Huaneng restrains capacity expansion as oversupply looms

PUBLISHED : Wednesday, 14 March, 2007, 12:00am
UPDATED : Wednesday, 14 March, 2007, 12:00am

China Huaneng Group, the country's largest power producer, will see a marked slowdown in capacity growth this year as an industry supply surplus looms after a plant construction binge.

The parent of listed Huaneng Power International plans to raise its generating capacity 17.5 per cent, or 10 gigawatts, this year to 67.18 GW, according to China Power News, the publication of the State Electricity Regulatory Commission.

That compares with a growth rate of 30.9 per cent last year when the industry's capacity grew a record 105 GW, or 20.3 per cent, to 622 GW, according to the China Electricity Council.

The mainland, the second-largest power producer and consumer after the United States, has raised its power-generating capacity more than 12 per cent annually over the past three years, the fastest among the major economies.

Capacity growth is forecast to slow this year and next while electricity demand is expected to decelerate as output growth in heavy industries has been cut by government polices requiring manufacturers to close inefficient and polluting plants.

State Grid Corp of China, the monopoly power distributor in all but five southern provinces, in late January forecast a 15.3 per cent surge in the country's generation capacity and an 11 per cent to 12.5 per cent rise in power consumption this year. Consumption grew 14 per cent last year.

The growth rates are expected to ease partly because the comparison bases have grown substantially in the past two years.

Meanwhile, the National Development and Reform Commission said it had approved three projects worth a total of 10 billion yuan.

They include a 5.2 billion yuan, 1,200-megawatt coal-fired plant in Heyuan, Guangdong province, that is 60 per cent owned by Shenzhen Energy Group and 40 per cent by Hopewell Holdings.

A 2.42 billion yuan, 300 MW wind power project in Inner Mongolia developed by China Guangdong Nuclear Power Group has also received the go-ahead.

A 2.63 billion yuan, 300 MW wind project, 51 per cent held by China Huaneng, 20 per cent by Citic Pacific, 19 per cent by Inner Mongolia Power Investment and 10 per cent by Beijing Guohua Power Investment, has also won approval.

Separately, Longyuan Group, a company belonging to China Guodian Group, last week signed an agreement to develop a 300 MW wind power project in Zhangjiakou, Jiangsu province, China Guodian said yesterday.

Beijing has set ambitious targets for the country's wind power industry.

These include achieving 5,000 MW of generating capacity by 2010 and 30,000 MW by 2020, an increase from 1,870 MW at the end of last year.