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Power Sector Undergoes Short Shocks
China's power industry experienced mixed feelings in the first half of the year, with the rise of electricity production and the drop of profits.
The nation generated 676.6 billion kilowatt-hours of electricity during the period, increasing 7.78 per cent year-on-year, while profit decreased by 9.7 per cent to 7.9 billion yuan (US$955.2 million).
An official from the State Power Corp of China, the nation's largest electricity producer, said the profit decline is due to the increase of interest of loans for the upgrading of power grids in urban and rural areas.
"Although the investment in the project declined during the period, the total accumulated loan interest rose, which has dragged down the industry's profit,'' said the official.
However, the official did not specify how much the interest had grown but added that the cost for electricity sales had also swollen, lowering the profit.
The State Power Corp of China, which controls half of the nation's power plants, registered a profit of 4.1 billion yuan (US$495.7 million), also down 6.15 per cent year-on-year.
According to Wang Zijian, from the company's strategic planning department, the State Power poured 27.8 billion yuan (US$3.35 billion) in the grid upgrading project in the past six months, 13.3 per cent down compared with the same period last year.
The investment in the project accounts for 46 per cent of the total investment in the industry during the period.
At present, China has invested 180 billion yuan (US$21.8 billion) in upgrading the grids since 1998, in a bid to improve the safety and efficiency of the grids.
The upgrading of power grids has helped slash the electricity price, especially in rural areas, by 0.05-0.1 yuan (0.6 US cents-1.2 US cents) for a kilowatt-hour of electricity, which could save 2.3 billion (US$278.1 million) annually.
The improved power grids and lower price has stimulated residential electricity consumption, which rose by 8.5 per cent in the previous six months year-on-year.
The company's Liang Weilie said the steady national economic growth -- the gross domestic production (GDP), which rose 7.9 per cent in the period -- has spurred electricity consumption in the first half of the year.
"Power consumption in industries such as textile, metallurgy, communications equipment and construction materials has kept a two-digit increase rate,'' said Liang.
Liang predicted that China is expected to generate 1,452 billion kilowatt-hours of electricity by the year end, up 7.5 per cent year-on-year.
Liang noted that the increase of hydropower production during the period, a rise of 9.3 per cent year-on-year, has indicated that China has been focusing more on clean and cheap hydropower to ease the thirst for electricity.
China is expected to increase its hydropower in electricity production to 23.5 per cent from 15 per cent.
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