GEOTHERMAL POTENTIAL OF CHINA

Yangbajing Geothermal Power Station in Tibet (Fanghong)

Worldview Report – June 2012

Contents 1

Executive Summary ....................................................................................... 3

2

Market Structure............................................................................................. 4

3

2.1

Energy Market..................................................................................... 4

2.2

Geothermal Market............................................................................. 8

2.3

Market Potential................................................................................ 10

2.4

Challenges in the Market ................................................................. 12

Opportunities for New Zealand................................................................... 13 3.1

New Zealand's Value Proposition ................................................... 13

3.2

Potential Benefits.............................................................................. 14

3.3

Trade Facilitation .............................................................................. 15

4

Conclusion .................................................................................................... 16

5

Resources and Contacts ............................................................................. 17

6

About Worldview .......................................................................................... 18

7

6.1

Mission............................................................................................... 18

6.2

Service Offer ..................................................................................... 18

6.3

Who we are ....................................................................................... 19

6.4

Contact Us......................................................................................... 19

End Notes ..................................................................................................... 20

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1 Executive Summary With 14% of the world's population, a land area of 9.6 million km² and the second largest economy in the world, China's electricity demand is projected to triple by 2035. Renewable energy, including geothermal, will play an important role in meeting this demand. New Zealand companies are well positioned to enter into the Chinese market, with valuable geothermal expertise and facilitated market entry through the NZ-China Free Trade Agreement. Key issues: ·

The IEA estimates that China's electricity demand will almost triple to 9,594 TWh by 2035, with an average annual growth rate of 5.3 percent;

·

In order to ensure a secure, domestic supply of energy while minimising the environmental impact of fossil fuels, China has been steadily developing renewable sources of energy, and now leads the world in hydro and wind power;

·

Geothermal energy offers huge potential for China, with the country ranked first in the world in the overall use of geothermal resources, but only 18th in geothermal electricity generation (24.2MW capacity);

·

The Ministry of Land and Resources estimates that China's twelve major geothermal basins have energy resources amounting to an equivalent of 853 billion tons of common coal (which could generate around 7 billion GWh of electricity);

·

By 2015, the Ministry expects that China will be using geothermal energy equivalent to 68.8 million tons of standard coal (560,000 GWh of electricity), representing 1.7% of the country's energy consumption;

·

Technological advances are opening new possibilities, with exploration into the potential of Enhanced Geothermal Systems (EGS) and utilising low temperature co-produced geothermal resources for electric power generation;

·

China's geothermal market offers opportunities for New Zealand companies in geothermal exploration, R&D development and deployment, geothermal reservoir management and global development projects.

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2 Market Structure China is the second largest economy in the world after the US, and is widely projected to become the world's largest economy. China has experienced unprecedented growth over the past 25 years, moving from a closed, centrally planned system to a more market-oriented approach. Between 1978 and 2005, China's economy more than quadrupled in size. In 2010, China became the world's largest exporter. It has maintained an average growth rate of almost 10 percent per annum (9.2 percent in 2011) and built up around US$3 trillion in reserves.i China performed comparatively well during the global financial crisis, but growth slowed to near 9% for 2011, and is expected to slow further in 2012 as a result of the economic crisis in Europe. Challenges facing China include a rapidly aging population (as a result of a strict population control policy), addressing environmental damage and social adjustments following rapid economic growth, and further lifting the overall development of its population (per capita income remains below the world average). China is New Zealand's second-largest market, accounting for over 12 percent of exports, and our second-largest source of imports, at 16 percent. New Zealand was the first country in the OECD to sign a Free Trade Agreement with China, which came into force on 1 October 2008. Since the FTA, two-way merchandise trade has increased more than 50 percent, which represents the fastest growth with any major nation in New Zealand's trading history. In the year to October 2011, New Zealand's exports to China grew 34 percent, from NZ$4.3 billion to NZ$5.8 billion, led by dairy and wood. Imports from China grew 13 percent, from NZ$6.1 billion to NZ$6.9 billion, led by machinery and clothing. The New Zealand government has ambitious targets for future trade growth with China, including doubling two-way goods trade to NZ$20 billion by 2015 (under the NZ Inc China Strategy).ii

2.1 Energy Market China is the largest energy consumer in the world. Total energy consumption increased from 776 million tonnes of oil equivalent (Mtoe) in 2000, to 2,164 Mtoe in 2009 - a compound annual growth rate of over 8%. In the same period, electricity consumption rose to 3,643 terawatt hours (TWh) in 2009, increasing by 3.4 times since 2000. The IEA estimates that China's electricity demand will almost triple to 9,594 TWh by 2035, with an average growth rate of 5.3%.iii

4

Electricity consumption in China, 2000-35 TWh 12000

9594

10000 8000 6000 4000 2000

1081

2825

3246

3438

2007

2008

3640

0 2000

2006

2009

2035

Years Source: International Energy Agency

China has abundant energy resources, but less so on a per-capita basis. The country has a large supply of coal, but oil, natural gas and other fossil energy resources are limited.iv Coal Coal is the dominant source of electricity supply in China, representing around 80% of the supply and more than 70% of the capacity. Natural Gas Less than 1% of the total electricity generated in China comes from natural gas - the bulk of gas is utilised for residential space heating. China has plans to increase natural gas plants by 43 GW capacity by 2015. Hydro China has the highest installed hydro capacity in the world, and is set to reach 380 GW by 2020 (from 197 GW in 2009) according to the National Energy Administration (NEA), an average annual increase of 16.5%. The world's largest hydroelectric project, the Three Gorges Dam, is situated in China (with an installed capacity of 21,000 MW). Wind At the end of 2010, China surpassed Germany and the US to become the world's largest wind power capacity holder. China's installed wind capacity increased from 28 MW in 1996 to 42 GW in 2010. China is currently building the first of seven planned 10 GW mega wind farms.

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Solar Solar is a fast growing sector in China, with around 3 GW of installed solar capacity at the end of 2011. China's National Energy Administration is aiming for 15 GW by 2015.v Nuclear On 31 May 2012, China's cabinet announced that it had approved a 2020 nuclear strategy (still to be released), and is reportedly targeting 60GW of nuclear capacity by 2020. China has 41 nuclear power plants either operating or under construction.vi Electricity generation capacity and production in China, 2009 Electricity Production 3663 TWh Hydro, 15.7%

Installed Capacity 874 GW

Wind, 0.7%

Hydro, 22.5%

Wind, 1.8%

Nuclear, 1.9%

Oil & gas, 1.4%

Nuclear & Other, 1.1%

Fossil, 74.6% Coal, 80.3%

Hydro Wind (grid connected) Solar Biomass Total

Total installed capacity by 2009 (GW) 196.8 16.1 0.3 4.0 217.3

Total electricity production (TWh) 574.7 26.9 0.5 20.0 620.6

Share of the total electricity production (%) 15.7 0.7 0.6 17.0

Source: International Energy Agency

Renewable Energy In order to increase domestic energy production while minimising the environmental impact of fossil fuels, China has been steadily developing renewable sources of energy. China's installed renewable electricity capacity (excluding hydro) has doubled every year since 2005.vii The growth of renewables in China has been supported by favourable government policies and legislation. The 12th Five-Year Plan for Economic and Social Development (2011-15), published in March 2011, proposed that China "promote diversified clean energy diversity and other measures to

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encourage changes in energy production and use." Targets for 2015 include that non-fossil fuels in primary energy consumption increase to 11.4% in 2015 (from 8.3% in 2010); and that energy consumption and CO2 emissions per unit of GDP be reduced by 16% and 17% respectively.viii Under China's Renewable Energy Law (2005), power grid operators are requested to "buy all the grid connected power produced with renewable energy within the coverage of their power grid, and provide grid-connection service for the generation of power with renewable energy". However, implementation of this clause has been inconsistent. When local grids are saturated, grid companies typically curtail electricity generated by wind farms (in favour of the cheaper and more reliable electricity from coal plants).ix A revised Renewable Energy Law took effect in April 2010. The revised law "obliges" grid companies to guarantee the purchase of a minimum amount of electricity from renewable energy. Details on what percentage of electricity from renewables is mandatory are still to be determined. Challenges in the Energy Market Given the massive size of China (9.6 million km²), long-distance power transmission is an important factor in power sector decision making. While China's coal, hydro and wind energy resources are mainly located in the west, the principal load centres are in the east. China lacks a unified national electricity grid. Its grid system is currently fragmented into six regional power grid clusters, all of which operate quite independently. Four of the clusters are managed by the State Grid Corporation of China (the East, Central, Northwest and Northeast grids, as well as part of the North grid). The western part of the Inner Mongolia grid is managed by an independent company. The South grid is managed by the China Southern Grid Company. Inter-regional interconnections are weak and cross-regional trade of electricity made-up just 4% of total electricity production in 2009. As each company is responsible for its own profit and loss and there is little incentive for inter-company cooperation.x Grid companies are looking to strengthen the interconnections between regional grids and build additional transmission lines to handle larger quantities of electricity from variable sources. They plan to build a smart grid system with an ultra-high-voltage (UHV) network nationwide.xi China also has an extremely rigid power market. More than 80% of the electricity trading between regions and provinces is governed by long-term contracts. There is an annual agreement on quantity and prices of electricity traded based on multi-year demand and supply forecast. Less than 20% of total electricity traded can take place on the spot market, with a strictly limited amount, which is usually reserved for an emergency.xii

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Key Players in the Energy Market There are five major players in China's electric power industry, which are all state-owned enterprises. Each has around 10% of national installed capacity, and their listed subsidiary (independent power producers) generally has an additional 4-5% of installed capacity. · · · · ·

China Datang (parent of Datang International Power Generation) China Guodian (parent of GD Power Development) China Huadian (parent of Huadian Power International) China Huaneng (parent of Huaneng Power International) China Power Investment (parent of China Power International Development)

A number of Chinese companies also play an important role in the global energy industry. · · · ·

China National Petroleum Corporation (parent of PetroChina) (State-owned oil and gas corporation and the largest integrated energy company in China (revenue: USD$240 billion (2011) Sinopec (China Petroleum & Chemical Corporation) (State-owned company, ranked 5th in Fortune Global 500 in 2011) China National Offshore Oil Corporation (CNOOC Ltd) (China's largest producer of offshore crude oil and natural gas, and a leading global oil and gas exploration and production company) China Shenhua Energy Company (The largest coal mining enterprise in China and the world)

China's largest renewable power company is China Datang Cooperation Renewable Power, which is primarily engaged in wind power projects. As of June 2010, it had an installed capacity of 2.7 GW, and aims to have 30 GW by 2020.

2.2 Geothermal Market China's geothermal resource has not received the same focus or development as other renewable sources, such as hydro and wind. China has rich geothermal resources throughout the country, and leads the world in overall usage of geothermal resources. However, most of China's geothermal resource is utilised as direct heat due to low source temperature. High temperature resources exist in the regions of Tibet and Yunnan, which hold the greatest potential for geothermal power generation. While geothermal electricity is unlikely to play a major role in China's nation-wide electricity supply in the near future, it could be an important provider of local electricity in remote regions.

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Geological Features China is located in the south-eastern corner of the Eurasian Tectonic Plate, and is influenced by both the Pacific Plate to the east and the IndianAustralian Plate to the south. At the juncture of these plates, two geothermal belts are formed. The Himalayan Geothermal Belt (approximately 150 km wide and 2000 km long) passes through southern Tibet and western Sichuan Provinces, turns southward through western Yunnan Province and then extends downward through Thailand. The Circum-Pacific belt passes through eastern Taiwan. Southern Tibet, western Sichuan and Yunnan, and Taiwan are active tectonic areas from the Cenozoic Age. There are 112 known geothermal systems in southern Tibet, 12 in western Sichuan, and 47 in western Yunnan.xiii Map showing Geothermal Regions of Tibet, Sichuan, Yunnan and Taiwan

Historical Background China's development of geothermal energy began during the 1970's global oil crisis. A geothermal survey and exploration was conducted throughout the country. Nine small hydrothermal plants of 50-300kW capacity were installed, but lower temperatures and inefficiencies led to the rapid closure of seven of these plants. In 1977, a high temperature 1MW hydrothermal power plant 9

was build in Yangbajing, Tibet, 90km from the Tibetan capital Lhasa. Between 1977-1991, 25MW of capacity was installed in Tibet (representing approximately 88% of China's total power generation capacity from geothermal).xiv Geothermal Power Plantsxv Yangbajing Nagqu Langjiu Fengshun Huitang Qingshui Tuchang

Region Tibet Tibet Tibet Guangdong Hunan Taiwan Taiwan

Total capacity MW 25.18 1 2 0.3 0.3 3 0.3

Commissioned 1977 (operational) 1993 (ceased operations 2000) 1987 (ceased operations) 1984 (ceased operations 2006) 1975 (operational) 1981 (ceased operations 1995) 1985 (ceased operations)

Since 1992, there have been no major geothermal power developments in China, with only the increase of a 1MW unit in Nagqu, Tibet. In 2010, China was ranked eighteenth in global geothermal electric power capacity, with 24.2 MW installed.xvi Geothermal Heat Pumps While there has been little progress in China's geothermal power generation, there has been significant progress in the development of China's mediumlow source temperature geothermal resource. China leads the world in geothermal direct use, with five million tons of standard coal equivalent utilised in 2010.xvii Direct usage takes place in agriculture, spas, and residential and commercial buildings - the Beijing 2008 Olympics was powered using geothermal pumps. The Ground Source Heat Pump (GHP) industry has grown significantly in China since it was first introduced in the 1990s (through a joint US-China governmental collaboration). From 2004 to 2009, the installed MWt increased from 383 to 5210, representing 1263% growth. China has a large, and growing, number of geothermal heat pump manufacturers. Over the past 10 years, the GHP market has expanded to over 200 Chinese manufacturers.xviii

2.3 Market Potential The potential of overall geothermal resources in China is significant. According to Guan Fengjun, Head of the Geological Environment Department at the Ministry of Land and Resources (MLR), China's twelve major geothermal basins have energy resources amounting to an equivalent of 853 billion tons of common coal, which could generate around 7 billion GWh of

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electricity.xix Hot springs can be found throughout China, and are mainly located in the regions of Fujian, Guangdong, Yunnan, Sichuan and Tibet. Guan Fengjun has also stated that China also has considerable hot dry rock resources, located 3,000-10,000 meters deep. These resources could theoretically produce 860 trillion tons of standard coal equivalent (which could generate more than 7 trillion GWh of electricity), or 260,000 times more than China's annual consumption of energy from all sources combined. The Chinese government is proactively expanding the usage of geothermal resources. China's National 12th Five-Year Energy Plan, 2011-2015, sets the goal of supplying geothermal heating to 350 million square meters of building space during this five year period (compared to 150 million square meters in 2010).xx Shanghai Securities News has estimated the potential market size at 70 billion yuan (NZ$14.4 billion).xxi The government is also undertaking a geothermal energy exploration and development project, as announced by the Ministry of Land and Resources in 2011. They expect that China's geothermal usage will expand to 68.8 million tons of standard coal equivalent (around 560,000 GWh of electricity), by 2015, representing 1.7% of the country's energy consumption.xxii The China Geological Survey explained that shallow-lying geothermal energy would be explored and evaluated in 29 provincial cities across the country, including Shijiazhuang, Shenyang and Zhengzhou. The cost of 164 million yuan (NZ$33 million) would be met by the central government.xxiii Electric Power Generation Research conducted by the Chinese government and research institutes in the 1990's estimated China's geothermal potential electric generation at 6,744 MW, of which 6,000 MW is located in southern Tibet, 174 MW in western Sichuan and 570 MW in western Yunnan.xxiv However, the current forecast for installed geothermal energy capacity by 2015 is only 60 MW.xxv Geothermal could meet a persistent electric generation shortfall in remote regions such as the Tibetan Plateau, western Sichuan and western Yunnan Provinces. These regions have minimal fossil fuels and are not reached by the national and regional electric grids. Geothermal energy would also overcome the intermittency problems posed by other forms of renewable energy, as unlike solar, wind or hydro energy, geothermal has no topological or meteorological limitations. China's electricity generation has suffered from meteorological challenges in recent years. In January 2008, power blackouts were recorded in 17 provinces in China, due to prolonged snow and icy weather. Power grids were damaged, and heavy snow blocked rail transportation of coal to the east. Several droughts have

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frequently hit the hydro rich southern region of China, significantly reducing the generation of hydro-electricity.xxvi Electricity Generation from Low Temperature Resources China is also exploring electrical power generation from low temperature coproduced geothermal resources. In April 2011, China installed its first lowtemperature, geothermal power plant using fluids co-produced from an oil field. A 400 kW power generator was installed at Huabei oilfield (owned by PetroChina), 150 km south of Beijing. Further research and development will be undertaken, including testing greater capacity power generators.xxvii Enhanced Geothermal Systems (EGS) Research has also been undertaken on the potential of Enhanced Geothermal System (EGS) xxviii resources in China. Experts from the Geothermal Council of China Energy Society and Petratherm Ltd (Australia) undertook a preliminary joint study in 2008-2009. Funding has been sought from China's government for further investigation into China's EGS potential.xxix

2.4 Challenges in the Market One of China's greatest challenges is the lack of sufficient exploration to fully understand its geothermal resources. Until the market has substantial knowledge of its geothermal resources, it will be difficult to attract funding for investment. As noted above, efforts are being made to increase knowledge of China's low-medium temperature resources, including the potential of EGS resources. Globally, geothermal is a relatively small sector, with knowledge and experience concentrated in a small number of companies around the world. Given the lack of prominence of geothermal in China, the Chinese market has a very small pool of geothermal expertise and lacks the necessary geothermal technology R&D and deployment for growing the sector. The country would need to rely on external expertise.xxx Most of China's known high-temperature, power generation resources are located in only two provinces - Tibet and Yunnan. The nature of the geothermal heat source within these two regions pose challenges. Tibet is the collision zone of two continental plates (not continental/marine), while the fields in Yunnan are related to neo-volcanic activity and pose high risk for development. Both locations have a low geothermal fluid yield, which means fluids have to be imported for reinjection, thereby increasing operational costs. Tibet and Yunnan are also located at high altitudes, which significantly raises the cost of exploration and drilling.xxxi

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A lack of funding has inhibited the development of geothermal resources in these remote regions. Both Tibet and Yunnan are relatively poor and have not been able to locally fund geothermal projects, while the central government has not inserted funds into geothermal exploration.xxxii Technological issues have also posed a challenge to past geothermal projects. Key obstacles included instrument and casing failure in high temperatures, bit failure in high crystalline or granitic formations, corrosion of various parts, and loss of circulation. Geothermal developers also faced a loss of production temperature and pressure, and the lack of locally available water to replenish reservoir fluids. As production declined, geothermal projects were no longer economically feasible, and so were abandoned.xxxiii The bulk of China's geothermal power generation in China occurred in the 1970s, and there has been little progress in the sector since then. In the intervening years, there have been technological improvements which could address China's past issues concerning drilling for access and management of the geothermal reservoir.

3 Opportunities for New Zealand New Zealand's strengths currently lie in geothermal power generation, rather than direct usage of geothermal resources (although there are a handful of small niche NZ companies working on direct usage). Given that China's focus is primarily on expansion of direct heat use, New Zealand's value proposition would include general expertise, in areas such as geothermal exploration and training, in addition to more specific power generation expertise. Developments in China concerning the utilisation of low-medium temperature resources would be very relevant to the New Zealand context, where there are vast underutilised low temperature geothermal resources.

3.1 New Zealand's Value Proposition Given China's lack of geothermal development in recent years, the country is looking towards external expertise to develop its geothermal sector. New Zealand is one of a handful of countries that could supply the necessary expertise. New Zealand has contributed to at least 2,000 MW of geothermal power developments internationally, and includes in its recent track record the successful completion of new geothermal plants at Kawerau, Ngawha, Nga Awa Purua and Te Huka, and the start of construction of plants at Te Mihi and Ngatamariki.xxxiv

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Areas where New Zealand strengths would be valued in China include: ·

Exploration & Feasibility (assist China in enhancing knowledge of its geothermal resources and assess feasibility of electricity generation);

·

Training (encourage Chinese students to study at New Zealand's Geothermal Institute as an alternative to the UN Geothermal Training Programme in Iceland, where Chinese students have studied in the past);

·

R&D (provide engineering expertise to address past technological obstacles, including drilling for access);

·

Maintenance of geothermal reservoir (utilise experience in New Zealand and offshore projects to advise on operations and maintenance issues).

3.2 Potential Benefits Diversify Revenue An investment in China could create a new revenue stream with considerable future potential. There is estimated to be 1,000MW of geothermal potential left in New Zealand for generating electricity.xxxv In order to expand, New Zealand companies need to look for offshore investment and exporting opportunities. Build and Retain Quality Geothermal Engineering Skills Offshore expansion would create the volume of work necessary to attract, retain and grow a world class New Zealand engineering team. A successful NZ geothermal engineering team could offer services to Chinese utilities, investors, government and other parties looking to access these skills and IP in order to de-risk their own geothermal projects. Enhance Knowledge on Usage of Low Temperature Resources Engagement with China would also provide an opportunity to access IP arising from Chinese projects (which may be used on New Zealand geothermal projects). Like China, New Zealand has great potential to utilise low temperature geothermal resources, however there has been minimal progress on direct usage in New Zealand. China's development of geothermal direct heat usage, electrical power generation from low temperature co-produced geothermal resources, and enhanced geothermal systems would be of direct relevance to New Zealand.

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Global Opportunities New Zealand could follow Iceland's example, which is hoping to work with China in third countries which have geothermal energy potential, such as Africa.xxxvi There may likewise be opportunities for New Zealand companies to provide geothermal expertise alongside Chinese development funding. A New Zealand-Chinese development partnership in the Pacific region may be a possibility, in countries which contain untapped geothermal resources such as Fiji, Papua New Guinea and Vanuatu. New Zealand could bring to the partnership its geothermal expertise and reputation as a well known and respected Pacific nation. China is looking to expand its influence in the Pacific. According to an ANZ bank report, trade between China and the Pacific rose from US$180 million in 2001 to US$1.5 billion in 2010. During a visit to Beijing in April 2012, Foreign Affairs Minister Murray McCully stated that there were now more diplomats from China in the Pacific than New Zealand and Australia combined. McCully has said that he would welcome development cooperation between New Zealand and China in the Pacific.xxxvii

3.3 Trade Facilitation Given that China is a priority market for New Zealand and geothermal is a priority sector, New Zealand may want to advance a geothermal partnership with China at the highest political level. Iceland has taken this approach and when Prime Minister Wen Jiabao travelled to Iceland in April 2012, his visit included a stop-over at a geothermal power plant.xxxviii Wen Jiabao and his Icelandic counterpart PM Johanna Sigurdardottir witnessed the signing of an agreement to expand collaboration and knowledge-sharing for geothermal energy between the Chinese Sinopec Group and the Icelandic company Orka Energy Holding. The agreement includes expanded cooperation in harnessing geothermal energy for heating, electricity production and other related projects.xxxix If a New Zealand company were to enter a similar agreement with China, the geothermal partnership would be greatly advanced through a high-level political show of support. The New Zealand-China Free Trade Agreement could also facilitate market entry. xl The FTA came into effect in 2008, and opens new opportunities for two-way trade. The FTA immediately removed tariffs on 96 percent of New Zealand's exports to China. China made commitments in a number of services sectors which went beyond its commitments in the WTO, including in the area of environmental services and construction services. New Zealand business visitors travelling to China under these sectors would be entitled to a maximum stay of 6 months (as opposed to 90 days under WTO commitments).

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The FTA also provides New Zealand investors with a recourse to dispute resolution processes outside the Chinese legal system. Under the FTA, there is provision for compulsory settlement of disputes between foreign investors and the country in which the investment is made. If a settlement is not reached within six months, the investor is able to submit the issue to the International Centre for the Settlement of Investment Disputes (ICSID) or arbitration under the rules of the United Nations Commission on International Trade Law (UNCITRAL).

4 Conclusion China's energy market will continue to experience impressive growth into the future. As the country seeks to secure a domestic supply of non-fossil fuels, geothermal will become an increasingly attractive and reliable option. Geothermal energy is still small-scale in China (compared to hydro, wind and even solar), but the potential of this sector is significant. In this early stage of its geothermal development, China is looking for external expertise. Iceland is actively engaging in the Chinese market, and New Zealand companies might also take a strategic decision to enter the market and establish their credentials as a valued and trusted partner. The relationship would be mutually beneficial as China would value New Zealand's electricity generation expertise, while New Zealand could gain insights on utilisation of low temperature resources, and become an established player in China's growing geothermal market. Both could benefit through NZ-Chinese geothermal development partnerships.

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5 Resources and Contacts Association/Organisation

Description

Weblink

Ministry of Land and Resources (MLR)

MLR's Geological Environmental Department is responsible for geothermal resources.

www.mlr.gov.cn/mlrenglish/

Ministry of Science and Technology (MOST)

Coordinates science and technology activities.

www.most.gov.cn/eng/

China Geological Survey

Government owned (MLR) entity promoting geological investigation and mineral exploration.

www.cgs.gov.cn/Ev/English.htm

National Energy Administration (NEA)

Situated within the National Development and Reform Commission (NDRC), the NEA formulates and implements energy development plans.

http://en.ndrc.gov.cn/

Geothermal Council of China Energy Society (GCES)

Society of Geothermal Experts, directed by Keyan Zheng.

Contact email: [email protected]

Chinese Renewable Energy Industries Association (CREIA)

Industrial Association established in 2000 to promote the development and utilisation of renewable energy.

www.creia.net

China National Renewable Energy Center (CNREC)

Renewable energy policy research think tank, established February 2012

www.cnrec.org.cn/English/

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6 About Worldview 6.1 Mission The mission of Worldview is to lift New Zealand's international engagement through rigorous analysis of global issues and their 'NZ dimension'. Worldview aims to provide value to its clients through: · · ·

consolidating and interpreting public material on international issues; providing concise, accessible and informative analysis; highlighting international trends and themes of direct relevance to NZ.

Our reports may help a company decide on whether to explore a new export market, could assist a government department develop a new policy based on international models of best practise, or might provide an organisation with a snapshot of global trends in their sector. Through its website: www.worldview.co.nz, Worldview also aims to provide a platform for debate on global issues. We look at world events through a national lens and consider the impact of international issues on New Zealand. We also reverse the telescope and provide a New Zealand perspective on key global concerns.

6.2 Service Offer Worldview has three service offerings: Service Offer Service Offer Detail Country Sector Level These reports collate and analyse key publically Reports available political, economic and social information as it relates to a target sector within a particular country. These reports aim to supply NZ companies with sector specific insights into current trends and emerging themes in an offshore market. This report is an example of this type of service offering. Global Trends Reports

These reports provide quarterly, six-monthly or annual updates on global trends in a target sector. They focus on recent developments and forecast upcoming issues across multiple key countries.

Customised Reports

These reports will analyse a sector and / or foreign market according to the specification asked for by the client.

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6.3 Who we are Worldview is a start-up company founded by Amy and Simon Prebble Amy Prebble has a Masters (MPhil) from Cambridge University and ten years’ experience in the New Zealand diplomatic service. During this time she served as a diplomat in Paris and Canberra, was Private Secretary to the Minister of Foreign Affairs and Trade, Phil Goff, and worked in strategy, trade and Europe divisions of MFAT. Amy wrote her Cambridge Masters dissertation on China, and has travelled to Beijing as part of a ministerial delegation. Simon Prebble has an MBA majoring in corporate strategy from HEC Paris and a commercial background in the power and telecommunications sectors. Simon has worked for Telecom NZ, Deloitte and Meridian Energy in Wellington and Schneider Electric in Paris. He has specialised in contract management and is currently a Senior Commercial Manager at Chorus.

6.4 Contact Us If you would like further information, to discuss a report, or make a suggestion please do not hesitate to contact us at: Amy Prebble Worldview Ltd PO Box 25080 Wellington 6146 T: +64 21 120 7407 E: [email protected] www.worldview.co.nz

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7 End Notes i ii iii iv v vi vii viii ix x xi xii xiii xiv xv xvi xvii xviii xix xx xxi xxii xxiii xxiv xxv xxvi

xxvii xxviii xxix xxx xxxi xxxii xxxiii xxxiv

xxxv

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NZ Government, NZ Inc China Strategy, www.mfat.govt.nz Ibid IEA, "Integration of Renewables: Status and challenges in China", 2011, www.iea.org/publications/freepublications/publication/Integration_of_Renewables.pdf Information on the following energy resources are sourced from the IEA, unless noted otherwise. Chinadaily USA, "Dark clouds loom over solar industry," 24 February 2012, http://usa.chinadaily.com.cn/weekly/2012-02/24/content_14681304.htm Financial Times, China to restart nuclear power programme, 1 June 2012, www.ft.com/intl/cms/s/0/b328f9aaabb9-11e1-a8a0-00144feabdc0.html#axzz1wmzgMGSP IEA, "Integration of Renewables: Status and challenges in China", 2011, www.iea.org/publications/freepublications/publication/Integration_of_Renewables.pdf IEA, "China Wind Energy Development Roadmap 2050", 2011, http://www.iea.org/papers/roadmaps/china_wind.pdf IEA, "Integration of Renewables: Status and Challenges in China", 2011 Ibid Ibid Ibid Taylor, Anthony and Zheng Li, "Geothermal Resources in China", 1996, www.bla.com/ECB/PDFFiles/China1996.PDF On Sung, Peter, "Potential of Geothermal Energy in China", June 2010, http://dspace.mit.edu/bitstream/handle/1721.1/59916/676696407.pdf?sequence=1 2008 China Geothermal Industry Report, Chinese Renewable Energy Industry Association, www.cresp.org.cn/uploadfiles/108/1568/a1-b1-cs-2008-019-1-en.pdf World Geothermal Market, KPMG Iceland, 2010 China Daily, "China to further develop geothermal energy", 22 April 2011, www.chinadaily.com.cn/china/201104/22/content_12379714.htm Zheng Keyan and He Fang, Prospects of GHP & EGS Development in China, 2011, http://www.geothermalenergy.org/pdf/IGAstandard/SGW/2011/zhengkeyan.pdf Yuanyuan, Liu, "China on Track to Increase Geothermal Energy Development and Utilisation", RenewableEnergyWorld.com, May 2011, www.renewableenergyworld.com Ibid China Daily, "China's geothermal energy market set to boom", June 2011, www.chinadaily.com.cn/bizchina/2011-06/16/content_12715598.htm Yuanyuan, Liu, "China on Track to Increase Geothermal Energy Development and Utilisation" University of Queensland, www.uq.edu.au/geothermal/geothermal-energy-for-china www.geothermal-energy.org/pdf/IGAstandard/WGC/1995/1-ren.pdf Bertani, Ruggero, Geothermal Power Generation in the World: 2005-2010 Update Report. Proceedings World Geothermal Congress 2010. IEA, "Integration of Renewables: status and challenges in China", 2011.

"Electrical Power Generation from low temperature co-produced geothermal resources at Huabei Oilfield", 2012, http://pangea.stanford.edu/ERE/pdf/IGAstandard/SGW/2012/Xin.pdf EGS refers to creating an enhanced geothermal system in hot dry rock resources using 'hydraulic stimulation' - injecting water to improve the permeability of rock. Zheng Keyan and He Fang, "Prospects of GHP & EGS Development in China", 2011 Ibid Liu, Xiangmin and Shi Yanzhou, "Summary of Geothermal Power Generation Engineering Technology in China", 2005, www.geothermal-energy.org/pdf/IGAstandard/WGC/2005/1307.pdf Ibid Ibid NZTE & Geothermal New Zealand, "Geothermal Energy, the Opportunity", www.geothermalnewzealand.com/NZTE_Geothermal_Booklet_and_Profiles.pdf EECA, "Geothermal Energy", http://www.eeca.govt.nz/efficient-and-renewable-energy/renewableenergy/geothermal-energy ChinaDaily, "Iceland Target's China's Geothermal Energy Market", www.chinadaily.com.cn, March 2011

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McCully, Murray, Speech to China Foreign Affairs University, Beijing, 6 April 2012, www.beehive.govt.nz/speech/speech-china-foreign-affairs-university-beijing Xinhuanet, "Premier Wen pledges more cooperation with Iceland in geothermal energy", April 2012, www.globaltimes.cn Orka Energy, "Expansion of Cooperation in Harnessing Geothermal Energy in China", April 2012, www.orkaenergy.com NZ-China FTA, www.chinafta.govt.nz

_____________________________________________________________________________________________ Disclaimer: This report was compiled from publically available information and while we have aimed to ensure accuracy and reliability of sources, Worldview accepts no liability for any errors or omissions expressed. The information expressed in this report is general, and you would be advised to conduct your own independent assessment of the opportunities in this market.

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