Entri’s new study of China Power examines the benefits and the costs of deploying a wide range of technologies to satisfy China’s demand for electric power. We have completed two elements of this study. First, we requested a “smart grid” vision statement from Chinese experts. Next, we developed a model to project possible Chinese electric power futures and to consider options for cutting costs and carbon dioxide emissions.
Our analysis concludes China will likely stick with the tried and true – coal and hydropower – and forego the most cost effective option – energy efficiency – without stronger oversight of utilities and powerful new regulations. The costs of these missed opportunities – to China’s economy and to the global environment – could be huge.
We continue to perfect the model, improve the data sets, and generate technology-specific scenarios. We also are assessing the prospects for research and development to affect development of China’s power system.
China already has developed many technically capable energy-efficiency businesses and technologies needed to improve efficiency in homes, factories, and commercial buildings. But ESCo development has been impeded by lack of financing, particularly longer-term debt financing. New companies are generally small, lack credit history and collateral sufficient to meet financing requirements in China. Even experienced ESCos with good accounts receivable and future cash flow assets provided by their projects confront a banking system that typically does not recognize accounts receivable as collateral.
Our research is examining whether a business structure that would enable developers to cash out their assets in order to obtain new financing – a secondary market – could replace debt with equity to achieve rapid deployment of energy efficiency technologies.