China’s economic recovery faces challenging summer as hydropower producer sizzles amid drought
- Hydropower-reliant Yunnan province cannot generate as much electricity amid low water inflows, and the problem threatens to have a broader impact on other regions
- Rainfall across Yunnan was down by 60 per cent from January to April, year on year
As sizzling summer heat leads to a surge in power demand, months of persistent drought conditions across a major hydropower producer in China’s southwest are compounding concerns about the nation’s economic recovery.
Rainfall in Yunnan province during the first four months of 2023 dropped by more than 60 per cent from the same period last year, and the trend has shown little sign of reversing even as the region enters its rainy season, according to local meteorological data.
While the province has been limiting the electricity consumption of more than 300 energy-intensive local enterprises – mostly for aluminium production – since September to ensure residents’ livelihoods, the impact may soon spill over to other parts of the country if the droughts continue, as Yunnan also bears responsibility for supplying electricity to the southern economic powerhouse of Guangdong.
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As the power-supply dilemma caused by extreme weather has persisted for two consecutive years in China, the reliability of the existing electricity supply structure in the country is facing increasing challenges from the worsening impact of global warming.
“Hydropower generation in Yunnan in the following months is crucial for the electricity supply and demand situation in Guangdong,” said a note from Tianfeng Securities last week.
Last year, Guangdong consumed the most electricity – or 787 billion kilowatt-hours – among all major provinces and regions, and 23 per cent of the power it consumed was from other provinces, according to official data.
Among the external sources, Yunnan is the biggest supplier, accounting for around 70 per cent.
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Guangdong province has entered its peak season for energy consumption, which rises sharply from June to August due to high temperatures.
As Guangdong has signed a new agreement with neighbouring Fujian to provide power to the southern part of the province from July to September, as well as in December, it may further intensify the pressure on Guangdong’s power-supply situation this summer, according to the Tianfeng note.
Yunnan, located on the upper reaches of the Yangtze River, houses seven of China’s top 10 hydropower stations. It is China’s second-largest hydropower province, and 80 per cent of its local supply is from hydropower.
As occasional rainfalls in May did not alleviate the ongoing drought, it is expected that the tight power supply in Yunnan will continue in June, with the gap between supply and demand being as much as 1.4 billion kilowatt-hours, according to the Kunming Power Exchange Centre.
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But guaranteeing residential and agriculture use, as well as contractual supply to other provinces, will be the priority, it said.
In the first quarter, the amount of electricity Yunnan sent to Guangdong dropped by one-third compared with the same period last year, or 2.4 billion kilowatt-hours short of the amount originally planned for that period, official data showed.
In May 2021, droughts in Yunnan also caused power rationing in parts of Guangdong. Months later, a lack of coal led to power cuts that affected most parts of the country.
Last summer, droughts in Sichuan province caused severe power shortages, which curtailed local residential power use and energy supplies to coastal economic powerhouses such as Shanghai, Jiangsu and Zhejiang.
According to the China Electricity Council, the nation’s maximum power load may increase by nearly 100 million kilowatts compared with 2022 if heatwaves persist in many parts of the country this summer.
