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China acts against worst power shortage in years

Headquarters of the
State Grid Corporation
of China
Beijing, China — ESI-AFRICA.COM — 31 May 2011 – Electricity supplies to industrial users in China will be cut further this summer as capacity shortages, coal supply problems and declining hydropower output combine to produce the worst power crunch the country has experienced in years.

“Power deficits in the 26 provinces and regions serviced by State Grid Corporation of China (SGCC) would total 30GW in the summer, even if coal supplies remained steady, water levels were normal and there were no persistent high temperatures,” SGCC vice general manager Shuai Junqing was quoted as saying by the State Grid News, a company newspaper.

“This year’s shortfall would increase to about 40GW if coal supplies tightened, water stocks were lower than normal and unusually high temperatures persisted,” Shuai told a company conference.
He said power shortages could turn out to be even worse than 2004, when thousands of businesses were forced to shut down and large parts of China were plagued by blackouts over the summer months.

The forecasts suggest national power shortages could be worse than earlier estimates, as several provinces and regions serviced by China Southern Power Grid also face large supply deficits.

The situation could also be exacerbated by a serious drought in major hydropower producing regions in southwest and central China. The government has already issued an emergency notice on handling the drought in Hubei province, the site of the world’s biggest hydropower plant at the Three Gorges Dam.

Energy-guzzling steel mills and aluminium smelters could be the first to suffer if the government implemented power rationing to guarantee supplies to residential users and vital facilities such as hospitals and schools.

China’s biggest steel producers normally have their own standalone power plants and are not affected by mandatory cuts, but they could suffer from tight coal supplies. The biggest impact is likely to be felt by industry minnows, which rely on local grids to power their equipment.

Last year, dozens of steel mills in the industrial heartland of the northern province of Hebei were forced to shut down when the local government cut off their power supplies to meet a 2006 to 2010 energy saving target.

With the peak consumption period yet to arrive, steel mills and other big heavy industrial firms in eastern Zhejiang province have already had power supplies restricted to five days a week.