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Full transcript of the State Council policy briefing on June 24

Updated: Jun 24,2016 8:41 PM

Xi Yanchun:

Good morning, ladies and gentlemen. Welcome to the policy briefing of the State Council. This week’s State Council executive meeting discussed work on the Internet plus smart energy action plan. In order to tell us more about it, today we are so glad to have Li Ye, chief economist of the National Energy Administration (NEA). Please welcome Mr Li to give us more details and answer questions.

Li Ye:

Thank you. Good morning, ladies and gentlemen, media friends. I feel very grateful to attend today’s policy briefing of the State Council. As we all know, the State Council executive meeting on June 22 discussed the work report on implementing the Internet plus smart energy action plan proposed by NEA. We know that listening to the work report is also an inspection and deployment of this work by the State Council. Now let me give you a brief account.

The State Council attaches great importance to the innovative development of the energy industry, represented by Internet plus smart energy. Premier Li Keqiang has stressed many times that energy supply is related to China’s economic and social development. We have to promote the Internet Plus strategy, boost deep integration of the Internet and energy industry, facilitate smart energy development, improve the level of development of green, low-carbon and smart energy, the Premier said. He urged building a clean, high efficient, safe, and sustainable energy development road, which can bolster sustainable and sound development of the economy and society.

Currently, the concept of “energy Internet” is attracting great attention at both home and abroad. Generally, people think “energy Internet” (also known as “Internet plus smart energy”) will bring some opportunities for the development of the energy industry. First, it will greatly promote the development of clean energy, especially the well-known method of distributed renewable energy use.

Li Ye:

Second, it is of great significance for the intellectualization of energy technology and equipment through the development of energy Internet technologies. China has launched the “Made in China 2025” strategy, and a corresponding implementation plan for energy and equipment has also been issued. This plan includes lots of equipment for energy Internet and gives a clear direction for Chinese technology standards going forward.

Third, using new technologies and business modes such as energy Internet can provide examples for reform of the energy system. Therefore, according to the unified arrangement by the State Council, the guideline to promote Internet plus smart energy development was issued in February, jointly by the National Development and Reform Commission, NEA, and Ministry of Industry and Information, clearly setting 10 tasks.

From theory to practice, the energy Internet is still under exploration. In the guideline, we encourage carrying out pilot demonstration programs and accumulating new technologies and business modes that can be duplicated before 2019. By the end of 2025, we will promote some sophisticated technologies and models, summing up the successes from the demonstration projects.

Li Ye:

Guidelines on the energy plus Internet has attracted much attention, and the National Energy Administration and other department worked together to put it into practice. The current focus is to carry out the plan, and so far we are mainly promoting the work through the following four aspects:

First is to start the pilot program. The National Energy Administration has put together an implementation plan on the smart energy pilot program, which will be released later. It focuses on encouraging effective investments in the energy sector, laying a road map and timetable for the program. As we know, many regions are excited about the program. We estimated that it will bring about investments of at least 40 billion yuan this year. The National Development and Reform Commission also set up a specific construction fund, about 300 million to 400 million yuan, in the energy sector to support research and pilot programs.

Second is to widely promote technological innovation, and conduct technology research into key technology equipment. Recently, the NEA and NDRC printed and distributed a detailed action plan on energy technology revolution based on the energy development strategy of “Four Revolutions and One Cooperation” proposed by President Xi Jinping. In the action plan, we have deployed nine innovation actions in many important sectors that are related to the energy Internet, such as energy production, smart consumption, and energy systematic integration. It is one of the 15 important tasks in the energy technology revolution plan, and also clearly maps out a timetable for the innovation plan.

Third is to build a standard system. We all know that energy is related to the safety of national economy, and the technology and concepts of the Internet, and the technology standard is especially important. We have organized experts in energy and information industry to jointly conduct the research on a standard system building and to help find the common points of traditional energy field and modern Internet technology. It has formed a general framework and action roadmap for the standard. China now has become a full member of the smart energy system of the International Electrotechnical Commission, which signals that the standard of energy Internet we are building is synchronized with international levels.

Fourth is to continuously push the reform and reserve development space. We are trying to conduct research on support measures for industry access, including the pricing mechanism, and interconnectivity through the Internet pilot program. After the release of the No.9 document, reform on the electric power system is being promoted intensively, and we hope the energy Internet could help produce new models and new businesses in the reform of electric power system and make room for the reform. In the implementation process, we will make use of the active dual role of the government and market to encourage the participation of private capital, and expand the financing channels for energy Internet.

Li Ye:

In recent months, we have done some work in the above four areas. Next, we will focus our efforts on the following aspects:

First, technological innovation. Technological innovation is the key to developing energy Internet. Next, we plan to set up a national research and development platform for energy Internet, taking as reference foreign practices of establishing key labs and R&D centers. Meanwhile, we will also support the establishment of industrial and technical alliances for national energy innovation. Now many enterprises are calling for such alliances, wishing to integrate several large sectors, especially energy and Internet. A lot of large enterprises have brought forward requests in this regard. This will be the first step. Many projects and research on technology and equipment will be carried out at the same time.

Second, we will pay close attention to developing related standards. Standards involve all aspects of the energy sector. We have now initially formed the overall framework and the course of action for building a standards system. Next, based on the implementation of pilot projects, we should lose no time in developing a group of much-needed standards and specifications to provide support for such projects. Meanwhile, we will actively strengthen communication with the International Electrotechnical Commission and other related international organizations to keep track of some standards that are currently being studied by these organizations, and even make our standards the internationally accepted ones.

Third, we will expedite the implementation of pilot projects. A large number of projects are now being organized, which will soon be implemented. At the same time, we, as the authority of national energy industry, should strengthen services in terms of tracking, monitoring, coordination, expert consultation, guidance, evaluation, summary, promotion and application. We should try our best to perform the duties of the National Energy Administration, and develop new technologies, models and business trends that can stand the test of the market and be integrated with internationally accepted models.

Fourth, we will speed up the study and improvement of support policies. One expert in our industry has noted that policies are crucial for promoting energy development. Next, we will pay close attention to implementing the national strategy of big data to integrate, share and trade big data in the energy sector. We will also encourage Internet companies to cooperate with energy enterprises to facilitate application innovation and strengthen safety supervision. And, in order to improve the support measures for pilot projects, we will conduct further studies on some special construction funds, including some support policies on taxation and pricing.

Li Ye:

I have just briefly introduced our recent work and what we plan to do in the next step to our media friends.

The National Energy Administration attaches great importance to today’s policy briefing. Today, responsible people from the Department of General Affairs and the Department of Technology and Equipment are here with me. And members of the main drafting group of the Energy Internet Action Plan, who are also members of the Energy Internet Expert Committee, are here, too. We have specially invited two professors from Tsinghua University: Dr. Gao Feng and Dr. Chen Qixin, executive vice dean and vice dean of the Tsinghua University Energy Internet Research Institution. Both are industry experts. Next, my colleagues and I are willing to answer questions from media friends and discuss some issues of common concern.

Xi Yanchun:

Thanks to Mr. Li’s introduction. Now question time, and please identify yourself before you ask your questions.

China Radio International:

My question is about “Internet plus” and smart energy. Mr. Li, would you please expound on this? In addition, how can the market play a decisive role in it? What support measures will the government make to boost the progress? Is there any explicit timetable or roadmap? Thank you.

Li Ye:

Thanks for your question. There are two “keys” in “Internet plus” and smart energy, or the “energy Internet”. One is technology. The other is system and mechanism, or policies. Technology is an important part. In the past, traditional enterprises in the energy industry were separated based on what sectors they were in. Now, the most important idea of energy Internet is the complement of coal, electricity, and gas, especially the interaction between production and consumption, in which technologies and ideas of Internet are applied. In terms of technology, we have deployed many technologies and equipment in our plan, and I will not introduce them one by one. The first thing to do is technology innovation, especially in core technology research and development. R&D efforts cannot simply depend on “the work behind closed doors”. In fact, we want to coordinate basic research, research and development of technical equipment, and engineering application to make a major technology breakthrough in energy Internet.

The second thing is system and mechanism. Generally speaking, energy Internet is a new thing. So regulating and market systems in this regard are not mature. The next thing we should do is build a market system featuring equality, interconnectivity, sharing, and opening-up. In addition, regulation will be strengthened, and the regulating system will always be there to monitor the energy Internet industry.

Li Ye:

The third thing is industry guarantee. In the past, people conducted businesses on their own. Now if energy Internet became a new industry, there will be many new products coming out. Who will manufacture the new products? So industry guarantee, which includes manpower, material and financial resources, is very important.

The fourth thing is strengthened organization. The feature of energy Internet is cross-industries. It even connects closely with the individual consumer. So we think that organization is also very important.

In terms of timetable and roadmap of the energy Internet, we have explicit statements in the plan. Three will be in two stages. In the first stage, all kinds of energy Internet demonstration projects will be completed before the end of 2019. The energy Internet will be advocated and applied in the second stage, from 2019 to 2025. Of course, these are not simple dividing points. Timely efforts will be made in order. Thank you.

China News Service:

Promoting energy conservation and reducing emissions reduction are twois one of the important goals of enhancing the Internet plus smart energy. Could you please have an offer an introduction about on how to promote the efficient use of fossil fuels? Thanks.

Li Ye:

This is a very important question. No matter what kind of technology and business mode we adopt, the most crucial thing in the energy field is to make full use of its nature natural essence. What is the nature natural essence of the energy? In the past, it was to ensure supply and was the food fuel of industries. This nature still exists today and it is still an important guarantee for the national economy, social development and people’s livelihood. Meanwhile, the clean and efficiency of energy is raised to a higher agenda. Adjustment of the energy structure and its large-scale and efficient allocation and consumption on the whole industry chain is are the keys to of the energy development in both China and the whole world. Either implementing the energy Internet action plan, or developing one in accordance with the energy Internet Internet model, or using Internet Internet technology and ideas to upgrade the traditional energy industry, - these ir goals are all first to adjust structure, and secondly to improve efficiency.

Your question is very important because “Energy Internet” is usually looked at as a new business model and is easily linked with new energy and renewable energy. However, we saw a greater potential on in its role for traditional fossil fuels. Traditional energy still occupies a large proportion of use in China, with fossil fuels accounting for about 89%. percent of energy sources. Last year, the proportion of new energy and renewable energy respectively reached 11.4 percent and 11.5 percent and all the rest were fossil fuels.

Just now we mentioned a concept of multi-energy complementarity, such as, raising the concept of smart mines from the production and consumption-supply of fossil energy. – eEven if you are in Beijing, you can know the production situations and safety status of all mines by Internet technology. Now we have realized smart mines, and have completely applied digital and Internet Internet technology in the production of traditional energy.

Li Ye:

On the other hand, there is a huge space area to improve the energy efficiency in its transmission, distribution and end-use, which also has also witnessed the most loss of energy efficiency. In the past the traditional fossil fuels were involved large-scale production and use. Actually there are many new use patterns for fossil fuels. If you have the opportunity, I recommend you to visit Beijing Gas Group, which is a good such example of such. Adopting the Energy Internet model and concept is actually a great revolutionary promotion for traditional fossil fuels. In this regard, if you have any particular interest in the technology, we have experts who can discuss this with you at any time. Thanks.

China Daily:

Mr Li, would you please tell us what benefits we will receive if the “Internet plus energy” action plan is put in place? Thank you!

Li Ye:

That’s a good question. Energy not only concerns our country’s economic and social development, but concerns people’s living standards. The concept of “Internet plus energy” has attracted many Internet enterprises’ attention in recent years, and we also invited experts and technicians at Alibaba, Tencent and Huawei to carry out researches with our colleagues when drawing up the action plan.

We all recognized that the “Internet plus energy” will not only change the traditional energy production mode, but also change the pattern of consumption, which may greatly influence the direct consumers of energy, especially the people. In the past, we were simple buyers who bought electricity and heating from power, as well as thermal, companies; in the future, people also will become energy producers, with the use of the smarter energy mode. For example, in the future, you can use your house to develop your own energy, to help meet the needs of daily life. Once put into production, it can also be sold to energy companies. When there is a power failure, we can borrow electricity from our neighbors, which is exactly a private transaction. The consciousness of consumers will change.

Second, changes will take place in some areas, such as the well-known electric battery vehicle industry. I suppose most of you here have had experience driving an electric car. Although the industry has grown fast nowadays, there are still some problems, such as the inconvenience of charging. We know that since the popularization of private cars in the United States from 1918 to 1920, automobile culture has already existed for over 100 years. In China, most households began to own private cars after 30 years of reform and opening up, and in the next step, the implementation of the “Internet plus energy” action plan will bring a revolutionary change and great convenience to the use of electric cars. For instance, people can make an appointment to charge a battery, choosing a charging pile with a lower load rate in advance.

Third, smarter energy management will bring great benefits to energy saving in households. In the past, the energy consumption of a household was too costly and might cause waste for lack of smart management. However, smarter energy management changes it. For example, if we are here without turning down the air conditioner when leaving home, we can turn it down now. And if you want to save time and cook dinner earlier, you can order the energy controller to switch on a kitchen appliance here now. It is of great importance for energy savings to apply smarter energy management to every household in China. Those are the three aspects that will be beneficial to people. Thanks!

People’s Daily

Internet plus smart energy will follow distribution concept so how should we handle the relationship between Internet plus energy and construction of centralized and large scaled grid. Thank you

Li Ye:

Your question is very acute. Internet plus smart energy covers the entire industrial chain of the energy sector and is related to fossil energy, renewable energy and other energy production and consumption. Indeed, we feel that Internet plus smart energy has obvious advantage in the use of renewable distributed energy.

However, it is not in conflict with the application of centralized production, centralized distribution, grids and giant transmission projects. In China, large-scale centralized construction, centralized distribution and transmission projects are what we urgently need in the current situation, in which the energy in our country is now mostly produced in the western region and vastly consumed in the eastern area.

We still have to maintain this large-scale centralized construction and distribution guaranteed by the traditional fossil energy or energy achieved by traditional methods within years. This large scale centralized construction and distribution of energy cannot be replaced within a short period of time.

However, actually the concept of network has been applied to the field of traditional centralized production and distribution of energy, reflecting the concept of smart grids. We now have begun to explore to use Internet technologies to transform and update traditional fields including large-scale electric power plants, the production, distribution and transmission of electricity, oil, natural gas and coal.

Judging from China’s reality and its demand of energy, centralized production and distribution of energy is not in conflict with the distributed energy and is complementing each other.

Professor Gao Feng, executive vice-dean of the Tsinghua University Energy Internet Research Institution, will give you more detailed explanations.

Gao Feng:

I’d like to cite an example. Beijing Telecom owns about 30,000 base stations in Beijing, with each station storing at least 40 kilowatt-hours (kWh) of electricity. That means a total of 1.2 million kWh of electricity is available. The peak in demand occurred on July 13 last year, three percent higher than in the previous peak, or 550,000 kilowatts more. If the peak time lasts for two hours, only 1.1 million kWh of electricity is needed to secure normal operation. This is the advantage of a distributed energy system controlled by the Internet, which could save costs in the hundreds of billions of yuan on power grid construction. Thus, the distributed model could cooperate with and help the centralized model in energy usage.

Chen Qixin:

In fact, “Internet Plus” can bring some unexpected benefits. We talked about some obvious benefits just now, while there are some others we have never thought of. For instance, the United States has taken advantage of the Internet to integrate resources from users to respond to their requests. As for electric power, it can reduce the costs for electric investment, so long as these users agree to cut power for four to eight hours during the warmest weather in the summer or go outside rather than keep the air conditioner on at home for several hours.

There are also some unexpected aspects for the Internet. For example, as long as you have an air conditioner at home and set up a controller, you can enjoy energy-saving services in which the refrigeration system can be shut down automatically when demand is low. An Internet-based system can distribute energy resources as needed.

Guangming Daily:

Mr Li just mentioned that the “Internet plus smart energy” program will be under testing until 2019. Would you please tell us the target and the main area of the pilot program this year?

You said that a bundle of projects are eager to participate in the program. What are they? How would the program change people’s lives?

Thank you.

Li Ye:

We officially launched the plan for Internet plus smart energy on Feb 24, exactly four months ago. Though local governments have been enthusiastic during these months, we have to be frank that the work has just started and is still underway.

We plan to issue a notice to invite projects, as many projects should be launched for the benefit of the whole country. To be frank, many projects are related to either Internet or energy, but not all of them meet the standard.

With macro and grand goals and strategies in sight, the national program mainly supports modeling projects with a specific purpose.

The modeling projects must be achievable, and capable of formulating a platform and production chain for technologies, standards and industries. It should serve as trailblazers, the success of which can be followed by others.

Some local governments applied for the program, and other applicants are enterprises, some of which are purely involved in IT industry.

Our next major task is to “encourage”. In addition to national support, we encourage social resources and enterprises to tap into the field. We will also encourage financial institutions, and foreign technologies and theories to explore and discuss these issues.

Currently, we are striving to make breakthroughs in some major products and technologies. And this is very import at present.

For example, energy storage. People say renewable energy is scattered, and distributed energies are volatile. But as former US Energy Secretary Steven Chu said, if energy storage is workable, the combination of distributed photovoltaic energy, energy storage and smart grid will overthrow the traditional way of power distribution. I will not judge his opinion, but we can take it as a reference.

The media, methods, and technologies for energy storage vary a lot, and different kinds of energy require different ways of storage.

Our concept of energy storage chiefly refers to the storage of electricity, but it can also be the storage of other forms of energy, such as thermal energy.

Li Ye:

Second is power energy storage, whether the storage is on the generation side, power side, grid side or user side, they are all different storage patterns. We will want some demonstrations on smart grid and energy storage. We agreed to establish a large-scale chemical energy storage demonstration project in some key areas such as Dalian in Liaoning province. Dalian was selected due to its specialties: First, it is the grid end in Northeast China. Second, there are many types of energy that exist together, such as offshore wind power and nuclear power.

The “storage” we talked about today has a completely different concept from what people would usually consider. As there are differences in peaks, the most important thing is the adjustment function. We will expand experiments and demonstrations accordingly. There are more projects in the long-run. The two professors have more thoughts, but I dare not publicize their information for them. Some are astonishing world projects.

Some traditional Internet enterprises are inventing new technologies. For example, Huawei has invented many new technologies. Now they are entering the field of energy. Whether the things they invented work needs to be tried in test areas. Demonstrations need at least one key element. Technologies and facilities need breakthroughs to mature. Otherwise, a new idea with immature technologies and facilities cannot become reality. Thank you.


Mr Li. What investment opportunities will emerge from building the energy Internet? Will the National Energy Administration take some new measures to absorb the social capital?

Li Ye:

I want to answer your question from two aspects. First, China is the largest energy production and consumption country in the world, and energy is our most important basic industry. There are boundless commercial opportunities in energy. As everyone can see, currently the leading new energy enterprises are mostly private enterprises and foreign enterprises. And now some private capital and private enterprises have even started to enter the traditional energy field. So the energy field has become a hot spot for national, social capital and enterprise investments.

It has been said that energy Internet or Internet plus smart energy will bring many new businesses. You may have noticed that the ongoing electricity power system reform is rather different from the reform in 2003. This time, the reform focuses on power distribution and sale. In a few months, hundreds of power selling companies have registered. They purchase electricity and sell it according to the differences in peak demand and off-peak demand, which is pure trade. Some other companies want to build commercialized areas, residential communities or research and development institutions with the new concept of energy Internet. Previously, the power supply infrastructure in these areas was not good enough. Now some companies have proposed that they will use their own funds to build the infrastructure, which will enable power, gas and heat to be distributed in such areas through the energy Internet. And later they will run such infrastructure and gain profits. I learned from many enterprises and local governments that there are many people who want to do such businesses and felt very excited. Two professors, do you have any good examples for our media friends? Mr Chen, please.

Chen Qixin:

I will give you some examples I have learned about. Just like Mr Li said, there are many new models and investment opportunities. Currently, Guangdong and Chongqing are two pilot areas. Guangdong has been doing quite well owing to its sound market environment. We can see that now some power selling companies are combining electricity meters with users’ data. After the data is dealt with according to state regulations, they may turn out to be very useful information. For example, the car-using app Didi can reveal when most people in a community go to work, and home appliance retailer Suning may learn how many years air conditioners are being used and when they will be replaced. So we can see that once the traditional energy companies, including power supply companies, combine with the Internet, various new commercial models will pop up. Thank you.

Xi Yanchun

That’s all for today’s policy briefing. Thank you all.