[JD Says] Focus on the Energy Internet: the Best Way to Embrace the “World Earth Day”


[JD Says]Focusing on industry investment, and experiencing the rapid development of enterprises, JD Capital is ready to share its inspiration and successful experience with all Chinese companies.

[Who’s sharing?] JD Capital’s investment fund in energy and bulk commodities: our team has nearly 20 years’ experiences in energy and chemical business development and investment. It concentrates on investment in fields such as resources, production, circulation, technology and equipment, with energy, chemicals, materials, and minerals as its main focus. It attaches more importance to clean energy and new materials.

“Promoting economical and intensive use of resources, advocating simple and green life” -- The 2016 World Earth Day

Q: What is “The World Earth Day”

The World Earth Day falls on April 22 every year, aiming at protecting the global environment. It has been memorized for 47 years since its initiation on April 22, 1970. 

Q: What should we know about this year’s “World Earth Day”

After experiencing the firewood era, coal era and oil era, all countries now are actively seeking to explore clean energy. The non-renewable fossil fuels can no longer meet the rapidly increasing demand of energy. At the same time, the global industrial structure changes enormously. Under such contexts, all countries are trying to build the “Energy Internet”, in the hope that the new economic model can promote efficiency, upgrade the energy industry, and create a clean, efficient and sustainable world for all of us.

Energy Internet: Subverting the traditional industry

—Slightly touching the tablet computer or through the mobile phone apps, we can easily sell the superfluous photovoltaic power produced on top of our roofs to strangers nearby who need to charge their electric cars.

—According to the energy consumption curve, we can set the optimum switching time and use remote control for household appliances at any time

—Dynamically adjust the energy consumption in buildings based on the type of conference activities, the number of participants and real-time electricity price.

—New energy power generation equipment will be installed in desert and sea, which can make free trade of new energy possible through auction or investment by people in different countries.

—The overall energy consumption and carbon dioxide emissions of the city shall be arranged in accordance with time and weather, in order to maximize the utility.

—Every item, activity and individual shall all have a carbon-emission tag in order for trade at any time.

Welcome to the New Era of ”Energy Internet”

The idea of “Energy Internet” was first put forward by Jeremy Rifkin, an American economists, in his book The Third Industrial Revolution.

[Keyword] Energy Internet: a new pattern for energy industry development by in-depth integration of the Internet with energy production, transmission, storage, consumption and the energy market, with main characteristics such as intelligent equipment, synergy, information symmetry, decentralized supply and demand, flat system and open trade.

In recent years, the Energy Internet has generated a new entrepreneurial ecosystem in Europe and the US. New start-ups, such as Opower in the US, Powershop in New Zealand and the Green Packet in Germany, all emerged against the background of open electricity selling, active market, energy conservation and efficiency enhancement.

Development Plan for China’s Energy Internet 

In March, 2016, the National Development and Reform Commission (NDRC), the National Energy Administration and the Ministry of Industry and Information Technology of the People's Republic of China jointly issued the “Opinion for Advancing the New Model of Combining Internet with Smart Energy Development”, which provides a clear plan for China’s Energy Internet development in the future.

The first stage: China will work for a consensus around the world and begin technology and standard research in around 2020. All countries will strengthen their national network and smart grid building, develop clean energy and thus promoting the connectivity of the Energy Internet in their own countries.

The second stage: By 2030, we hope to realize the connectivity of the Energy Internet across the whole continent. Clean energy base in the continent is also expected to be built for closer connectivity.

The third stage: By around 2050, the cross-continent UHV backbone network frame will be built, and the energy base in the pole and the equator of the earth will be developed. The global Energy Internet is expected to be completed at that time, thus the Energy Internets in different continents are connected together.

Clean Energy is the Fundamental Factor

The Energy Internet is regarded as a comprehensive energy system by combining smart power grid, ultra-high voltage grid and clean energy together. Among those factors, the smart power grid forms the basis; ultra-high voltage grid is the key and the clean energy is the foundation.

[Keyword] Clean energy, also known as green energy, refers to the energy that discharges no pollutants to the environment, mainly including nuclear power and renewable energy. The technology system developed for the clean, efficient and systematic use of energy is also part of clean energy in a broader sense. 

According to the 13th Five-Year Plan, China’s energy production is expected to reach 4.2 billion tons of standard coal by 2020, while consumption should be controlled within 48 to 50 tons. It is also clearly stipulated in the obligatory target: the consumption of non-fossil energy should account for 15% of primary energy consumption (the figure was 12% in 2015, and is expected to reach about 20% in 2030). The carbon dioxides emission per unit GDP is expected to reduce by 18% compared with that during the 12th Five-Year Plan.

Some authoritative third-party energy consultancy institutions even predicted publicly that by 2050, global clean energy will take up 80% of the primary energy, and electricity produced by clean energy (exceeding 70% of the primary energy) will account for 90% of the total electricity produced.

[Keyword]: Primary Energy, also known as natural energy, refers to the unprocessed and unconverted energy resource that exist in nature in its original form.

While the proportion of clean energy consumption is increasing, many challenges emerge. The supply center of mass clean energy is not always the load center of clean energy; the supply of clean energy is more volatile and unpredictable than that of traditional power supply; the decentralized use of energy increases the number of subjects and bidirectional transmission frequency, which makes electricity system more complicated. As a result, there is an inevitable trend to build an “open and shared” ecological energy internet, so that the flexibility and intensity of the energy system can be improved through information technology.  

As clean energy is becoming more and more popular, JD Capital will give high priority to the following investment opportunities:

Opportunities during the Upgrading of the Energy Structure

Given that there is still a vast space for scale expansion and price reduction of non-fossil energy, such as the photovoltaic power, wind power, the ecological water and electricity, safe nuclear power, biomass energy, and geothermal energy, and natural gas will develop steadily; carbon trading will become more mature and the clean energy will gradually take up a higher percentage in utilization. As a result, during the process of structure upgrading, a batch of high-growth enterprises will  emerge in areas such as technology services, production, operation and maintenance.

Key Technology Equipment in the Field of Energy 

Include: large-scale energy storage and peak shaving technology, groundbreaking technology in exploring unconventional oil & gas exploitation, clean and efficient coal conversion technology, such as the pyrolysis technology by low temperature to convert low-rank coal.

Emerging Opportunities in Building Smart Energy System

Include: operational service providers adapted to distributed energy development and diversified customer needs; solution providers for a deep fusion of energy and new technologies, such as information; and promotion the new business model and technology in which energy production, transmission, distributing, selling and consuming are interconnected with each other.

New Areas Are Opening with the Deepening Energy Reform

The oil and gas exploration is now open to the private enterprises and the electricity reform is further advanced. Taking advantage of this new trend, a number of excellent private companies are standing out in the market which are previously monopolized by the large state-owned enterprises.

Internet of Things is the Basis

Based on the concept of “shared economy” put forward by Rifkin, the future of energy is like this, small and medium-sized retailers will assume the role of power generation, while big companies will be responsible for coordinating, and gradually change from power generation companies to energy management enterprises or Energy Internet operational enterprises.

After that, other industries, such as e-business, logistics and transportation businesses will also be incorporated into this platform, which will jointly change their traditional mode of production and score new achievements. As far as JD Capital is concerned, an “energy revolution” is on the way.

In real practice, Energy Internet needs advanced sensors, control and software applications to connect hundreds of millions of equipment, machinery and systems in energy production, transmission and consumption ends. 

With this new trend, various emerging technologies, enterprises and models will spring out to support the basis of Energy Internet. 

JD Capital mainly focuses on the following investment opportunities:

Lower Level Interconnected Physical System

Include: advanced material, new energy equipment, intelligent upgrading of traditional energy equipment, and new framework of the energy internet.

Middle Level Data Information Integrated Analysis Function

Include: advanced sensors and sensor network, advanced telecommunication, big data, advanced computing and simulation technology.

Upper Level Consumer-centered New Forms and Modes of Energy Production, Consumption And Services

Include: flexible energy trading (new electricity selling companies), intelligent energy consumption and value-added services, big data service for energy utilization. 

As such, we can maximize the benefit of energy through the market mechanism.