Four factors caused power shortage this year in China

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Last updated at: (Beijing Time) Monday, December 08, 2003

Four factors caused power shortage this year in China

The situation where input in power infrastructure kept lagging behind the national infrastructure investment for several years is the immediate reason for slow power construction and inadequate overall power generation.

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Experts from the Estimation Work Group for Power Market with the company pointed out on Dec. 5 that recent years have seen the ratio of investment on power infrastructure in the total national infrastructure investment keep declining year-on-year, from 12.9 percent during the "Eighth Five-year Plan" to 10.4 percent for the "Ninth Five-year Plan, then a further reduction of 7.22 percent for 2000 and 6.94 percent in 2001. The ratio for the last year, albeit a slight recovery, stood at 7.17 percent. The situation where input in power infrastructure kept lagging behind the national infrastructure investment for several years is the immediate reason for slow power construction and inadequate overall power generation.

The combination of such factors as the Financial Crisis in Asia in 1997, national economic restructuring program, slow power demand increase and relative excessive power supply in 1998 have all functioned to result in underestimation of macro-economic development outlook. Apparently too slow pace was set for the development of power industry when the blueprint for the power industry was mapped out for the Tenth Five-year. Newly launched power projects were too small to make enough capacity.

In the meantime, the national economy has been keeping growing fast which has greatly spurred the electricity consumption and added more pressure on power grids. Especially the high speed expansion of heavy power consumption industries has led the industrial structure on a heavy-duty way. In addition, power consumption per unit in GDP kept rising, which weakened the support that power supply can offer to the economy.

Power shortage is possible to happen at any time now due to the continuous high temperature, draught, and less waterfall this year. High temperature plaguing the south and east part of China and southern part of north China this summer was one of the major reasons for the power shortage in these areas. Poor water source to the reservoirs due to serious draught caused less hydro power generation but more power consumption for farm land irrigation. This has made the power demand and supply relationship in hydroelectric heavy areas more vulnerable to uncertainties caused by the climate.

Tightened coal supply for coal-fired power plants and more unexpected shut-down on generators also fuelled the tension between the demand and supply.

The demand for power will surge even higher next year while the electricity capacity into operation lags behind. The whole country will face a more serious challenge than this year. Power rationing will spread to more areas. The power demand is expected to top 2 trillion kw hours with an increase of 11 percent and a net growth of about 200b kw hours. From 2005 to 2006, the situation will ease and less amount of electricity capacity will be switched off. The power consumption will rise by 7 percent to 10 percent and by 6 percent to 7 percent in 2006 on the basis of the previous year. By then, there will be a balanced power supply and demand basically in the country. But shortage may still remain in some areas.

China faces energy shortage

China is facing a severe power shortage again this year, following a nationwide electricity crisis caused by a rare heat wave that struck many parts of the country in the summer.

Major Chinese electricity producers recently sent urgent signals that they badly needed coal for electricity generation. Some have appealed for state intervention to solve their acute coal shortage, which has gravely hampered normal electricity production.

According to a petition filed by China Huadian Group, China Huaneng Enterprise Group and five other major power producers, most power plants in central and north China now face shortages of coal.

Coal reserves in these power plants have dropped below the warning level, and some plants even have been compelled to shut down their generators, it said.

Some people attributed this power shortage to the soaring coal price, the rising transportation cost, and declining coal storage and coal quality, but experts said the remarkable growth of the Chinese economy is the fundamental reason for the current shortage of all sorts of energy including coal and electricity.

In 2003, China's economic growth rate is expected to hit 8.5 percent, even higher than the past several years, which has already drawn the attention of international media.

Since 1991, the industrial output in Zhejiang Province has been growing at an annual rate of over 10 percent, while its power demand has been rising at a yearly rate of 12.5 percent, according to the State Electricity Regulatory Commission.

Now China has become the largest consumer of coal and the second largest consumer of oil and electricity in the world, official figures showed.

The amazing booming of China's automobile sales has brought heavy pressure on oil supplies. In Guangdong Province recently, tank trucks queued for two kilometers to buy diesel oil. In Shanxi and many other provinces, small gas stations began to charge drivers for gasoline with higher prices than regulated by the government.

The shortage of domestic energy supply has increased the demand for imports. Over the first three quarters of the year, China imported 50 billion US dollars worth of major energy resources and raw materials, 49.1 percent more than in the same period of last year.

The increasing demand of the Chinese market has driven up prices of raw materials in the global market and put pressure on ports and transportation lines, said Ma Kai, minister in charge of the State Development and Reform Commission.

Some argued the reform pace of China's energy systems could not follow the pace of national economic development. The electricity pricing is still subject to government approval at present, while coal prices float in line with market demands, said an official with China Huaneng Enterprise Group.

Others say China needs to add investment in this regard to accelerate facility construction and new resource exploring, as well as to improve the efficiency in energy consumption. Some experts suggest the government map out wiser oil strategies so as to buy oil at a lower international price.

By People's Daily Online

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