Like its galloping economy, the nation's power generation in the first half this year has surpassed most analysts' expectations so the industry has many achievements to trumpet in its mid-year review. Yet reading between the lines of these glossy numbers, economic planners and regulators are worried about the industry's structural weaknesses and imbalances, which may take decades to correct. The nation's total generation capacity surpassed 650 gigawatts (GW) at the end of June, thanks to the addition of 38.75 GW in new plants - roughly the capacity of the entire power industry in Taiwan - in the space of six months. This came after the industry commissioned 105 GW last year, a third more than Britain's total capacity and a record addition anywhere in the world. For a decade, the mainland has been second only to the United States for its power generation capacity and generation volume. Assuming the generation capacity of the US continues to grow by the average rate seen in 2004 and 2005 of 1.88 per cent, the mainland could surpass the US 10 years from now, based on a forecast by the monopoly power distributor State Grid Corp that the nation's capacity will reach 1,120 GW by the end of 2015. Mainland power generation grew 16 per cent year on year in the first half to 1.48 trillion kilowatt-hours (kWh), the fastest in any of the leading economies. However, on a per-capita basis, the mainland's generation capacity only amounts to 0.5 kilowatts (KW), 15 per cent that of the US and 26 per cent of Japan. This could rise to 0.91 KW by 2020, based on State Grid's capacity projection and the National Population and Family Planning Commission's population forecast. Regulators know much restructuring is required to improve the industry and help achieve the central government's sustainable economic development goals. 'The current power industry, whether on the basis of quantity or quality, cannot meet the demand from the state's goal to build a comprehensively well-off society by 2020,' Xinhua quoted State Electricity Regulatory Commission (SERC) chairman You Quan as saying. Of the two parameters, achieving quality development poses a greater challenge to the industry, given the nation's quantity commitment in undertaking the world's largest power plant construction programme in the past five years to plug shortages. This was facilitated by the break-up of former behemoth State Power Corp in 2002 into five power generation groups and two distributors, which greatly intensified competition and mobilised generators to out-race one another in building plants to meet surging demand. As a result, installed capacity soared 84 per cent in the five years to the end of last year, erasing power shortages in all but a few regions. But some regions still experience various degrees of power shortages, albeit far less severe than several years ago, according to State Grid. These include the booming and relatively wealthy Guangdong, northern regions such as western Inner Mongolia, Shanxi and Hebei where heavy industry output exceeded expectations, as well as the eastern industrialised provinces of Anhui, Zhejiang and Fujian. Part of the blame lies in the mainland's under-invested power distribution network which prevents the maximisation of distribution of power from areas with surplus to those with shortage. Distribution infrastructure investment accounts for only 30 per cent of total investment in the sector compared with 50 per cent of developed nations, according to SERC. 'Weaknesses in our regional distribution networks are still prevalent, resulting in many bottlenecks,' Mr You said. A resurgence of heavy industry output growth was also to blame for the shortages. For example, aluminium smelting, where electricity costs account for some 35 per cent of total production costs, grew 34.9 per cent year on year in the first six months compared with 19.7 per cent for the whole of last year. What is more worrying about the 'quality' of expansion in the mainland's power industry is its heavy reliance on coal as a fuel source. Coal-fired power accounted for 86 per cent of national electricity output in the first half, up from 83 per cent last year, according to the China Electricity Council figures. Hydro power, a clean energy source, saw its contribution drop to 11.8 per cent from 14.7 per cent last year while the weighting of nuclear power fell to 1.78 per cent from 1.91 per cent. Given the long construction lead time - from seven to 10 years - of large-scale hydro and nuclear projects and the high prices of natural gas, it will take decades for the mainland to cut its reliance on polluting coal in a significant way. Although clean, renewable energy, led by wind power, is expected to grow in leaps and bounds in the next decade, its tiny existing scale of development meant it could play only a minor role in helping the mainland go green. Technology to burn coal in a clean manner is key to reducing pollution markedly. The state has already implemented policies to require desulphurisation facilities in all forthcoming power plants, and introduced a market mechanism to encourage power firms to install them. But it will be years before the nation can commercialise expensive technology to cut the emission of carbon dioxide.