Why the power shortage? "Limiting electricity" 3 focus issues interpretation
Since September, China's national policy to limit production and electricity has been implemented in all provinces of China. Faced with the severe situation of dual control of domestic energy consumption, Guangdong, Zhejiang, Jiangsu and other provinces have introduced power rationing measures.
A number of places in northeast China have issued power rationing notices, saying power rationing may continue if the power shortage does not ease.
So why the recent power shortages? This time, we will focus on the following three major issues:
1. Is the power supply shortage of this round related to "the dual control system of total energy consumption and intensity" ?
In 2015, the fifth Plenary Session of the 18th Central Committee of the COMMUNIST Party of China (CPC) proposed "dual control" of energy consumption, which means to control both energy intensity (also known as energy consumption per unit of GDP, the efficiency of energy use in creating economic output) and total energy consumption.
Recently, some provinces have experienced power rationing, and the assessment pressure under the "dual control of energy consumption" is believed to be the reason behind the power shortage.
In response, Guangdong authorities recently said that this round of off-peak power consumption is mainly caused by the double increase of power load caused by high temperature and the limited power generation capacity of units in the province, rather than the double control of energy consumption.
In terms of energy consumption control, Guangdong province has avoided the "allow no flexibility" approach, and has taken measures such as stopping production and rectification of projects with high energy consumption and high energy consumption before approval. When there is a shortage of electricity supply, the government will give priority to ensuring the use of electricity for People's Daily life and the service industry, and focus on restricting the use of electricity by enterprises engaged in the two industries.
2. Why the recent shortage of power supply?
Thermal power has always been the main power supply, accounting for more than 70 percent of the country's total power generation. An official source in Jilin province said, "There is a shortage of coal and power supply."
China consumed about 2.1 billion tons of coal in the first half of this year, up 10.7 percent year on year, according to a report on Coal Economic Operation in the first half of 2021 released by the China National Coal Association.
In the same period, raw coal output of enterprises above designated size was 1.95 billion tons, up only 6.4 percent year on year. In addition, the country's major ports stored 62.98 million tons of coal, down 8.3 percent year on year.
China's recovery from the epidemic has been better than the global average, leading to strong demand for industrial production and a strong expansion of electricity demand and coal consumption. Demand for coal exceeds supply, causing prices to rise.
From the absolute price of coal, China's coal price has been in 2008 since the high. Last week, the purchase price of thermal coal has reached 1086 yuan/ton (calorific value is 5500 kcal), nearly double the year-on-year increase, 56.26% higher than the beginning of the year.
In addition, hydropower is the second largest source of electricity after thermal power. The lack of hydropower production this year is also a major reason for the shortage.
3. Why didn't wind power and natural gas play their role?
It is reported that entering September, with the continuous economic development, electricity demand repeatedly record highs, coupled with the pre-heating equipment maintenance, thermal power generation capacity is limited, reduced new energy generation and other factors, resulting in a tight power supply.
In addition, the price of natural gas in the international market and coal prices are rising in a similar trend, resulting in a tight global supply and demand for natural gas. China imports about half of its natural gas needs, which could be as tight as coal amid soaring prices and tight supply and demand.
As mentioned above, hydropower, the second largest power source after thermal power, has not been active in generating electricity this year. In the first five months of this year, hydropower only accounted for 11.6% of the total electricity supply in China.
"Similar to hydropower, the instantaneous power generation of wind power depends on the current wind speed, and the overall proportion of wind power generation in China and northeast China is very low. In 2020, wind power generation accounted for less than 11% of the electricity consumption in the three eastern provinces, which has little impact on the overall power supply and demand."
