China greatly affected by power deficit
Power shortage is one of the greatest problems faced by developing and developed countries across the world. Recently China has been grappling with a power shortage problem due to summer peak consumption. The town of Songsha in the Zhejiang Province of east China has been confronted with power blackouts every four days since March of this year. Songsha is the home of more than 1000 umbrella manufacturers, among other industrial activities. The top economic planner of the China National Development and Reform Commission, in a statement on the State-owned media TV station, told people from 20 provinces, municipalities and autonomous regions to ration their use of electricity. The National Energy Bureau of China released figures of energy consumption in the country which portrayed that the electricity consumption of the Chinese, during the first quarter of this year, increased significantly to 1.09 trillion kilowatts per hour (KwPH.) This figure represents a nearly 13% increase over the previous year.
The Electricity Council of China revealed that the power supply deficit could increase to reach 30 million kilowatts this summer. It would be the worst supply shortage since 2004, according to a well-read newspaper in its May 4 issue. Experts are searching for the reason behind the blackouts, and many energy analysts say the power shortage is due to the increasing price of thermal coal.
Every week since March 17 of this year has seen the price of thermal coal increase tremendously, reaching its highest level on April 20 at $124 USD per ton. At the same time, electricity rates throughout the nation, regulated by the State, have not experienced any increase. Due to this, many electricity power stations are operating under a loss. China analyst Nate Taplin asserted that the reasons for such electric power blackouts are not that the country is producing too little electricity, but that it is a form of blackmail conducted by the electric power producers against the government and people of China.
China’s electrical production companies want the government to increase the price they can charge for electricity. Nate Taplin further believes the rationing increase may force private manufacturers to depend on diesel generators for generating electricity. To address these structural problems without price hikes, outages will probably be important, and will lead to a jump in demand for diesel fuel.
The China Enterprise Confederation has reported that a few power plants in China have even been temporarily shut down due to shortages of coal. They predict the power shortage would intensify through the middle of the 12th Five-Year Plan period of China, which runs from 2011 to 2015. Vice Chairperson of the China Energy Research Society, Zhou Dadi, has been on the record saying that current retail electricity rates are too low, and can no longer compensate the unyielding increases to the cost of power generation. The coalition of business leaders stated in their latest press release that the government should increase electricity rates appropriately to address the power deficit.