Hi Kenneth,



Your essay is a fine example of the intellectual and the pragmatic. And I strongly agree with what you've written.



How China might best spend its money:



If there is one thing that lifts people out of poverty and contributes to social good and GDP, it is energy.



'Bang for the buck' when we electrify communities (whether by electrical grid connection, or by co-generation; Read, a 'standalone grid' not necessarily connected to the national grid) that is the quickest and surest way to alleviate poverty and increase money velocity in a community or region.



China would be wise to invest the first money they lend out towards modular, renewable energy power plants for communities that either a) don't have electrification yet, or b) have dirty coal servicing their communities where entire communities live in heavy smog day after day, for decades.



Modular, hybrid renewable energy power plants are the way to go here. Such power plants should be modular, first off, because this dramatically lowers the cost of all the following power plants, except of course, the first prototype plant.



A modular, hybrid renewable energy power plant of 10MW that gets 65% of its daily power from solar panels, and 35% of its daily power from wind turbines, would provide the right balance of day/night power.



In regions where there is little wind availability, simply substitute that 35% generation with a natural gas fired generator. These do not have to be turbines, as Caterpillar, GE and others make quite wonderful natural gas powered engines to generate electricity.



The huge benefit of these engines compared to gas turbines, is that they do not need hours to come online, they ramp up to full power in minutes, even seconds with the modern technology of today.



The natural gas for these small generator sets is available from nearby landfill sites, which harvest the methane off-gas and burn it to produce electricity, neatly solving many problems at once.



Durban, South Africa is an amazing success story on this account:



"Durban, South Africa, a city of 3.5 million people has created a huge Waste-to-Fuel landfill power plant that provides electricity to more than 5000 nearby homes.



Durban Solid Waste receives 4000 tons of trash each weekday which produces some 2600 cubic metres of gas every day of the year."



GE has natural gas fired power plants that arrive in 4 large shipping containers and take mere hours to install and connect, if all the permits, etc. are in order. I think an early record was 22 hours from arrival to power production for the GE Clean Cycle Waste-to-Fuel power plant.



Want to improve a community by electrifying it quickly? That's how it's done.



"One GE Clean Cycle Waste-to-Fuel power plant unit can generate 1 million kWh per year from waste heat and avoid more than 350 metric tons of CO2 per year, equivalent to the emissions of almost 200 cars."



http://jbsnews.com/2015/02/22/clean-clean-burn-renewable-energy-natural-gas-powered-electricity-grids/



Powering non-electrified communities, or replacing dirty coal power generation that makes locals very ill, with clean power generation via solar/wind hybrid power plants or solar/natural gas 'co-generation' power plants will allow China and other SE Asia nations to leap forward by 10-15 years, in the space of months.



That is the difference between 'investment' in communities, as compared to 'throwing money at problems' to solve them.



That's what the AIIB needs to be best at in SE Asia. It's also what other development banks need to do more often.



Final note: If the AIIB is purchasing U.S. and European equipment to provide power to communities, it's almost certain that American concerns will dissipate.



Best regards, JBS



Additional links:



http://www.cat.com/en_US/power-systems/electric-power-generation/gas-generator-sets.html



http://www.greentechmedia.com/articles/read/ge-puts-1.4b-into-natural-gas-fired-distributed-power



http://www.clarke-energy.com/gas-engines/