Yangcheng Coal-Fired Power Plant, Shanxi Province, China

Yangcheng International Power Company is now operating its 2,100MW (6 x 350MW) No. 1 coal-fired plant in Shanxi province, about 800km south west of Beijing. The steam generators fire low-volatile anthracite coals from a nearby mine, representing a new power supply strategy for China.

Yangcheng International Power Company is a joint venture between AES Corp, the leading US Independent Power Producer (IPP), and four Chinese groups. Yangcheng supplies power to the eastern coastal province of Jiangsu as part of China's effort to substitute the transmission of electricity for the transport of coal (the coal-by-wire strategy). Previously, power stations were built close to markets and coal was transported to them. As well as being expensive, this created transport congestion and other environmental problems. The new power plant was built on the site of the coal mine, in Shanxi Province, and the electricity generated is transmitted over a 740km, high-voltage transmission line to Jiangsu.

Orders for the plant were placed in 1996 and the first turbine started before the end of 1999. Other turbines will then start up at five-month intervals until 2002.

ELECTRICITY PROVISION

Shanxi Province, China's major coal producer, is working on becoming the country's largest electricity provider. According to a three-year plan, the provincial government set aside RMB¥70 billion for improving ten large power plants. After completion of Yangcheng, Shanxi had an installed capacity of 6,500MW, and can produce 30 billion kWh of electricity for other Chinese provinces annually.

For AES, Yangcheng marks a significant advance in the Chinese IPP market. Its earlier Chinese projects were small to medium scale. This project will be one of China's largest, taking AES into the top ranks in the country. AES invested $98 million in the joint venture, and the Chinese subsidiary of US company AES will hold a 25% stake in the project. Chinese sponsors include North China Electric Power, local utilities in Shanxi and Jiangsu, and provincial investment arms. The partners' agreement will run for 20 years from the venture formation in October 1996.

YANGCHENG PROJECT FINANCE

Investment of around $1.9 billion was mostly covered by debt, although project shareholders supplied $393 million in equity. Initial equity investments were made in June 1997. International sources provided around 55% of the finance. The US Export-Import Bank initially provided $400 million, and Germany's official development finance group Kreditanstalt für Wiederaufbau (KfW) provided a similar sum at an annual interest rate of about 6.6%. China Construction Bank and the China State Development Bank provided the main Chinese project funding.

POWER PLANT MAKE-UP

Yangcheng Intnl Power Generating Co awarded contracts worth about $400 million to Siemens AG, and $350 million to Foster Wheeler Energy Group, to design and equip the Yangcheng power station. Yangcheng itself handled civil works, commissioning and erection of the plant, although both Siemens and Foster acted as consultants.

Siemens provided plant design and the six 350MW steam turbine units, generators, instrumentation and control equipment. The contract is Siemens biggest to date in China. The company has been involved in five coal projects in the country, with a combined capacity of 5,100MW. Tianjin UBS Park Industrial Co., Ltd. supplied the steel structure, roofing, siding, decking panels, windows and doors for UBA and UMA Building.

Foster Wheeler provided engineering, procurement and delivery of six 350MW steam generators, coal-handling equipment and ash removal systems. The steam generators use FW's double-arch fired technology. The group claimed it to be the largest single-steam generator order ever placed in China.

Shanxi Provincial Coal Transportation and Sales Company supplies low sulphur coal to power the station.