Planning for Power Consumption in China

For manufacturers, ensuring the stability of your operation means getting solid infrastructure in place, and for most manufacturing that means power. Before you flip the switch on your China facility take some simple steps to make sure that you have access to the power that you need.

Although China’s electrical grid has improved in recent years, the demand for power has also increased. In some cases this has meant power rationing, even for industrial enterprises. Foreign manufacturers coming to China from more developed countries should also be aware that local perspectives on power capacity can differ greatly in China than in their home countries. For most state-owned companies operating in China, time is not money, and thanks to a history of low-interest, flexible loans from state-owned banks, their costs of capital may be a fraction of what many manufacturers would expect. This also means that companies in this situation are much more likely to take a casual view to temporary power outages, brown-outs or power rationing. However, for foreign invested companies who have spent sizable sums to acquire their equipment, and many of whom may have built their business plans on operating on multiple shifts, including weekends, then investigating the availability of power at your facility before you complete the deal can be of utmost importance.

Peak Time Restrictions

Investors entering China for the first time should be aware that due to China’s burgeoning electrical demand in recent years, many areas mandate power restrictions during summer months. These measures may not be in place on an everyday basis, but they are often set up as contingency plans for unusually hot periods.

During the times when these power restrictions are put in place access to electricity may be reduced or cut off during some days of the week to balance electrical load and ensure sufficient electrical supply for residential and commercial use. In most cases, industrial facilities are able to maintain five days each week during the times that these measures are put in place, but may be forced to move some production to weekends while shutting down during some weekdays. Keep in mind that when the measures are employed they are usually announced with minimum forewarning (10 days to 2 weeks advanced notice is typical). Before signing a lease, (or if you’ve already signed, then still inquire) check with the management of the industrial zone and, if possible, other manufacturers based in the area, to find out if such measures have been put in place historically.

Don’t Count on Existing Circuits

Even in many modern industrial zones or in facilities previously occupied by manufacturing companies, many workshops are set up with what would be classified as office power supplies in more developed countries. Expect to see a standard power circuit of 50 kVA in many places, which you will need to upgrade to meet your own needs.

What Happens If There’s Not Enough Juice

Time Delays The biggest problem with upgrading the power supply at your facility will be the potential delays to your operations. Increasing the size of main electrical circuits usually means applying to the district or municipal power bureau and waiting for approval. In many cases, receiving this approval may take 30 to 90 days.

Questions of Availability Getting approval for a higher capacity circuit at your facility will frequently depend on the available capacity on transformers near your operation. If the local transformers are at or near capacity, then additional power may not be available, or you may be asked to pay for installation of a new transformer. If a new transformer is necessary, than expect additional time delays and fees.

Costs Involved Once the power company determines that the necessary power is available in your location and approves your request to upgrade your power supply, then you get to the issue of the fees involved. You will need to pay fees to the power company, and, in some cases to an electrical engineering firm, for getting your new power cabled in. The exact amount will depend on the amount of upgrading required, as well as the distance to the nearest transformer and other factors. However, many manufacturers advise that you should expect to incur fees of RMB 100,000 to 300,000 for a typical upgrade.

Make the Right Plans

When setting up your facility, get an experienced electrical engineer involved in the planning and provide them with all of the information necessary about the machinery and equipment that you plan to operate. While many people will try to be helpful, keep in mind that unless they are professionals trained in this area, then they are not likely to have a clear grasp of your needs. Be careful about relying advice from staff at the industrial zone or property agents who assure you that there is “enough” power. Be equally cautious about advice from your own staff, unless they have experience in estimating power consumption for your type of project. Also, be sure to take into account any future need for expansion. If things go well and demand for your products grow, then you don’t want to have to an inadequate power supply restricting your operation three years down the road.

Who to Talk to About Power For Your New Facility

Because of the potential costs involved, prospective investors are advised to make a thorough investigation of their power needs and the electrical supply available in their target location before completing their site selection process. During the site selection process have thorough discussions with the management of the industrial zone about the resources available, and inquire with neighboring manufacturers about any potential risks. In the case that upgrades may be necessary, then ask about the application and approval process, as well as getting an estimate for any fees involved.

This article was originally published on RightSite.asia and is republished here with the permission of the original publisher

http://rightsite.asia/en/article/planning-power-consumption-china

2009-06-08