Deep in a tangle of planning bureaucracies in western Beijing, the future of a country nearly 3,000km away is under discussion. Xie Qiuye, president of China’s Electric Power Planning & Engineering Institute, has been charged with developing an electricity plan for Laos, a nation struggling with a glut of electricity supply from Chinese-built dams on the Mekong river.
Mr Xie’s job is to find a rational solution for Laos, even as powerful Chinese construction companies vie for more dam contracts in China’s poor southern neighbour. His answer — to make Laos into a regional power hub, exporting electricity to the rest of south-east Asia — depends on a technology that is being pushed hard by a powerful former state electricity boss with a vision for connecting world power markets.
In Laos, in Brazil, in central Africa and most of all in China itself, ultra high-voltage cable technology that allows power to be commercially transported over vast distances with lower costs and increased load is justifying the construction of massive power projects. It is dubbed the “intercontinental ballistic missile” of the power industry by Liu Zhenya, its biggest backer and for a decade the president of State Grid, China’s powerful transmission utility.
UHV allowed China to binge on dam building in its mountainous hinterland, then transport the power thousands of kilometres to its wealthy, industrial east coast. But by enabling this, and other projects, UHV has left western China with such a glut of power that Mr Liu in 2016 proposed using the technology to export power as far away as Germany.
Now Mr Liu is promoting UHV internationally through his Global Energy Interconnection initiative. Designated a “national strategy” and championed by Xi Jinping, China’s president, the initiative feeds into one of China’s most ambitious international plans — to create the world’s first global electricity grid.
“All of this fits in with Beijing’s goals of expansion and being a global standard setter,” says Erica Downs, an expert on China and energy at Columbia University. “It is also linked to China’s intention to become an advanced industrial superpower. There is a big prestige element in this.”
Advocates stress that this does not mean China would control the resulting grid but networks would be linked to allow better cross-regional allocation of power surpluses. It is no coincidence that this would resolve the problem of “trapped” power resulting from some of China’s mega construction projects in countries like Laos that lack a big enough domestic market.
Some western observers see a geopolitical strategy on a par with China’s Belt and Road Initiative, a grand design that seeks to boost Chinese-led infrastructure investment in more than 80 countries around the world.
“While there is certainly a commercial explanation for China’s rapid expansion in the power sector, it should also be recognised that Beijing is known to intertwine its economic, diplomatic and strategic initiatives,” says Andrew Davenport, chief operating officer at RWR Advisory, a Washington-based consultancy. “Part of the explanation for its expansion in this area is, therefore, likely the influence — and soft power gains — that accompanies increased control over an industry so fundamental to the everyday lives of citizens.”
Chinese companies have announced investments of $102bn in building or acquiring power transmission infrastructure across 83 projects in Latin America, Africa, Europe and beyond over the past five years, according to RWR. Adding in loans from Chinese institutions for overseas power grid investments brings the total to $123bn.
Throw in all power-related Chinese deals overseas, including investments and loans to power plants as well as grids, and the number almost quadruples. Between 2013 and the end of February 2018, total overseas power transactions announced reached $452bn, up 92 per cent from 2013 levels, according to RWR, which strips out of its calculations deals that are announced only to be subsequently cancelled.
Officials and power industry analysts in China insist that it would be too simple to assume that such investments are all slated to be rolled up into a single international grid to achieve the GEI goal, which Mr Liu recently described as similar to the internet: global but not controlled by a single country.
The first stage, set to run until 2020, involves investment in domestic grid assets within other countries. The second phase would see the knitting together of some of those grids and that generation capacity. “From 2020 to 2030, the task will be to promote intra-continental interconnection with the interconnection of Asian, European and African grids being basically realised,” Mr Liu said recently in London.
Although Chinese companies would not necessarily own or control the regional grids, their influence, via the assets they do control, would ultimately lead to regional interconnection.
“China’s state-owned power companies are pursuing an aggressive overseas expansion strategy, investing in the construction and operation of energy networks in some countries and as equity investors in others,” says Xu Yi-chong, a politics professor at Griffith University, Australia and author of Sinews of Power, a book about State Grid. “