well as a

smaller percentage of technology spillover within power generation technologies from the knowledge

and technology generated from hydropower itself.

Reference to the World Energy Resources Report 2015, there are more detailed information with

regards to the areas of spillovers and recent advancements of hydropower technology.

For example, in recent times, hydropower technology has further advanced turbine technology

through the invention of adjustable rotor blades and inlet guide vanes, creating the advent of variable

speed pumps technology which can be used within the power generating industry. Within the energy

field, low-head technology was a recent progression from hydropower technology. There is also a

demand from hydropower on mathematical modelling, which have helped modelling field has

benefited. There is support from highly sophisticated optimization software and decision-support tools

to help operational decisions. It was also understood from Joelle and Victoria’s report that hydropower

patents were being cited by other patents in the field of electrical machinery (16%); engines, pumps

and turbines (25%), mechanical elements (13%), and civil engineering (18%). This breakdown is

understandable because of the fact that hydropower technology is one old but very important form of

renewable technology.

Turbines have also benefited from use of new alloys such as tungsten carbide. Such blades are more

resistant to erosion and sediments. Aerospace turbine technology of tungsten carbide turbine blade

materials and/or tungsten carbide-coated (not limited to plasma-sprayed or laser-coated types and

other process variants) turbine blades are in use and in development within the aerospace, marine and

hydropower sectors. There is a cross-fertilization of technology due to some shared similarities in

performance requirements in turbine technology. Further, hydropower has assisted fields in demand

for oil-free turbines and bio-degradable lubricants.

For China, operating labor cost is low, as plants are automated and have few personnel on site.

However, the impact of hydropower technology adoption to the local labor market cannot be

neglected. For example, the Three Gorges Dam Project, reported funding required for relocation,

which covered 45% of the total investment on the

project. It has been reported from the same resource

that 129 cities and towns were flooded as a result of the

dam project. The migrant count exceeded 1,200,000

from 20 cities and counties in Hubei and Chongqing

alone. The sheer size definitely affected the local

demographics and labor market in the regions. It is

known that even through infrastructure construction in

this particular project is rapid; the industry around the

region developed slowly, and caused many local

enterprises to fold. So, while the more sustainable hydropower renewable technology helps China’s

economy, the surrounding regions around hydropower projects need not necessarily benefit. This

obviously is a complex scenario. Also, when the three Gorges dam project was launched, the

authorities had promised to provide replacement land to farmers and to provide new jobs to the urban

population. However, according to affected farmers had not receive compensation for their lands

because they were not official owners of the land and few managed to restart their farming-based

economy, and with an estimated 20,000 people had lost their jobs for Yunnan region.

• δV/δL , the marginal productivity in case of China’s Hydropower has increased. There is also

assimilation of the mega structure construction capability and fast GDP growth in the past two

decades. This is propotional to the rise in demand due to rise in quality of life, rapid

industrialization, cheap labor availability attracting FDI and several other factors.

• δV/δK , the marginal capital has increased. One can also witness the increased capital financing

in China. China remains a very attractive destination for investors because of many logistical

and operational advantage. It also has a very huge consumer base.

• The Chinese government has committed to plan for the goals and direction to take in

undergoing economic development vision with reduction to its greenhouse gas emissions via

various forms of renewable energy sources including hydropower, amidst rising energy

demand. This is detailed in their five-year plan.

• Factors like FDI can play a key role in achieving the target quick and efficiently.

• Hydropower is a renewable and clean energy source can play an effective role in protecting the

environment and have had technology spillover effects.

• The 2050 roadmap – published in April this year – predicts China could get almost 86 percent of

power generation from renewable energy by 2050.

• With a constructive blend of ICT and technological advancements, Hydropower can become the

major and eventually primary source of energy for China to depend on. Development of proper

grid system and consolidation of existing grid system remains a key challenge.

• Information sharing and exchange of knowledge will lead to a rapid growth and development in

Hydropower sector.

References

World Economic Forum | Database on China’s Economic Policy GDP Data taken from MarketThoughts.com Total Primary Energy Consumption | Source from U.S. Energy Information Administration (EIA)

China’s Energy Demand | Source from U.S. Energy Information Administration (EIA)

Wind Energy Installed Capacity of China | China’s fast track to a renewable future

Solar Energy Installed Capacity of China | China’s fast track to a renewable future

Technical Potential Graph | Kumar and Team, Based on IJHD 2010

Innovations in Hydro Technology | Energy island. Source from: Kema 2007

Growth Rate of China | CEBC, ISI Group

China’s Installed Capacity Analysis | CEC, NEA

Composition of China’s Electricity Production | FACTS Global Energy

Composition of China’s Electricity Production | US Energy Administration Information

Sources of Hydropower | China Water Risk, CEC

Countries with Highest Installed Capacity | The SHIFT Project, Data Portal

Global Hydropower Capacity | REN21, US Global Investors

Contribution by Labor Inputs | Power Technology, International Rivers

Contribution by Capital Investment | CEBC, ISI Group

Contribution by Capital Investment | International Hydropower Association

Contribution by Capital Investment | EIA

Technology Spillover | Hydropower capacity and additions in 2014 [www.ren21.net/wp-content/uploads/2015/07/REN12-GSR2015_Onlinebook_low1.pdf, last accessed 5th Oct 2015]

Technology Spillover | CPB Netherlands Bureau for Economic Analysis titled “Knowledge spillovers from renewable energy technologies, Lessons from Patent Citations, by Joelle Noailly and Victoria Shestalova

Impact to Local Population | [http://www.travelchinaguide.com/attraction/hubei/yichang/three-gorges-dam-problems.htm, last accessed 7th October 2016]

Impact to Local Population | www.internationalrivers.org/files/attached-files/3gorgesfactsheet_feb2012_web.pdf, last accessed 7th October 2015]