Electricity shortage a growing pain for China

13:23, May 25, 2011      

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Workers check power transmission facilities in Gaobeidian, Hebei Province Tuesday. Photo: Xinhua

Financially crippled coal plants are shutting down their generators, even though the country is facing one of its most severe power shortages ever, which could hamper the 12th Five- Year Plan starting this year.

Some 26 provincial regions under the management of the State Grid Corp of China (SGCC) would suffer combined power shortages of at least 30 gigawatts this year, Shuai Junqing, the company's executive vice president, was quoted by the Xinhua News Agency as saying Monday.

The deficiency could reach 40 million kilowatts when power consumption reaches its annual peak during the summer, Shuai said, adding that the situation could become worse in 2012 and 2013.

In 2004, China suffered its worst power shortage since the 90s, imposing power cuts or limits in 27 out of its 31 provinces, municipalities and autonomous regions.

As more than 70 percent of the country's electricity generation comes from burning coal, analysts pointed out that the rising price of coal and the fixed price of electricity have forced many coal plants to trim production in order to curb losses.

According to the Hong Kong-based Wenweipo newspaper, compared with 2007, the average electricity rate has risen by 15 percent, compared to a 75 percent surge of coal price in the same period.

China's five biggest power generation groups had accumulated up to 60 billion yuan ($9.23 billion) in losses in their coal power business since 2008, according to the State Electricity Regulatory Commission (SERC), and the deficit continued to expand in the first four months of this year.

"Many coal plants have shut down their generators because the more they produce, the bigger the losses they will suffer," Li Chaolin, a coal and energy industry analyst at Anbound Group, told the Global Times.

"The gap cannot be filled under the current system - on the one hand coal prices are driven up by the market while on the other, the price of electricity is being squeezed by government intervention," he added.

According to the Guangming Daily, the capability of coal plants in Hunan Province is up to 14.17 gigawatts, but only half of them are working, with the rest being told to undergo an overhaul.

A similar phenomenon was also found in Henan Province, where more than 20 percent of coal electricity utilities were left unused.

Some analysts suggested that the government adopt a more flexible electricity rate to help coal plants.

"The coal industry is in a market economy, but the power industry is still in a planned economy," the Oriental Morning Post said in a commentary.

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Source: Global Times
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