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Wednesday, October 20, 2021

What is behind China’s power crisis?

Beijing manufacturers China is in the grip of a power crisis because of a shortage of coal supplies and strong coal demand from producers, industries and households, pushing up coal prices and imposing massive restrictions on consumption.

China’s heavily regulated power pricing system prevents its generators from going up to their coal aring cost customers, leaving them with no option but to lose or reduce production.

How long has the power supply problem in China?

China has often struggled to balance supply and demand, with central planners often underestimating demand growth, putting many provinces at risk of power outages during the summer and winter peak seasons.

This year, a perfect storm of factors – including some coal supply disruptions and rising demand for industry and households – has led to power crises across the country. However, the country’s inflexible pricing system is seen as the main culprit.

Why is China’s price system being blamed?

China’s worst power supply crisis occurred in the winter of 2010-2011, when severe blizzards disrupted coal supplies and damaged power transmission infrastructure.

However, power plants – concerned about their profits – have made the deficit worse by reducing their reserves to prolong price negotiations with coal suppliers.

Although China has allowed electricity prices to fluctuate when coal costs reach a certain level, generators struggling to avoid losses do not have the freedom to raise prices in a timely manner.

Some policymakers warned in 2019 that China would have to build more coal-fired power plants to address the risk of power shortages between 2021-2025, but existing production capacity remained largely unused, leaving many plants lacking economic incentives. End all to increase output.

What has become of China’s plan to curb the use of industrial energy?

Despite Beijing’s efforts to curb heavy industrial power consumption, there has been a recent shortage.

The provincial authorities of Inner Mongolia and Guangdong have instructed to reduce the use of electricity, including both industrial-energy-intensive aluminum smelters.

However, it was revealed that 10 provinces and territories প্রধান major coal producers such as Inner Mongolia এখনও still failed to meet existing energy efficiency targets in the first half, largely due to post-lockdown recovery, analysts say energy-dependent নি intensive heavy industry.

But despite the ban, China’s total power generation by August 2021 is still 10.1 percent higher than the same period in 2020 and about 15 percent higher than the same slot in 2019-2019 because utilities across the country have shrunk to meet the growing industry.

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How are regions now restricting power to specific users?

At present, electricity rations are running in at least nine provinces and territories. In major manufacturing centers such as Zhejiang, Jiangsu and Guangdong provinces, local governments have asked factories to limit electricity use or limit output.

Some electricity suppliers have sent notices to heavy users that may run from 8am to 11pm, or be completely shut down two to three days a week.

Others have been asked to close until further notice or a specific date, including soybean processing centers in eastern China’s Tianjin, which have been closed since September 22.

Which industries have been affected by power shortage?

The impact on the industry is broad and includes power-intensive sectors such as aluminum smelting, steel making, cement production and fertilizer production.

At least 15 listed Chinese companies that produce a variety of materials and products, from aluminum and chemicals to dyes and furniture – have reported that their production has been disrupted due to power outages.

Residential users have also been affected, with family members in some parts of northeast China calling for limiting the use of water heaters and microwaves to save electricity. Lifts and traffic lights have also been reported in some parts of the northeast.

What was Beijing’s response to the power crisis?

The National Development and Reform Commission said Friday it would work to address the power shortage, but gave no specific details on what action it would take.

A major near-term challenge for Beijing is the ongoing trade dispute with Australia, the world’s second-largest coal exporter, which has largely controlled coal shipments to China, as local authorities have raised safety standards that have slowed production at China’s coal mines. A series of accidents.

A senior official in northeastern China’s Jilin Province has urged authorities to try to produce more coal from Mongolia, Russia and Indonesia to bridge the supply gap.

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This News Originally From – The Epoch Times

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