In pursuit of its long term goal of increasing the role of gas plants for base load electricity production, the Chinese government has placed a bulk order worth $600 million for major power generation equipment, including ten gas turbines, with Mitsubishi Heavy Industries. Almost immediately it was made known that a similar order would be placed with GE for another thirteen GTs. The government is planning to place a second bulk order within a year.

MHI will be operating in co-operation with Dongfang Electric Corp of Szechwan. This was the first order under Chinese national policy, initially announced as part of its current 10 year plan, to address pollution problems by increasing the ratio of gas to coal fired plant in the country. Currently 90 per cent of electricity is produced in coal fired stations. MHI will supply 8×350 MW units for 4 plants including Beijing No 3, and Huishou LPG plant, Shenzhen Qianwan and Shenzhen Eastern Power Plant, all in Guangdong province. These four are among 10 locations named in the first batch and are scheduled to come on stream between 2005 and 2007. The 13 GE units are destined for the other six plants, as yet unnamed, but it is known that they will be GE 9FA gas turbine-based combined cycle systems worth US$900 million in total.

During this first part of the long term project orders will be placed with construction consortia composed of foreign gas turbine manufacturers and Chinese partner companies for the supply of major generation equipment including steam turbines and generators. HRSGs and auxiliary equipment will be ordered separately.

As part of a common plan to exploit the expected large Chinese market for GTs and in line with technology transfer agreements MHI and Dongfang will be manufacturing GT parts and assembling gas turbines at Dongfang Electric facilities. This process started in April last year when MHI and Dongfang started joint manufacture of large gas turbines in preparation for their partnership bid in October. The two companies plan also to establish a repair and mainternance joint venture company to operate in China.

GE won its bid in consortium with the Chinese company Harbin Power Equipment Co. Ltd, where the GE turbines will be assembled under a technology transfer arrangement. GE also signed a joint venture agreement with Shenyang Liming Aero-Engine Group Corp for the technology transfer and production of combustion systems for 9FA class gas turbines. The deal cements GE’s position as the leading supplier to the Chinese market, where it already has 160+ gas and 56 steam turbines operating, with sales expected to be worth $1 bn in 2003 alone.