China is long used to power cuts during the summer months, when electricity demand for air conditioning and refrigeration is at its highest. The China Electricity Council is now forecasting this year’s shortage to be the worst in seven years.
The culprit, for the most part, is the shortfall between the rising cost of coal that has risen almost 20% in the last year alone, and the state controlled price of electricity charged to the end user that has only increased by 2% over the same period.
Not able to control the price of their end product, coal-fueled power plants have only the option of varying supply as a way of maintaining their profits, or for some just breaking even. As the power cuts hit, major manufactures look to diesel generators to maintain production, compounding the same problem at the pump. As with many summers before, we can expect long queues of trucks at petrol stations across the country should oil prices rise above US$130 per barrel.
While coal accounts for approximately 80% of power generation in China, the government is looking for as much as 15% from renewable sources by 2020, a target that for now looks far out of range. The massive necessary investment in the infrastructure for renewable energy means that wind and solar power have to date contributed very little to the growth of the country’s installed power capacity.
One exception is hydro-power. The capital of Hunan province, Changsha, draws a significant proportion of its power needs from hydro-electric installations in the surrounding hilly landscape. Now, the dry winter has meant water levels are considerably lower than normal for this time of year, forcing the city to ration electricity. Street lighting has been dimmed and rotating one hour power cuts are said to be in operation.
For us in Nanjing, and quite probably only for now, Jiangsu Province is not on the list of provinces whose power systems face the most pressure, announced by the State Grid. Hunan, Hubei, Henan, Jiangxi and Shanxi are expected to be the worst hit, but people in Jiangsu and neighbouring Zhejiang and Anhui are being warned not to be surprised if electricity rationing begins in force.
