China struggles to keep the lights on amid sky-high demand

  • Date: 23/12/20
  • Bloomberg

China’s roaring industrial rebound from the pandemic has an unforeseen consequence — the surge in power demand has left factories, office buildings and street lights in some areas straining under an electricity shortage.

The country’s local governments are cutting power to some industrial and commercial customers in several provinces. State-owned companies are sending an army of workers to inspect power lines, and authorities are urging coal miners to produce more.

But that’s done little to quell the stream of domestic media reports on struggling cities. With the rest of the world growing ever-more dependent on China’s medical equipment and electronics exports as their pandemic-ravaged economies suffer, the focus abroad is also increasingly turning to the Asian manufacturing giant’s power supply.

“As the global economy recovers, it will be imperative for China to stabilize its power supplies,” said Rana Mitter, professor of Chinese politics at the University of Oxford. “There is a move in the West to re-shore supply chains and unreliability of power supply in China could be another motivation to do this.”

The world is relying on China’s factories like never before. As one of the first economies to emerge from a pandemic induced lockdown, and as a leading producer of protective gear and medical equipment, China’s exports have soared to record levels. That’s led to surging demand for power, with November consumption up 9.4% over the previous year, the highest level in more than two years.

On top of that, colder-than-normal weather is now adding to winter demand as people heat their homes, and ice is also wreaking havoc on grid infrastructure. Meanwhile, some parts of the country are curtailing electricity to keep emissions in check. That’s left some regions without enough power during peak hours, with two expected to have lasting shortfalls.

Chinese power demand is surging after a drop during the pandemic

“Weather conditions for the following months will be the key factor to determine the scale of the outage,” said Hanyang Wei, an analyst with BloombergNEF. “Peak load would drop quickly if cold weather lasts for just a few days.”

This is all happening as coal, the fuel of choice for a majority of China’s power generation, remains in short supply. The government had limited imports to support domestic miners, and imposed an unofficial ban on Australian shipments amid a diplomatic spat. But domestic supplies haven’t risen as much as needed following a recent spate of deadly mining accidents.

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