Central China Faces Power Deficit

Power shortages in provinces covered by the central China grid will rise to 8 gigawatts GW in January, the State Grid News reported, echoing earlier industry warnings.

The shortfall would be 8 percent of the peak load of about 100 GW in December in the hydropower-rich region.

Provinces covered by the central China grid include Chongqing, Henan, Hubei, Hunan, Jiangxi and Sichuan. These provinces had 187 GW of power generating capacity at the end of 2009, of which hydropower accounted for nearly 40 percent.

The winter-spring power supply situation would be unusually grim as northern Shanxi and Shaanxi provinces, which normally supply electricity to central China in winter, were themselves short of power, the newspaper report said.

The newspaper, which is run by the State Grid Corp of China, the country's grid operator in 26 of 31 provinces, did not provide current power shortage figures.

Power rationing had been in place in Chongqing since December 2, Henan since December 16 and Hubei since December 22.

Chinese power companies, facing stiff power tariffs set by the government, lack incentives to build up coal inventories and increase generation when coal costs surge and they operated in the red.

Insufficient coal transportation and power distribution capacity also impeded energy flows, triggering power rationing when demand increased on either hot or cold weather.

Power companies often blamed coal shortages for power crunches and look for government intervention on coal supplies, but coal miners have insisted coal production is ample and power companies are unwilling to pay market prices.

Jiang Zhimin, general secretary of the China Coal Industry Association was quoted by the Beijing Times newspaper as saying that coal inventories in major power plants across the country were sufficient for 15 days of generation as of December 26, above the critical level of 10 days' combustion.

"China is not short of coal... widespread power shortages are unlikely," Jiang was quoted as saying.

He said coal company profit margins were normal, in an apparent effort to refute power industry claims that coal miners were profiteering at the expense of power companies.