As companies abroad slash spending to ride out a global slump, China's biggest utility is bucking the trend and pouring money into trying to become a pioneer in the multibillion-dollar field of electric power transmission.

State Grid Corp says it began operation in January of a 1-million-volt commercial power line, an increase over 765,000-volt systems used in the United States and elsewhere. It says such "ultra-high voltage" transmission is more efficient and could be used in India, Brazil, Africa or other markets to link cities to distant hydroelectric dams.

"This is a milestone in the history of the power industry," said State Grid Vice President Lu Jian.

The effort reflects China's broader ambition to transform itself from a low-cost factory into a creator of profitable technology - a step economists say it must take if it is to continue growing. The government is boosting research spending and promising companies tax breaks and other support.

"Chinese players are indeed climbing up the technical ladder," said David Xu, director of McKinsey & Co's Asia-Pacific power consulting group. "They understand that just competing on a cost basis is not going to be sustainable."

Another potential positive: such lines could help with a plan to clear smog in China's cities by locating new coal-fired power plants near mines instead of in urban areas.

The initiative is a reminder that State Grid and other major Chinese state companies are flush with cash and still investing despite turmoil that has forced global corporations to cut payrolls and spending. Utilities in particular have been told to step up spending as part of China's multibillion-dollar stimulus plan.

Titanic transmission

Little known abroad, State Grid is one of the world's biggest companies, ranked 24th on Fortune magazine's Global 500 list last year with US$133 billion in 2007 revenues.

It operates the vast network of power-distribution lines across 26 of China's provinces and regions and is expanding abroad. The company signed a US$3.9-billion, 25-year contract with the Philippines in January to run its power grid.

The appeal of ultra-high-voltage transmission is its efficiency over long distances, according to experts. Power, measured in kilowatts, is a function of voltage multiplied by current. That means a higher-voltage line can carry less current, which reduces energy losses, yet still deliver the same amount of power.

"You get more power with less loss and increased stability of the power grid," said Richard Lordan, technology director for power delivery for the Electric Power Research Institute.

State Grid says it will spend up to 100 billion yuan (US$14.6 billion) over the next three to four years on ultra-high-voltage lines to link Beijing, Shanghai and other eastern cities to dams in the southwest and power plants in the coal-mining north.

(Shanghai Daily February 23, 2009)