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FEATURE STORY

Solar Systems for 400,000 Rural Households in China

April 6, 2011


In China, 97% of the population has access to electricity. But given China’s huge size, the 3% without access to electricity still adds up. The people of Inner Mongolia, are turning to new technologies like solar power to solve the problem.

World Bank Group

Overview

Launched in 1999, the Renewable Energy Development Project focused on solar energy and wind power. Through the development of a photovoltaic (PV) market, the project provided electricity to more than 400,000 households in nine north-western provinces and autonomous regions in China. Through the installation and operation of two demonstration wind farms in Shanghai, the project showed that wind power development is commercially viable in the coastal regions. The project, which closed in mid-2007, contributed to a broader Government effort to develop renewable energy.

Challenge

Since the late 1990s, China has been actively promoting clean, renewable energy to try to balance growth and environmental concerns and ultimately to reduce its reliance on coal. In 2010, it set the goal of meeting 15% of its primary energy consumption through non-fossil fuels by 2020. Alternative sources of energy, such as solar panels, also represent a low-cost solution for the approximately 30 million people who lived in villages without electricity in 2002. But in China's Northwest provinces, where population densities are less than 40 people per km², establishing effective sales and service operations was particularly challenging. Poor products and services, in turn, hampered the reputation and market growth of PV systems. Building a large-scale grid-connected wind farm in coastal areas and near municipalities is also a challenge.

Approach

The project, supported by the Bank and the Global Environment Facility (GEF), promoted the development of a sustainable PV market in China. The aim was to provide reliable, affordable and environment-friendly energy to villagers who live off the electric grid, by assisting the development of good-quality, service-oriented PV businesses through capacity building, training and technical assistance. The Bank also provided financing for two wind farms in Shanghai municipality to demonstrate the viability of commercial wind energy development.

Results

The Project supported the sale of solar powered systems to approximately 400,000 rural households and institutions in the provinces of Qinghai, Gansu, Sichuan, Yunnan, and Sha'anxi, and in the autonomous regions of Inner Mongolia, Xinjiang, Xizang, and Ninxia. The supply of solar electricity to isolated semi-nomadic populations (mainly herdsmen) translated into improved access to communications, education and entertainment, improved indoor air quality and reduced CO2 emissions.

  • About 2 million people, mostly nomads and farmers in isolated areas, now get electricity for their home appliances.
  • A market survey conducted during project preparation in four project provinces helped participating companies to design appropriate and effective marketing strategies to overcome local barriers.
  • Participating companies selling high-quality, project-approved PV systems were rewarded with direct grants.
  • By the end of 2007, 34 participating companies had received 190 Market Development Support grants valued at about US$688,000 and 201 grants for technology improvement worth US$2.1 million, and had leveraged bigger amount of financing of their own.
  • The international standard for PV systems applied to all systems financed under the project and partly as a result, China has now become a major exporter of world-class PV systems.
  • By helping to upgrade the quality of PV systems made in China, the project helped combine international technology advances with China's proven low-cost production capabilities.
  • Two grid-connected wind farms of 20 megawatts each were installed in Shanghai. Despite their small size, they demonstrated the commercial viability of well designed, procured and constructed wind farms and became models for some other wind farm projects in the coastal regions.

" Before the system was installed, it was hard to have fresh meat and vegetables. Now we use the fridge and eat fresh food whenever we want. And we can watch TV. We watch the news and know what is happening in the rest of the world. "

Bater

herder

Bank Contribution

The total project cost was US$317 million of which the Bank provided US$13 million in loan financing and GEF provided US$27 million in grants. Contributions came from the State Power Corporation (US$5.3 million), financial intermediaries (US$8.1 million) and photovoltaic and technology improvement companies and end-users (US$264 million). Technical standards for PV components in China built upon standards prepared for other Bank- and GEF-sponsored projects in Indonesia and Sri Lanka. The World Bank Group's experience with supporting decentralized, renewable energy-based electrification began in 1993 in India.

Toward the Future

While the project focused on providing rural areas far from power grids with access to electricity and demonstrating the commercial viability of wind power, a follow-up project, the China Renewable Energy Scale-Up Project (2005-2010), takes a broader look at China's renewable energy development strategy. It seeks to remove some of the technical, administrative and capacity constraints that limit the competitiveness of alternative energy sources, such as wind farms and biomass plants.


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