China is unlikely to face large-scale power outages this summer but current fixes not financially and environmentally sustainable, analysts say
- ‘We do not see that another large-scale power shortage is likely this summer,’ Lucas Zhang Liutong of Hong Kong-based consultancy WaterRock Energy Economics says
- China must resolve the issue of meeting electricity demand without relying on ever-increasing coal power capacity: Crea analyst
China is unlikely to see large-scale power shortages this summer even with heatwaves driving up demand for cooling and more frequent droughts threatening the country’s hydropower output, analysts said.
Beijing has mandated provincial governments to avoid blackouts “at all costs” by producing more coal power and improving power transmission infrastructure, and the country is now better prepared after last year’s hydropower outage in southwest Sichuan province in the summer.
Lower coal and gas prices, and lower-than-expected demand for power due to a slow recovery in the economy are also factors that will reduce the likelihood of power shortages.
“We do not see that another large-scale power shortage is likely this summer,” said Lucas Zhang Liutong, director of Hong Kong-based consultancy WaterRock Energy Economics. This is mainly because of positive “dark spread” – the difference between the price received by a generator for electricity produced and the cost of fuel needed to produce that electricity – at coal plants, which allows them to generate electricity to meet rising demand, relatively weak manufacturing activity due to weak exports, and proactive government measures forcing energy firms to prepare better for the expected spike in demand, he added.
