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LCQ15: Electricity consumption in Hong Kong

     Following is a question by the Hon Lee Wing Tat and a written reply by the Acting Secretary for the Environment, Dr Kitty Poon, at the Legislative Council meeting today (June 1):


     Regarding the electricity consumption in Hong Kong, will the Government inform this Council:

(a) of the respective electricity generation costs incurred, electricity output produced and volume of electricity sold by the power companies in Hong Kong in each of the past five years; whether it knows how the power companies handle surplus electricity (broken down by power company);

(b) whether it knows the respective electricity consumption of various types of customers and the respective percentages of such volumes in the total electricity production volume and total proceeds from electricity sales of the power companies in each of the past five years, broken down by year and by power company, and set out in table 1;

(c) whether it knows the respective number of customers to whom CLP Power Hong Kong Limited offered regressive and progressive rates in each of the past five years; and the percentage of the volumes of electricity involved in the annual electricity sales volume;

(d) given that an interim review will be carried out every five years according to the mechanism under the Scheme of Control Agreements (SCAs) signed between the Government and the power companies in Hong Kong, whether the Government will add new terms and requirements on energy conservation to SCAs in the next or future interim reviews;

(e) whether the Government had promoted energy conservation on the basis of "Demand Side Management"(DSM) in the past three years; if so, of the details and its effectiveness; if not, the reasons for that; whether it had conducted respective assessments on the emission reduction benefits achieved by methods such as DSM energy conservation approach, energy efficiency enhancement and nuclear energy development, etc.; if so, of the details; if not, the reasons for that; and

(f) whether it has studied, with the adoption of the DSM energy conservation approach to reduce energy consumption in residential and commercial buildings, how much energy will need to be saved in Hong Kong in order to offset the amount of energy supplied by increasing the proportion of nuclear power and thereby obviating the need to substantially increase the proportion of nuclear power?



(a) According to the Annual Report on Hong Kong Energy Statistics compiled by Census and Statistics Department, information on the two power companies' annual generation and sale of electricity in the past five years is at table 2.

     The difference between electricity generated and sold is normally energy losses in electricity generation, transmission and distribution. Besides, CLP Power is allowed to supply electricity to the Mainland from its standby generation capacity. Nevertheless, it is required that at any time should there be the event of power shortage, supply of electricity to Hong Kong consumers should take precedence; and 80% of the net profits arising from the related sales should be returned to CLP Power's customers. As regards the cost of electricity generation, the two power companies indicated that it is commercially sensitive and could not be disclosed.

(b) The annual electricity consumption and net tariff revenue of various consumer groups in the past five years are at table 3.

(c) CLP Power indicated that it has made reference to the cost of supplying electricity to different customer groups, in working out the tariff structure and avoiding cross-subsidisation among different customer groups (e.g. enterprises of different sizes, public utilities and residential customers).

     CLP Power indicated that the tariff structure adopted for non-domestic customers primarily reflects the cost effectiveness of electricity supply as the cost of supplying electricity to commercial and industrial customers with high electricity consumption is in general lower. CLP Power explained that commercial and industrial customers with high electricity demand may obtain direct electricity from high voltage power system, which could reduce the extra cost of transforming high voltage power to low voltage power for supplying to customers. Moreover, commercial and industrial customers with high electricity consumption usually draw high volume of electricity at centralised locations, which would require less complementary cabling facilities and thereby involve lower cost of supply. It should be noted that CLP Power charges customers with high electricity demand a "demand charge" on top of electricity consumption charge. The "demand charge" is charged based on the maximum demand of customers, i.e. the higher the demand, the higher the "demand charge" would be. This would incentivise customers to reduce its power demand.

(d) The current Scheme of Control Agreements (SCA) provides financial incentives for energy saving performance of power companies, with regard to the number of energy audits conducted by power companies for their customers and relevant energy saving achieved as indicators.  Moreover, the power companies have each set up a loan fund over a five-year period (amounting up to $125 million and $62.5 million respectively), to provide loans to non-Government customers to implement energy saving initiatives identified in energy audits to promote energy efficiency.  They have also set up an education fund for energy efficiency and promotion activities. The Government will review with the two power companies, at an appropriate time, the energy saving terms and requirements in the SCA.

(e) The Government is committed to promoting energy conservation and improving energy efficiency, with a view to reducing greenhouse gas emissions. We expect that mandatory compliance with the Building Energy Codes, backed by the Buildings Energy Efficiency Ordinance enacted in late 2010, will result in energy saving of 2.8 billion kWh in new buildings in the first decade, contributing to a reduction in carbon dioxide emission of around 1.96 million tonnes. As at mid May 2011, the Buildings Energy Efficiency Funding Schemes have approved more than 720 applications benefiting over 4 700 buildings. These projects will contribute to an electricity saving of 131 million kWh per annum, equivalent to a reduction of carbon dioxide emissions by 92 000 tonnes.

     We are setting up the District Cooling System at the Kai Tak Development, which may achieve a maximum annual saving of 85 million kWh, with a corresponding reduction of 59 500 tonnes of carbon dioxide emission per annum upon full implementation. The initial phase of the Mandatory Energy Efficiency Labelling Scheme has been fully implemented since November 2009, with the second phase to be fully implemented from September 2011. The two phases of the Scheme will together bring about an energy saving of about 175 million kWh per year, equivalent to a reduction of carbon dioxide emissions by 122 500 tonnes.

     The Environmental Protection Department commissioned a consultancy study in 2008 to assess the impact of climate change on Hong Kong. In the mitigation assessment conducted under the consultancy study, apart from a "business-as-usual" scenario (i.e. assuming no additional mitigation measures are to be introduced), the Consultants had developed other technically feasible scenarios and assessed their mitigation potential in 2020. The findings indicated that by implementing mitigation measures focusing only on reducing energy demand and improving energy efficiency and without making a major revamp to the fuel mix for local electricity generation, by 2020, Hong Kong's carbon intensity (i.e. carbon emission per unit of GDP) would be reduced up to about 39% as compared with 2005 level. If however there is a revamp in the fuel mix, including substantially suppressing coal-fired power and increasing the proportion of electricity from non-fossil fuel, we could as a result achieve a carbon intensity reduction target of 50% to 60%.

(f) In 2009, coal accounted for about 54% of the fuel mix for electricity generation in Hong Kong, followed by natural gas and nuclear electricity imported from the Mainland (each for about 23%). The majority of local coal-fired power plants have come into operation since the 1980s, and will start to retire in phases in the run-up to 2020. The rest will also be completely retired by early 2030s. As starting from 1997, power companies in Hong Kong had not been allowed, for environmental reasons, to build new coal-fired power plants. Alternative sources of cleaner, low carbon fuels (including the possibility of using more natural gas, renewable energy and imported nuclear electricity) will have to be identified in time to replace coal with a view to meeting local demand for electricity, while at the same time reducing greenhouse gas emissions so as to combat climate change.

     In the consultation document on Hong Kong's Climate Change Strategy and Action Agenda issued last year, the Government put forward a multi-pronged proposal to reduce Hong Kong's greenhouse gas emissions, which covers enhancing energy efficiency, promoting green building, advocating electricity saving, facilitating low-carbon transport and developing facilities to turn waste into energy. In addition, we have to improve our fuel mix in order to achieve substantive reduction in greenhouse gas emissions. In pursuing improvement to the fuel mix, we will strike a balance between various considerations, including safety, reliability, environmental protection and economic efficiency.

Ends/Wednesday, June 1, 2011
Issued at HKT 13:11


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