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Castle Peak Power Station in Tuen Mun. Photo: Felix Wong

Hong Kong should avoid more electricity imports from mainland China: British expert

City should focus more on alternative sources for its electricity, according to the consultant

Importing more electricity from the mainland should be the "last option" Hong Kong considers as it might close the door on alternative options, a British expert brought in to study the city's energy market says.

The government is studying ways to enrich the city's energy mix as part of its contribution to fighting climate change. Earlier this year, it put forward two options: boosting imports from the mainland to 30 per cent by 2023 or using cleaner gas to generate 60 per cent of power locally, cutting the reliance on coal.

Stephen Thomas, a professor of energy policy at the University of Greenwich in London, said both of these options were oversimplified.

"The link to the south China grid will be very expensive. Once in place, you will have to use it and it will close off other options such as … renewable energy," said Thomas, one of three experts commissioned by the Consumer Council to study the local market.

"This [importing] would be the last thing I would do," he told the

In a report released on Thursday, the council proposed opening up the electricity-generating market, breaking the duopoly of CLP Power and HK Electric. That could be done either using imports or by encouraging the creation of small-scale generators.

But the council questioned whether it would be in the interests of consumers to open up the retail market, regarded as a "natural monopoly" for the two firms.

The report comes as the Environment Bureau prepares a public consultation on the future of the electricity market. Under its "scheme of control" agreements with the two operators, the bureau is obliged to decide by 2016 whether the market will be opened up after its deals with the two firms end in 2018.

Thomas said reducing demand by improving energy efficiency was the most cost-effective way to cut emissions. But he urged the city to consider an experiment with "small generation" - the installation of small gas turbines that fit in a building's basement. The trend is growing in the United States and Europe.

"All you need to do is to ensure you are able to sell the extra power to the grid and take backup power from the grid. But the power companies have to be forced to do so," he said.

At present, small-scale power operators can feed into the grid only with the consent of the power firms, and would pay an administration fee to do so. But there is no legal barrier to the building of new power stations, as long as they meet environmental standards.

Thomas said he could not comment on whether the idea was technically or financially feasible in Hong Kong without further study. But he believes it could save on transmission and distribution costs - which make up a third of the cost of electricity.

Even if that idea does not work, he still believes the city should rely on gas generation rather than power imports, which might ultimately be generated using polluting coal.

But Thomas agreed that opening up the retail market might not help. He said doing so might mean extra costs for consumers, such as fees for switching between suppliers. Getting transparent information on power prices was also costly, he added, citing the example of Britain's liberalised electricity market.

"It seems attractive but is dangerous; it only benefits large users who have bargaining power to negotiate prices," he said.

Under either of the government's two options, some 20 per cent of the city's electricity will come from nuclear power generated at Daya Bay in Guangdong. But Thomas sees a bleak future for the nuclear industry as costs escalate and the financial community proves reluctant to embrace new investment.

He said the industry was "losing the last chance" to revive itself amid crippling financial and technical difficulties.

A nuclear project in Britain - which would include funding from China's biggest nuclearenergy provider - was on the verge of collapse after a long delay and huge cost overruns, Thomas said.

In China, nuclear power firms are facing similar problems as they try to modify designs to meet financial and technical requirements. But Thomas believes that there is no need for China to depend on nuclear.

"China does not need nuclear at all. A mere 5 per cent in its energy portfolio does not make any difference at all," he said.

This article appeared in the South China Morning Post print edition as: Avoid more power imports, UK expert says
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