Summer power shortages loom for mainland

PUBLISHED : Wednesday, 25 May, 2011, 12:00am
UPDATED : Wednesday, 25 May, 2011, 12:00am


China is facing its worst summer power shortage in seven years, according to the country's power industry regulator.

Industry officials said on Monday that, starting next month, China could find itself suffering from a combined power shortage of 30 million kilowatts during the peak demand hours.

Shuai Junqing, executive vice-president of the State Grid Corporation, told a company conference that the mainland experienced an energy shortage of 27 million kilowatts in January this year - well before the peak season, China National Radio reported. The company conference was addressing the summer electricity supply.

The radio report added that if the continuing drought and extreme weather problems worsen, the power shortage may well surpass the 2004 historical record shortage of 30 million kilowatts.

The threat to the power supply is more serious than in any previous market forecasts, Liang Bin, an analyst with Citic China Securities, was quoted by the China Securities Journal as saying.

At the company's conference, Tan Rongyao, supervisor of the State Electricity Regulatory Commission (SERC), noted that although the peak season had still not begun, power cuts and rationed supplies were already widespread.

They are being driven by a surge in demand associated with the recovery in industrial operations.

SERC is a central government agency that performs administrative and regulatory duties with regard to the national power-generating and distribution industries.

June generally marks the beginning of China's top power-use season each year, when air conditioners and cooling devices are run at full capacity.

Shuai revealed the company's gloomy forecast that, in the coming summer, power shortages could affect at least 26 provinces, municipalities and autonomous regions.

They include Beijing, the national business hub of Shanghai, the mainland's largest city, Chongqing, the northern port city of Tianjin and various industrial provinces such as Jiangsu and Zhejiang.

In Zhejiang, a province known for its small enterprises, many companies can operate their production lines only three days a week, as a result of provincial orders to ration power supplies, according to a report last week in the China Securities Journal. It said the limits were implemented near the end of February.

The State Grid said it would prioritise its supply to private residences and public services, including hospitals, schools and those responsible for national security. Strict measures would be adopted, Shuai vowed, to limit the supply to companies that used large amounts of energy.

Jin Changxin, a State Grid senior executive, said the company would devise 'a meticulous plan' for cross-regional power distribution and transmission, to help the areas where the worst shortages occurred. This means 13.65 million kilowatts will be diverted to northern China, 13.47 million kilowatts to eastern China and 7.83 million kilowatts to central areas.

Industry officials cited a host of problems causing the troubles they faced. But they also said none of the problems was likely to go away any time soon. The problems include a shortage of thermal coal and insufficient power-generating capacity in some areas, which has yet to be topped up by power-transmission capacity from other areas.

Other problems are a sharp rise in coal prices, while electricity prices remain low and under state control; and local governments' restarting many industries that had been closed down for wasting energy.

China still relies on coal for more than 70 per cent of its electricity output. While the price of thermal coal is on the rise, the government is reluctant to make corresponding adjustments to the price of electricity, for fear of angering citizens.