China’s Power Shortages to Last Until Spring 2022

By Jonathan Walker | November 10, 2021
Jonathan loves talking politics, economics and philosophy. He carries unique perspectives on everything making him a rather odd mix of liberal-conservative with a streak of independent Austrian thought.
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SHANDONG PROVINCE, CHINA - SEPT. 27: A coal power plant is seen in operation on Sept. 27, 2021 in southern Shandong Province, China. China, the largest contributor to carbon emissions, has plans to peak them by 2030, and to become carbon neutral by 2060. However, after recent power supply problems resulted in factories being shut and homes left without electricity throughout the country, the government has stressed the importance of traditional energy supply, alarming environmentalists ahead of the upcoming Glasgow’s United Nations Climate Change Conference (COP26). (Image: Andrea Verdelli/Getty Images)

China has been struggling under an intense power crisis for several months and according to the county’s power grid agency, the power situation will continue to remain a problem for some time. The power crisis has triggered accusations of mismanagement of the country’s electricity supply.

In a statement dated Nov. 7, the State Grid Corporation of China warned that it will be unable to ensure continuous, reliable electricity supply to all of China in the next months. The grid services almost 1.1 billion people spread over 88 percent of China’s land territory.

Power outages could become common as demand for electricity picks up due to winter heating and electricity demand. Weather experts predict La Nina conditions to come back by winter, which would mean less rainfall in the southern regions and possibly colder winters in the north. Some provinces will have to face continuous power outages through winter until spring, the agency said. 

“The grid would overall see a tight balance of the supply and demand situation and power shortage in some regions… The current electricity supply and demand situation in the region managed by the company has returned to normal,” the firm said in a statement.

The inventory of thermal coal in State Grid’s operating area is presently at 99.32 million tons, with available days of consumption rising to 20. As of Nov. 6, only a few companies utilizing high amounts of electricity are being subjected to power supply restrictions. The State Grid has announced initiatives to balance the domestic coal market, including a crackdown on the speculation of coal and boosting its production.

“The State Grid will increase and stabilize the power supply by tapping the potential of all kinds of resources, while closely tracking the thermal coal and gas supply, and coordinating power transmission across different regions to ensure the safety of the grid,” state-backed media outlet Xinhua reported.

To deal with the power crisis, China has ramped up coal production. According to CCP mouthpiece Global Times, average daily output of coal in November rose by 800,000 tons from October to 11.53 million tons. Power plants now have enough in coal inventories to maintain electricity supply for 20 days. 

Some plants in areas like Jilin, Heilongjiang, and Liaoning have coal stocks to last up to 32 days. Coal prices at the Zhengzhou Commodity Exchange have fallen by almost 50 percent from the 1,982 yuan (US$310) per ton record high hit on Oct. 19.

The power crisis has attracted intense criticism from several quarters. Speaking at a virtual energy forum, Chen Weidong, the former chief energy researcher with the China Institute of Energy Economics, put the blame of the current power crunch on antiquated power pricing systems and poor planning of coal production. 

“China, in fact, has no shortage of power generation capacity, coal resources nor production capacity. How could China suddenly descend into power rationing? This is a man-made crisis,” Chen said at the forum.

China had earlier limited the production of coal in order to meet its carbon emission reduction targets. This ended up creating an artificial shortage of coal, which in turn led to a power crisis, electricity rationing, lowering of industrial activity, and so on. A ban on coal imports from Australia contributed to making matters worse.