The new silk road: China commits to fibre

The new silk road: china commits to fibre

In 2013, China’s President Xi Jinping unveiled plans for two vast infrastructure and trade networks aiming to stimulate  the country’s economic growth: the New Silk Road (also called the Silk Road Economic Belt) and the Maritime Silk Road.

$170 billion investments in Internet projects announced by China institutions

63% China fixed-line broadband penetration target for 2017

The New Silk Road is, in effect, an expansive network o f communication, energy and transport projects. One key aim is to significantly stimulate economic development across China’s inland regions. According to the Want China Times, the total value of the New Silk Road will amount to a staggering $21.1 trillion. The government is not only providing funding and attracting private capital, but also aiming to make legislative and administrative procedures easier and faster.

Shaking up global energy

Energy infrastructure largely underpins all other economic growth ambitions, and there may be worthwhile opportunities to foreign parties interested in providing funding, knowledge and equipment. These infrastructure projects could create a huge concentrated market involving more than 75% of the world’s energy resources and 60% of the global population, responsible for 30% of the world’s total GDP.

For China, a country with a truly huge population that is increasingly demanding a higher standard of living, energy security is essential. The New Silk Road will be providing new hydrocarbon transport routes and new projects will allow China to better access natural resources in inner Asia, the Persian Gulf and the Caspian sea. Key projects include gas pipelines that run across central Asia, a $46 billion China-Pakistan corridor and hydropower projects in Pakistan and a liquefied gas project in Russia. In 2016, China’s level of dependence on fossil fuels for electric power stood at 64%, significantly lower than 77% a decade earlier.  Developments stimulated by the New Silk Road project, possibly coupled with new partnerships, could be good news for renewable energy.

According to Bloomberg New Energy Finance, China invested $102 billion in domestic renewable energy in 2015, double the amount invested domestically by the US.  President Xi Jinping wants China to lead the fight against climate change. The Asian Infrastructure Investment Bank (AIIB), which is investing $100 billion in the New Silk Road promotes itself as ‘lean, clean and green’, and aims to support countries in honouring their commitments to the Paris Agreement.

The AIIB’s 2017 Draft Energy Plan also shows that coal-based projects are being avoided. All of this could mean opportunities for engineering firms, infrastructure providers, Smart Grid experts and clean energy companies.

GLOBAL MARKET EFFECTS

The New Silk Road offers opportunities in areas such as technology, know-how and energy and telecom network products. New transport routes may also be good news for companies sourcing Chinese products or exporting to Asia. One thing is clear: China’s bold ambitions will certainly affect existing business and power structures as well as global relations.

Fibre for 100% of urban areas

China’s National Development and Reform Commission and Ministry of Industry and Information Technology (MIIT) have announced investments of $170 billion in Internet projects, geared towards improving broadband and mobile network coverage. The resulting digital highway will increase the speed of data exchanges between East Asia and Europe. There are plans to increase the number of points of presence connecting China to overseas networks from 80 to 120. Submarine cables installed across the Arctic Ocean aim to cut data packet travel times between Tokyo and London by 30 percent.

In China, some 700 million people are online today, many with high-speed connections. Although most users are located in the country’s big cities, about 178 million are from smaller rural areas. According to MIIT, the country’s fibre network now covers more than 82 percent of rural villages. China’s Information and Communication Development Department has recently stated that the country’s fixed-line broadband and mobile broadband penetration rate should be 63% and 75% respectively by the end of 2017. By 2018, broadband coverage to all urban areas and 90 percent of the countryside should be realized through the rolling out of 90,000 kilometres of fibre trunk cables. In addition, 2 million 4G base stations are to be added, ensuring 75 percent of the population have mobile network access.

China is home to half of the world’s FTTH subscribers with 120 million households enjoying FTTH connections in mid 2016. Recent deployment projections show China reaching nearly 300 million subscribers by 2020. This push to deploy FTTH is good news for optical fibre technology suppliers around the world. “China’s government is strongly committed to improving broadband connection speed,” says Vladimir Kozlov, CEO and founder, LightCounting Market Research. “Deploying 10G PON would appear to be a logical step towards achieving this goal. Although China is the global number one when it comes to the number of FTTH customers, the connection speed is below the global average. A large amount of bandwidth is deployed in the last mile, near the customer, but this is not high throughout the network. The main connectivity speed bottleneck is not FTTH, but the supporting network. These metro aggregation networks tend to lack capacity. Deploying 10GbE optics in this part of the network and 100G DWDM in the metro-core infrastructure to counteract this will be the main focus for China’s service providers in the coming years.”

Gas: key to decarbonisation?

As we strive towards widespread adoption of renewable energy, fossil fuels are widely generally seen as part of the problem, not the solution. However, gas can help pave the way to a low-carbon future…Production volumes and yields of energy from renewable sources have improved significantly in recent years. However, there’s still a long way to go before renewable energy can fully meet global demand. Costs are still relatively high, and supply continuity is not always guaranteed. Fossil fuels will still be required during the transition period, so it makes sense to opt for a source with relatively low emissions that should remain available for years to come, and can be harvested at a reasonable cost.

Cleanest-burning hydrocarbon

Of all fossil fuels, natural gas has the lowest carbon footprint. Gas is also relatively reliable and safe. Per kWh of generated electricity, its CO2 emissions are only half that of coal, which is most frequently used in electricity generation today. Today’s high-efficiency technologies can extract higher levels of energy from gas with lower emissions. Gas releases less than one tenth of the air pollutants emanating from coal. In fact, European ‘think tanks’ Agora Energiewende and Sandbag claim the uptake of gas as a replacement for coal resulted in a 4.5% lower CO2 in 2016 compared to the previous year.

A gas-fired power plant can ramp up in one-third of the time a coal plant would require, reducing waste and making it easier to match fluctuations in demand. Gas doesn’t only offer potential in the area of energy generation.

In transport, for example, using methane-based fuels instead of traditional fuels could reduce CO2 emissions by as much as a quarter.

Change of mindset

International Energy Association (IEA) data puts available resources of LNG (Liquid Natural Gas) at 780,000 bcm. At current production rates, this should be sufficient to last 217 years. Technical innovation is, however, essential to optimizing the potential of gas as a bridge on the route to sustainable energy. One prime example of innovation using gas to support renewable energy production can be found in Kuraymat, Egypt. Here, Integrated Solar Combined Cycle (ISCC) plants are generating electricity using a combination natural gas generators and solar energy.

Adoption of such gas-based innovations on a larger scale does, however, largely depends on policies and legislation in different areas. That may often require a change of mindset, as the realization grows that fossil fuels can be a vital enabler to sustainability – not just a threat!