February 21, 2008
What is going on in China’s electricity sector?
A month ago, power failures during China’s coldest, snowiest winter in decades left millions without heat or running water. The government responded by ordering ports to stop loading coal for exports, ordered railways and other transport networks to make hauling coal a priority over coming weeks, ordered ocean shippers to divert shipments when needed for domestic requirements, and warned of “severe” consequences for those failing to comply.
The shortages eased during the extended Chinese New Year holidays, but now that the holidays are over, and factories are firing up, power problems are back with a vengeance. Guangzhou, southern China’s export centre, has cut power to all energy-intensive firms while Guangdong province, which ships about a quarter of China’s export goods, cut back industrial users by 30%. Officials have warned that tight power supplies in Guangdong might not ease until late March when flows from Guizhou and other provinces are resumed.
China’s power sector continues to grow at unprecedented rates — it is adding new capacity of about 90 gigawatts annually, enough to power the United Kingdom. Its reliability as a power producer, and as an exporter, must give many pause.