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UPDATE 1-China sees 2008 power shortfall at 10 GW
April 22, 2008 / 4:33 AM / 10 years ago

UPDATE 1-China sees 2008 power shortfall at 10 GW

BEIJING, April 22 (Reuters) - China’s power demand this year could outpace supply by up to 10 gigawatts (GW), with temporary brownouts hitting parts of the south during the summer, the deputy head of the country’s power regulator said on Tuesday.

China’s power firms are building new power stations each year but coal burning generators are struggling with soaring fuel costs, an over-stretched domestic transport system and strong competition for supplies.

Wang Yeping, vice-chairman of the State Electricity Regulatory Commission, told a news conference that fuel stocks at major power plants had slipped to levels that cover 12 days of generation, from 15 days in early March.

At plants in Hebei province bordering Beijing, Anhui province in the east, and the western municipality of Chongqing, stores had collapsed even further, to under 7 days of use.

“Since March, the country’s thermal coal supply has again shown some tightness. Coal stocks fell again. At some power plants, thermal coal supply is already quite tight,” he said.

Coal prices shot up to record highs during power and coal shortages in early February, when freak winter weather cut off roads, railways and power lines and left some plants with coal to cover just 2 days of production.

Prices have eased as winter heating demand ebbs and mines resume production. Benchmark spot prices at Qinhuangdao, China’s top coal port, for top-grade coal, were at 640-650 yuan ($91.44-$92.87) per tonne on Tuesday.

This was below 670-680 yuan in early February, but still 37 percent higher than a year earlier, according to www.cqcoal.com, a coal market information website operated by a business venture.

Despite these high prices, Beijing is reluctant to take one measure analysts say could bolster coal supplies, increase investment in new plants and ensure existing ones run at full steam -- raise state set power prices.

Inflation is currently running close to the highest level in over a decade, and Wang said Beijing had to consider many factors, including the impact on inflation, when weighing up whether to increase power prices.

But prices are currently so low they leave an increasing number of plants in the red, and could exacerbate shortages.

And Wang’s forecast may be conservative, as booming Guangdong province, a manufacturing hub had warned last month it alone could face shortfalls of 10 GW.

Although Guangdong is expected to face some of the worst problems, other rich coastal provinces are likely to strain to meet demand as well over peak summer months. ($1=6.999 Yuan) (Reporting by Jim Bai; Writing by Rujun Shen, Editing by Emma Graham-Harrison)

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