Coal shortage leads to shutdowns in China's power grid
The coal shortage has forced the shutdown of 10,300 megawatts (MW) of generating units in areas including Guizhou Province (4,200 MW), Yunnan Province (2,300 MW) and the Guangxi Autonomous Region (2,300 MW). The shutdowns are the largest the grid has experienced since it was established, Xiao said. There are several reasons for the forced shutdown:
•The shutdown of small coal mines •Insufficient transportation capacity •The inability of small coal mines to supply large power plants
However, several insiders have said that the main reason for the shutdowns is the major rise in the price of coal. The price has been rising quickly in China since 2007, and the contract price for power-coal supply rose an additional 10% in 2008. The price of coal in Guizhou rose $11-$14 per metric ton, according to data provided by Xiao Peng.
Although various measures for energy conservation and emissions reduction have been taken and many new large units have been put into operation in the electric power sector, grid technology has been limited, and the potential for reductions in coal consumption by power producers is also limited. The suspension of price linkage between coal and power has reduced the possibility of changes to the price of coal from power producers. In addition, oil-fired units had to stop operating because of the "high fever" in oil price.
China has maintained control of prices over utilities such as power. In order to compensate for costs for power producers, China had implemented a mechanism to link coal and power, especially when the price rise in coal surpassed 5%. However, the Chinese government recently announced that no price hikes are allowed for utilities because of the current risk of inflation.
Because of the continual rise in the price of coal, it is understandable for some power producers to stop operating. However, the contradiction between deregulated coal price and regulated electricity price will be always a risk in the country's power supply.
Related News
Britain breaks record for coal-free power generation - but what does this mean for your energy bills?
LONDON - On Wednesday 10 June, Britain hit a significant landmark: the UK went for two full months without burning coal to generate power – that's the longest period since the 1880s.
According to the National Grid, Britain has now run its electricity network without burning coal since midnight on the 9 April. This coal-free period has beaten the country’s previous record of 18 days, six hours and 10 minutes, which was set in June 2019.
With such a shift in Britain’s drive for renewables and lower electricity demand following the coronavirus lockdown, now may be the perfect time to do an…
