China geothermal heating project case study

In China, the development of geothermal renewable energy for heating and electricity generation has been growing. The central government of the PRC has announced plans to significantly increase geothermal renewable energy

Geothermal renewable energy growth management 85 developments in China. Under the 13th Five-Year Plan of China, it has announced plans to expand the direct use of geothermal heating by another 400 million m2 by 2020. It believes that the sustainable use of geothermal resources will help to reduce air pollution and lower emissions plus reduce fossil fuel consumptions. In addition, it could help to protect water resources and reduce fossil fuel imports. To meet their new geothermal growth targets, Chinese geothermal companies have also been partnering with leading international geothermal companies on different projects.

An important new geothermal Sino-foreign partnership is the Icelandic-Chinese Joint Venture that has been established by the Arctic Green Energy Corporation (AGE) and Sinopec Star, which is called the Sinopec Green Energy Geothermal Company Limited (SGE). The new joint venture aims to expand geothermal district heating services in China with their combined expertise and network. SGE was established in 2006 and has grown to be the world’s largest geothermal district heating company in terms of service area. It is a joint venture between AGE and Sinopec Star of the Sinopec Group, which is also known as China Petrochemical Corporation. AGE is based in Iceland and is a leading global developer and operator of renewable projects, including geothermal technology and energy efficiency projects. The key mission of AGE is to export Icelandic expertise in geothermal and renewables to fast growing countries in Asia, especially China.

In a groundbreaking deal in 2018, the Asian Development Bank (ADB) provided loan facilities of $250 million to the new Icelandic-Chinese Joint Venture, Sinopec Green Energy Geothermal Company Limited (SGE), formed by Arctic Green Energy Corporation (AGE) and Sinopec Star (ADB, ADB Signs Landmark Project, 2018).

In China, the traditional coal-based power and heating plants have been some of the major causes of air pollution in the country, especially for the Beijing-Tianjin-Hebei region. New goethermal renewable district heating systems should help to extract clean thermal energy from underground geothermal wells so that these could be delivered to households and business through dedicated district heating system pipelines. This should offer a clean renewable energy alternative which is sustainable, stable and cost competitive to fossil sources, including coal and gas. The new geothermal systems would have zero emissions, and could be integrated into existing networks to replace heat sources.

The ADB which is based in Manila has the mission to reduce poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. The ADB was established in 1966 and is owned by 67 member countries with 48 from the Asia region. The ADB has considered the new China geothermal project to be a landmark renewable project for Asia. It believed that geothermal district heating could help to provide millions of citizens in Asia-Pacific with safe and stable heating whilst dramatically reducing air pollution and greenhouse gas emissions. Geothermal heating will also help the emerging economies in Asia to reduce their reliance on fossil heating and power generation. It should help them to lower GHG emissions whilst reducing oil and gas imports into the emerging economies in Asia-Pacific.

The funding from the ADB would enable both AGE and SGE to significantly expand their geothermal operations. These should contribute to China’s fight against air pollution whilst providing much needed clean heating to the Chinese cities. These new geothermal applications should also help to reduce oil and gas imports into China. There are also plans to replicate these successful collaborations across Asia and Central Asia (ADB, ADB Signs Landmark Project, 2018).

Other leading Chinese state-owned enterprises (SOEs) have also shown interest in geothermal energy developments. A good example is that the largest oil company in China, China National Petroleum Corp (CNPC), has started testing for geothermal energy resources. It had conducted a pilot test of geothermal power generation in Huabei, which is in the Hebei province of China. Two testing wells have met the low- and moderate-temperature requirements for geothermal power generation. These pilot tests have provided the basis for establishing future geothermal power plants and for future large-scale development of geothermal resources in the region. The significant amount of oil and gas drilling expertise that CNPC has built up from its vast oil and gas operations in China and overseas should help CNPC to accelerate its new geothermal exploration and business developments.

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