China is a large agricultural developing country with a rural population of more than 900 million. The stability of agriculture, development of the rural economy, and the improvement of rural living standards have always been of critical significance to national economic development and to social progress in the country. Without the modernization of agriculture there can be no modernization of China as a whole. Since the implementation of the reform and open-door policy, China has seen speedy development of its rural economy

The growth of the rural economy has been accompanied by an increasing demand for electricity. Rural electrification based on the exploitation of local water resources plays a significant role in economic development and the improvement of living standards. In fact, electrification has become a prerequisite for the development of the vast rural areas, many of which are quite mountainous. From the environmental point of view, the harnessing of water resources is also of great significance in decreasing air pollution and the emission of greenhouse gases.

This chapter will describe various aspects of the small hydropower sector in China. Firstly, the amount of water resources and the rural electrification programme will be explaned. A second section will describe the Government measures to encourage small hydropower development and a third section will set out the role and importance of small hydropower within the overall rural electrification programme. The final section provides a brief description of future plans for small hydropower.

Development of Water Power and Rural

Electrification in China

Water Resources in China

China is endowed with the richest water resources in the world, they account for 17.6% of the global total. The exploitable medium and small hydropower resources are 139 GW Most of these are located in the vast mountainous areas, which account for 70% of the country's area and which are inhabited by 56% of the total population. The ample water resources can be used for rural electrification based on small hydropower development.

Magnitude of the Small Hydropower Sector

Since the founding of the People's Republic of China in 1949, the Chinese government has attached much importance, and given great support, to the cause of rural electrification with Chinese characteristics. It has strongly encouraged the development of water resources in the vast rural areas. With the painstaking efforts of the past four decades, remarkable achievements have been realized. By the end of 1995, the to. installed capacity of small hydropower amounted to over 19 GW and the annual electric output to 64 TWh. The rural hydropower grids have 850,000 km of transmission line above 10 kV, and 1.56 million kin of low-voltage transmission line. The capacity of the matching transformers is 67million kVA. Hydropower supplies electricity to 300 million people in about 800 counties, covering nearly half of the country's area and 70% of the mountainous area. Water power has become the main energy source for rural areas in about 1/3 of the counties in the country, and a major component of the national electric power industry as a whole. The Chinese small hydropower technology and equipment, in addition to meeting the demand at home, is also exported to other countries. In the past forty years, China has accumulated substantial experience in developing, constructing and managing rural water power.

Aims of the Primary Rural Electrification Programme

The small hydropower-based primary rural electrification programme aims at providing electricity or increasing the supply in the rural areas, especially the mountainous ones. This electricity will stimulate economic development, and will also be used for household consumption. The rich water resources in mountainous areas will be used for power generation, while being shared equitably with other water users. With the strong backing of the state, local governments and people are making painstaking efforts to implement the programme, in a spirit of self-reliance and hard-work.

Implementation of the Rural Electrification Programme

The formal start of the programme was in 1985. During the past decade, two phases have been completed, and a total of 318 counties have implemented rural electrification projects based on small hydropower. More than 97% of the rural households are supplied with electricity and a rural population of 93 million has bid farewell to the days without electricity. Meanwhile, the demand for electricity from local industry, agriculture and other users are also met.

Government Measures to Implement the Rural Electrification and Small Hydropower Programme

Attention and support from the authorities

In order to encourage the development of small hydropower- based rural electrification, the central and local governments have made a series of policies and have adopted several measures to promote rural electrification.

The policies include:

a. Small hydropower should have its own network of local suppliers;

b. The construction and management of small hydropower projects should observe the principle of "He who invests is he who owns and benefits";

c. The interconnection of large and small power grids is encouraged in order to mutually complement individual systems at times of surpluses and shortages;

The measures include:

d. The central government provides special commercial loans and a small discount on loans to rural electrification projects;

e. There are some tax exemptions for the development of hydropower with existing hydropower stations.

The production of the "Rural Electrification Standards"

The "Rural Electrification Standards" have now been completed. Rural electrification is regarded as a systematic project, requiring a comprehensive analysis. It considers the existing local economic development level and the potential demand for electricity, taking into account projected economic growth and social progress. The main criteria that should be met by rural electrification projects are:

a. The per capita annual electricity consumption in the county should be no less then 200 KWh;

b. The per household annual electricity consumption in the county should be no less than 200 KWh;

c. The percentage of households supplied with electricity should be more than 90% of the total number of households in the county. Supply reliability should be above 85%;

d. The total grid loss in the county should be no more than 11 %.

These criteria are different from those in developed countries. However, practice shows that they suit the current level of economic development in the vast rural areas in China very well.

Sound planning and enhanced management

A sound rural electrification plan is prepared for each county. It is based on the energy resources available, the Rural Electrification Standards, the existing power sources, the existing grid network and future grid connections. The plan includes the selection of favorable sites and the development of power sources and grids at the same time. The application of new technology and equipment is encouraged in order to guarantee the quality of rural electrification and to lower the construction cost. A high priority is also given to sound management at all stages of the project cycle.

Establishment of special agencies

The governments at all levels have established special agencies to provide guidance and coordination for the planning, construction and management of rural electrification projects, to popularize new technologies and products, and to facilitate the exchange of technical and management experiences.

The Role and Importance of Small Hydropower and Rural Electrification

Small Hydropower is the foundation of rural economic development.

The areas supplied with electricity from small hydropower are mostly mountainous areas, which are hard to reach with large national grids and which have suffered from the lack of or shortage of electricity. This has severely restrained the economic development in these areas. Since 1949, small hydropower has supplied more than 700 TWh of commercial electricity to the rural areas, easing the electricity shortages. From 1984 to 1992, 160 million people who had no access to electricity were supplied with electric power, out of which, 58%, i.e. 93 million are supplied with hydropower. Small hydropower is one of the foundations of the economic vitalization and improvement of local living standards in mountainous areas.

Small hydropower promotes the development of agriculture.

Combining the development of water resources with electricity generation, the exploitation rural small hydropower not only solves the problem of water supply to mountainous agriculture, but also solves that of electricity supply for pumping water for agricultural use including irrigation. It accelerates the construction of infrastructure, improves the development, agriculture in mountainous areas, and guarantees a stable and high output of grain. Take the fir batch of rural electrification counties as an example. In a decade, the grain output in the counties increased by 38%, which is much hi than the national average.

Small hydropower accelerates the industrialization of rural areas.

The level of industrialization is an important criterion in evaluating the economic well-being and poverty-alleviation in rural areas. Small hydropower eliminates electricity shortages in rural areas and this supports the rapid growth local industry, township and village enterprises and agro-industry. it promotes the exploitation the mountainous resources and turns a resources advantage into an economic advantage. The experience with rural electrification in mountainous areas has shown that the process of industrialization has been accelerated and fundamental adjustments have been made to production structure, with the industrial output surpassing that of agriculture.

Small Hydropower helps to improve the living conditions of rural residents

A reliable and adequate electricity supply supports the industrialization of rural areas and the rap growth of all economic sectors. This creates n employment opportunities for rural residents, and reduces the migration of the rural population to urban areas. In the past decade, in the 318 counties where rural electrification was implemented, over 5 million surplus rural laborers have been locally employed and the living conditions of rural residents have been improved.

Small hydropower improves the environment.

Hydropower is a clean energy and its development does not pollute the environment. In addition, thanks to the replacement of firewood with electricity, deforestation is controlled. In areas supplied with hydropower, about 9 million rural households have replaced firewood with electricity and large amounts of wood have been saved. The forest coverage in the first batch of rural electrification counties has increased by 8 percent in ten years and that in the second batch of counties has increased by 4 percent in five years.

Future Plans

The Ninth Five-Year Plan provides for the rural electrification of 1,000 counties during the period 1996-2000. Of these, 600 will be electrified based on small hydropower development. The total small hydropower installed capacity will increase by more than 10 GW. By the year of 2000, the installed capacity of small hydropower in China will have reached 30 GW, and annual electricity output 100 TWh.

The management structure of small hydropower will also be reformed. It will gradually be reorganized into corporations, commercially operated and legally managed, thus transiting to a modern enterprise system.