Skip to content

Green Suicide: China Faces Potential Winter Power Cuts

China is again facing the prospect of winter power cuts, and in recent weeks government organizations have issued a series of warnings to prepare industry and consumers for the worst.

The latest comes from the State Electricity Regulatory Commission, which said Thursday that falling hydroelectric power output and tight coal supplies could result in a shortfall of at least 26 million kilowatts in the months ahead.

The state-run Xinhua news agency cited a commission official as saying the situation could worsen due to rising coal prices.

China’s benchmark Bohai-Rim Steam-Coal Price Index has risen steadily in the past six weeks, increasing to 847 yuan (about $133) a metric ton from 826 yuan per ton.

The warnings come at a time China is also experiencing diesel shortages, provoked by reluctance by state oil refiners to either increase output or sell fuel to independent distributors to minimize losses resulting from government-imposed price caps.

Last winter, power cuts and electricity rationing caused a big rise in industry use of diesel for power generation, which prompted a jump in China’s oil-product imports.

The possibility of a repeat of that situation increased Friday with the publication of data from China’s major oil companies showing that their commercial stocks of diesel fell 12.7% in September from August.

Each year, China’s creaky rail cargo network and inadequate regional road systems get clogged up as millions of tons of coal are moved by train and truck from mines in the west and north of the country to power stations serving the industrial east and south.

Late last month, the State Grid Corp. of China warned that five provinces—Hubei, Hunan, Jiangxi, Henan and Sichuan, along with the heavily industrialized Chongqing municipality—could face a combined shortage of 17 million tons of coal this winter and spring.

China’s National Energy Administration has said a prolonged drought in some regions will likely cause hydropower capacity to decline between 30% and 40% this winter.

The Wall Street Journal, 21 October 2011