What has been Beijing’s response to the power crunch? Elevators and traffic lights were also reportedly affected in some parts of the northeast. Residential users have also been hit, with households in parts of northeast China told to limit use of water heaters and microwaves to conserve power. The impact on industries is broad and includes power-intensive sectors like aluminum smelting, steelmaking, cement manufacturing, and fertilizer production.Īt least 15 listed Chinese firms that produce a range of materials and goods – from aluminum and chemicals to dyes and furniture – have reported that their production has been disrupted by power curbs. Which industries have been impacted by the power shortages?
Others have been told to shut until further notice or a particular date, including soybean processing plants in Tianjin in eastern China which have been shut since September 22. Some power providers have sent notices to heavy users to either halt production during peak power periods that can run from 7 am and 11 pm, or shut operations entirely for two to three days a week. Local governments in major manufacturing hubs like Zhejiang, Jiangsu, and Guangdong provinces have asked factories to limit power usage or curb output. Power rationing is currently taking place in at least nine provinces and regions. How are regions now limiting power for certain users? However, it was revealed that 10 provinces and regions – including major coal producers like Inner Mongolia – had still failed to meet existing energy efficiency targets in the first half, largely as a result of a post-lockdown recovery that analysts say relied on energy-intensive heavy industry.īut despite the curbs, China’s total power generation through August of 2021 was still 10.1% greater than in the same period in 2020, and nearly 15% more than in the same slot in 2019 as utilities across the country cranked up power to meet surging industrial demand. Provincial authorities in Inner Mongolia and Guangdong have both ordered industries – including energy-intensive aluminum smelters – to reduce electricity use. The recent shortages have come about despite Beijing’s efforts to curb heavy industrial power usage. What happened to China’s plans to curb industrial power use? Some policymakers warned in 2019 that China needed to build more coal-fired power plants in order to head off power shortage risks over the 2021-2025 period, but existing generation capacity has remained heavily underutilized, suggesting that many plants lack the economic incentives to go all out to boost output.
Though China has since allowed power tariffs to fluctuate if coal costs reach a certain level, struggling generators are still not at liberty to raise prices in a timely manner in order to avoid losses. However, power plants – concerned about their profitability – made the shortages worse by running down their stockpiles in order to prolong price negotiations with coal suppliers. One of China’s worst power supply crises took place in the winter of 2010-2011, when fierce snowstorms disrupted coal supplies and damaged power transmission infrastructure. Why is China’s pricing system being blamed? However, the country’s rigid pricing system is seen as the major culprit. This year, a perfect storm of factors – including some coal supply disruptions and surging demand from industries and households – have caused power shortages throughout the country.
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