Recent electricity shortage in some Chinese regions has prompted power cuts to industrial plants to prioritize supply for households, raising concerns for a repeat of the wider power crunch occurred in 2021.
But the power shortage this summer looks much less severe than last year, either from the supply or demand side.
The national observatory has issued a red alert for high temperatures for six straight days since the beginning of August. Anhui, Zhejiang, Jiangsu and Sichuan have started orderly power use to ease grid load pressures.
The inadequate rains this summer greatly affected generation from hydropower plants, and added pressure to coal-fired power and thermal coal supply, said the National Development and Reform Commission (NDRC) in a news briefing on August 16.
An over 40% drop from the historical average in water inflows on Dadu River and Minjiang River, main water sources to hydro-rich and hydro-reliant Sichuan, in July has led to extremely low water inflows to the province during typical flood season (June-October).
And the once-in-six-decade extreme heatwaves in Sichuan boosted air-conditioning demand from households, and the province’s outbound power transmission task to other eastern provinces further aggravated its power shortfall.
Heatwave also threatens electricity supply in other hydropower provinces, like Yunnan, Hubei and Guizhou, as well as some coastal provinces that depend on clean power transmitted from main generating provinces in the West.
But the challenges facing China this year are far less severe than last year, as the drought-incurred shortage in hydropower generation in several hydro-reliant provinces could be addressed through cutting power usage in industrial sector, which consumes nearly 70% of electricity.
By contrast, the similar crunch last year included dual problems – higher power demand driven by unusually quick economic growth, as well as low generating enthusiasm of power producers due to surging coal price.
This year China saw eased impact of most of the above issues. Power demand remained relatively weak with the downside pressure on economic growth, and power consumption in the secondary industries only increased 1.1% in January-July. Coal prices have come down from highs amid series of measures taken by the government, which lifted power producers’ willingness to generate more electricity.
The difference highlights the stronger role of coal-fired power in ensuring stable power supply this year despite similarly high electricity demand.
The daily coal consumption of China’s major power plants rose by 15% year on year to 8.16 million tonnes over August 1-14, with a record high created at 8.49 million tonnes on August 3, the NDRC said on August 16.
Meanwhile, China’s daily coal dispatches hit a high level of 12.4 million tonnes since July, and the highest coal stocks at major power plants increased 74 million tonnes from a year ago to 175 million tonnes. The NDRC contributed this to the 100% coverage of power plant coal demand by medium- and long-term contracts.
Total coal inventory across the country stayed at a high level of 249 million tonnes in July despite a drop of 14 million tonnes from the peak level in June. The robust coal production and increased imports last month have slowed the stock depletion pace.
With high temperature days reducing after late August, the impact of hydropower shortage would be much smaller than last year, even even the droughts along the Yangtze River could linger on and the power shortfall may spread to some other areas.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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