The development objective of the Global Environment Facility (GEF) China Thermal Power Efficiency Project is to reduce coal consumption and Greenhouse Gas (GHG) emission per unit of electricity production in Shanxi Province, Shandong Province, and Guangdong Province in China, through: (i) mitigating the financial barriers of closing inefficient small-sized coal-fired units; (ii) demonstrating the viability of investments in efficiency improvements in existing midsized thermal units; and (iii) developing effective regulations to implement the pilot Efficient Fuel Saving Dispatch (ESD) programs and conducting studies to support the transition to efficient generation dispatch. There are five components to the project. The first component of the project is mechanisms to support the closure of inefficient small coal-fired generation units. This component will support the closure of inefficient small thermal units and GHG emission reduction in Shandong (4,300 MW) and Shanxi (2,870 MW), by 2010. The component will also support the establishment and pilot operation of a transparent and effective financial incentive mechanism for the closure of small units (MCSU). The second component of the project is demonstration of power plant efficiency improvements. This component will demonstrate plant efficiency improvement and GHG emission reduction through three different types of investment activities: (i) conversion of mid-sized power generation only units into Combined Head and Power (CHP) units, at Huangtai Thermal Power Plant in Shandong; (ii) waste heat recovery at thermal power units and utilization for district heating, at Jinan Beijiao Thermal Power Plant in Shandong; and (iii) improvement of power generation efficiency resulting from plant energy audit recommendations, at Yangguang Thermal Power Plant in Shanxi. The third component of the project is transition to efficient generation dispatch. This component will reduce system-wide coal consumption and GHG emission for power generation by supporting the transition from current system dispatch practices to an efficient generation dispatch optimized for coal savings. The fourth component of the project is technical assistance for project implementation. This component will support the hiring of international and local consultants for operational management, technical advisory, procurement and financial management (FM) at various implementing agencies (IA) to support project implementation, Monitoring and Evaluation (M&E) and replication of successful experience and practices. The fifth component of the project is project management. This component will provide budget support for the incremental operating costs of various Implementing Agencies (IAs) resulting from the project implementation.
