*****International Association for Small Hydro*****

China has 17% of the earth's hydropower resource and has installed around half of the world’s SHP capacity. Since the establishment of the Peoples’ Republic in 1949, approximately 20GW of SHP has been constructed, with more than 80% of this coming on-line since the mid 1970s. One third (7GW) of this total capacity is below 500kW and 14.5GW is below 10MW. The economic SHP resource is estimated to exceed 70GW. The latest statistics about China’s SHP can be found in the annex of this article. Table 1 shows the provinces with total capacity of small hydro power over 1,000 MW.

Table 1 Provinces with installed hydropower capacity over 1,000MW in 2000

No.	Province	Capacity (MW)	No.	Province	Capacity (MW)
1	Sichuan	4,332	7	Zhejiang	1,692
2	Guangdong	3,513	8	Hubei	1,432
3	Fujian	3,442	9	Chongqing	1,326
4	Yunnan	2,831	10	Xinjiang	1,205
5	Hunan	2,771	11	Jiangxi	1,187
6	Guangxi	2,480	12	Guizhou	1,013

Capacity under 50MW was classified as SHP

As many as 56 million rural Chinese people still do not have access to electricity, but the wide dispersal of the unelectrified communities tends to make large-scale centralized generators and extension of electric grid networks impractical or uneconomic. These problems have to be addressed by exploiting locally-available energy forms to stimulate rural self-reliance. SHP is a key environmentally-sound solution for improving the economic growth rate in Chinas vast rural areas, many of which have rich, undeveloped SHP resources.

The Government has major plans for continued rural electrification via SHP; the technology is now well-proven and is cost-effective in areas remote from the grid. As such the investment risk for new SHP projects is low. China is perhaps unique in promoting a national policy which places equal importance on hydro and thermal power, and which devotes as much attention to small hydropower as to medium and large scale projects.

In recent years the rate of commissioning of new small hydro capacity has been around 1000MW per year. The Chinese government plans to install between 1500 and 2000 MW of SHP capacity every year between 2001 and 2005, in conjunction with improving water supplies for around 20 million people.

The Electric Power Law of 1996 established the framework for foreign investment in Chinese power projects. “The State will encourage and introduce domestic and foreign financial sources to invest in exploiting electricity sources and erecting enterprises in this field”. Article 3 of Chapter 1, stipulates that investments in the electric power industry observes the principle of “He who invests is he who profits” and “ the investors are empowered with legal right over the electricity generated from their investment.” In the respect of medium and small hydro power, “The State advocates the development of medium and small hydro power which could improve electrification in the rural areas.” China's practice and experience has shown that exploitation of medium and small hydro power can give impetus to rural economic and social development. As this experience now has been upgraded to law, it should have a profound effect on the future development of medium and small hydro power in China. In many respects, the key features of China’s approach to SHP development during the past thirty or so years could be a blueprint for SHP and rural electrification in other developing countries. SHP implementation is very much decentralized away from central government, with local government and local communities taking on responsibility for construction and management of their plant, and ultimately consuming the electricity produced. This is achieved by mobilizing capital from a number of channels, including all levels of government, the local community (mainly farmers), share-holders and private enterprise, and development banks. Nevertheless, the State Government has certainly assisted new SHP capacity building by identifying the value of the resource as a tool for rural electrification and development – as stipulated in various state directives – and backing this with partial financial contributions.