Exports May Be Down, But China is STILL Short on Energy.

Wednesday, January 20, 2010 7:48
Posted in category Uncategorized

In what may be the biggest sign of the problems that China’s energy infrastructure faces, a recent Alibaba article China’s spreading power shortage by province listed out the provinces that are going through shortages (Henan, Hubei, Chongqing, Zhejiang, Shandong, Shanxi, Yunnan, and Guizhou), and by how much (5-20% short), and it is clear that something is gonna give.  and soon.

Go back 2 years when China was hit by a blizzard the knocked out many of China’s North to South rail lines, which resulted in 17 provinces losing power, and fast forward to today (in a time where the export economy is off) … and there are still problems.

The recent Jan 6 WSJ article Europe and Asia Struggle With Travel, Power Woes says:

China faces potential power shortages as parts of the country struggle with the coldest weather in decades, authorities said. The cold spell is expected to persist through the week, driving up demand for heating and electricity.

… but in the China based Global Times December 31 article Power shortages worsen in Wuhan, the issue was already highlighted as one that Wuhan (Hubei province) was already fighting, and had been fighting for a very different reason:

“As the coal used for power generation is still in short supply, residents’ lives would be affected without the ban on industrial sectors,” said Fu Jianjun, deputy general manager of Wuhan Power.”

The severity of the problems which ultimately were highlighted in the Clean Techica article Coal-Power Shortage Threatened in China:

Any time coal reserves go lower than three days, coal-fired power plants must shut down. Eleven percent of the key coal producing provinces’ power plants are close to getting to that point. Coal reserves at power stations are in dangerously short supply.

As of Sunday, coal reserves in 598 major power plants were decreasing and were only enough to last for nine days. Coal storage in 205 power plants will last for seven days, an alarming level, the National Power Dispatch and Communication Center said.

Which takes me back to the Steel Guru piece Chinese utilities accept 2010 coal price hikes in regions from December 26, where I think we hit bedrock on the issue:

A power company executive said that a few coal groups in China’s top coal producing province Shanxi have asked to raise term prices by CNY 30 per tonne to CNY 50 per tonne with coal with calorific value of 5,000 kcal per kilogram at around CNY 500 per tonne after the hike. In the northern province of Heilongjiang, utilities and coal miners have agreed on a price hike of CNY 50 per tonne to about CNY 390 per tonne.

So, on Dec 26 an increase in the price of coal was agreed upon, a week later the capital of Hubei province was reporting coal shortages, and now you have 10 provinces short of power.  It is a condition that of course will have immediate economic and societal impacts, and is perhaps the key reason why the December Smartgrid conference in Beijing was packed.

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