City's largest electricity supplier wants to hold off on power-import decision

City's largest electricity supplier says it is too early to decide between local solution and importing from the mainland grid

PUBLISHED : Thursday, 22 May, 2014, 3:53am
UPDATED : Thursday, 22 May, 2014, 4:30am

The largest electricity supplier in Hong Kong says it is too early to rule out a local solution to the city's future energy needs before a decision is made on importing power from the mainland grid.

In a 30-page submission filed with the Environment Bureau yesterday, CLP Power said it wanted "flexibility" and a "phased" approach in dealing with the issue, and both import and local generation options should not be ruled out "once and for all" at this stage.

The import option would see Hong Kong meet 30 per cent of its power demand by importing electricity from China Southern Power Grid, on top of its existing nuclear energy imports. The local option would increase gas-fired power generation to meet 60 per cent of future demand.

"There is no need to shut the door to any one of the options," said Betty Yuen So Siu-mai, vice-chairwoman of CLP Power, adding that there was not enough information available to make an informed decision now.

"If I had to choose today, I would pick the local generation option," she said.

The firm says it should be allowed to build "a small number" of new gas-fired units first, to meet the expected stricter air emission and carbon targets to be set for 2020, while some of its coal-fired generation units would be retired in the coming years.

"We have no choice, as Hong Kong will have to meet these targets by then," she said.

Yuen said the import option would not help the firm on emissions in the short term because it could only be delivered 10 years from now.

Yuen could not say how many new units would be needed as it would depend on the targets assigned to the firm, but she said each unit would cost between HK$4 billion and HK$5 billion.

Under the current regulatory regime, CLP Power's prices and profit level is tied to the amount of fixed assets. But Yuen said since the investment would be spread out over a number of years, its impact on power prices would be less than that of fluctuating natural gas prices.

That's why the import option should be left open, according to Yuen, as it could allow room for the city to switch between imported electricity and local generation, depending on gas prices.

Dr William Yu Yuen-ping, chief executive of World Green Organisation, said CLP was trying to buy time. "They might actually be waiting for natural gas prices to fall, and then they could throw their weight behind the local generation option," he said.

He said CLP's refusal to rule out the import option, unlike HK Electric, which strongly opposed that option, might be related to its close partnership with the China Southern Power Grid.

The grid co-owns the Castle Peak Power Station and Black Point Power Station with CLP Power.