Development of Distributed Generation in China
November 9, 2011 by Chunfeng
Introduction: History of distributed generation
With the rapid economic development in China, above 10% GDP growth yoy in the past 5 years, China faces increasing challenges in the energy sector to keep the economic machine on going. The Chinese power generation market has been largely central controlled to reach economic of scale.
However, distributed generation is not new in China. Before the national grid formed its basic structure in 1980s, electricity supply has long been depended on local small power plants, which were mainly developed by the local government utilizing local energy resources.
China’s power generation mix is largely dependent on coal, figure 1, shows that in 2010 78% of electricity was generated from steam power plants. Under the recent price increase of coal and the increasing pressure of CO2 intensity reduction targets, utility companies are reluctant to operate steam power plant in full capacity. This will result in power shortage in 2012-2013 due to the lack of dependable capacity
Main DG applications in China
1) Supplement of power when electricity shortage occurs
Most DGs used in this case are small thermal and small hydro plants. For small thermal plants, due to their unfavorable environmental effect and high cost, their developments are no longer encouraged by the government. But for small hydro plants, as they are cheap and clean, the future prospect of their development is very promising.
2) Remote areas electricity access that not covered by central grids; in this case mainly small scale PV systems. The market of cheap and simple PV systems could be expected
3) Megacity urban electricity access to reduce emission and improve efficiency. More people have started to tentatively utilize DGs to improve their power quality and save traditional energy
Distributed generation technologies and development challenges
Small thermal and CHP power plants
Most of these stations are of less than 6MW installed capacity and are connected to the grid at 10kV or 35kV voltage level.
Till 2008 the total installed capacity of CHP is more than 48GW, and the total heating capacity is 1.66G GJ CHP is regarded as an efficient energy utilization form and therefore greatly encouraged.
Recent development of DG technology is gas fired combined electricity, heating and cooling. Key advantage of gas fired electricity heat and cooling system is improved energy efficiency. Traditional steam power plant can reach coal efficiency of 35%, traditional CHP power plant can reach 45% of electricity with coal; and gas fired system can reach the energy efficiency of 80%
Other DG technologies such as Solar PV and wind power generation can provide abundant electricity for remote areas. 
Major challenges of DG development in China
1. Constrains of grid connection
2. Limited government support in terms of feed in tariffs
3. Lack of technological development in China, resulting in major technologies needed to be imported