Economy

Chinese provinces grapple with power shortage

(Xinhua)
Updated: 2011-04-29 17:21

BEIJING - A power shortage has recently hit many Chinese provinces well ahead of the normal peak consumption season, and it is believed that demand will increase even further once the peak season actually hits.

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The power supply shortage may expand to 30 million kilowatts or more this summer, depending on coal supplies and water levels, according to the China Electricity Council (CEC).

East China's industry-heavy Zhejiang Province is facing power shortages of up to 2.71 million kw in April, the region's worst shortage since 2004. Other provinces, including Guangdong, Jiangsu, Jiangxi and Hunan, are also dealing with power shortages. Some of these provinces have implemented power rationing measures as a result.

Lin Weibin, deputy director of the research center of energy and strategic resources under Beijing Normal University, attributed the power shortages to increasing demand and coal shortages.

China's demand for electricity has grown robustly this year, in accordance with the country's rapidly expanding economy. According to recent data from the CEC, electricity consumption for the first quarter of 2011 rose 12.7 percent over the previous year to exceed one trillion kwh.

Power consumption in some energy-hungry industries such as construction, manufacturing and smelting climbed 11.1 percent year-on-year to 351.2 billion kwh during the January-March period, the greatest demand seen since the second quarter of 2010, the CEC said.

However, China built fewer power plants in the first quarter of this year than it did during the same period last year, despite expanding demands for power.

Although China's installed generative capacity has continued to increase, the amount generated by thermal power actually decreased this year, causing the country's total amount of "effective power supplies" to decline, said Xue Jing, director of the CEC's statistics department.

Higher coal prices have removed incentives for power companies to expand capacity, Xue said. Xue added that some of these companies have even temporarily shut down their plants because of coal shortages.

China's power companies, especially those in the thermal power sector, have been under great pressure recently as a result of soaring coal prices and lagging government-set electricity prices.

Floods in Australia's Queensland, which supplies the majority of the world's coking coal, triggered lower outputs and price increases. Coking coal is used in steelmaking and other industries.

In China, benchmark coal prices have been rising weekly since March 17 and hit a new high of 808 yuan (124.3 U.S. dollars) per ton between April 20 and 26.

Other factors, such as insufficient hydropower supplies and regional power supply imbalances, have also contributed to the power shortages, analysts said.

The CEC expects the power shortages to persist or even worsen around the middle of the 12th Five-Year Plan period (2011-2015).

To solve the problem, the council has advised the government to accelerate its approval of major power projects, especially medium- and large-sized hydropower projects. The council has also recommended promoting the development of new energy and increasing electricity prices.