Date
20 November 2017
China relies heavily on foreign producers of natural gas power generators for repair and maintenance, and has to pay high prices. Photo: Bloomberg
China relies heavily on foreign producers of natural gas power generators for repair and maintenance, and has to pay high prices. Photo: Bloomberg

China pays high price for foreign oligopoly in natural gas power

Every Chinese will pay a high price for allowing foreign giants to dominate the natural gas power generation sector, the 21st Century Business Herald reported on Tuesday, citing sources with knowledge of the matter.

Almost all gas-powered generators in China were made by foreign companies such as General Electric (GE), Siemens and Mitsubishi, the newspaper said. Not only is the machinery costly, the repair and maintenance fees for the foreign-made equipment are also expensive.

For example, the natural gas power station in Shanghai Caojing paid 383 million yuan (US$61.7 million) in maintenance fees from 2009 to 2011, accounting for about 13 percent of the station’s total investment. The station has two 300-million-watt gas generators produced by GE.]

The foreign firms hold the key technologies for natural gas generators, and as such, China relies heavily on them for repair and maintenance, and has to pay high prices.

Ultimately, it will be the consumers who will shoulder the high costs, the report said, adding that the oligopoly is unlikely to end in the short run.

While prices for other clean energy equipment declined sharply after domestic producers mastered the technologies involved, those for natural gas power generation have remained high for years.

The price for wind energy generation has been halved to 4,000 yuan per kilowatt from about 8,000 yuan following the entry of domestic producers.

Similar price drops have also been seen in other power-generating products such solar panels and photovoltaic inverters, the report said.

An internal document from the National Energy Administration said the situation in natural gas generation may last another decade. “China has limited choices,” the energy regulator was quoted as saying.

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