Electricity Sector in The People's Republic of China - Problems

Problems

In Spring, 2011, it was reported by The New York Times that due to increased demand and price controls shortages of electricity existed and power outages should be anticipated. The government-regulated price electricity could be sold for had not matched rising prices for coal.

• Price caps encourage wasteful use of cheap electricity and therefore producers are struggling to generate enough power overall
• China is unable to mine enough coal or transport it in sufficient quantities to meet demand
• The enormous volume of coal burning generates massive pollution
• Regional power shortages occur frequently when generation drops in one province or region and the lack of long-distance power transmission capacity means that power cannot be routed in from other regions where there is surplus capacity

It seems likely the cost of power will need to rise substantially over the medium term (2–5 years) to curb wasteful energy consumption and slow the rate of growth in electricity demand. In theory, the government could raise power costs by a similar amount across the whole of China in the interests of inter-regional equity.

• China's power transmission system remains under-developed. There is no national grid. Instead there are six regional grids—five managed by the giant State Grid Corporation (north, north-east, east, central and north-west) and an independent grid (south) managed by the South China State Grid Corp (covering the light manufacturing hub around Guangzhou-Shenzhen and the inland areas of Guangdong, Guangxi and Guizhou).
  • Northern areas experience shortages in winter due to increased heating demand and problems with coal deliveries.
  • Eastern and southern areas are prone to shortages in late spring/early summer as temperatures and airconditioning demand rise, while reservoir levels and hydro output fall until the arrival of the summer rains in July and August. Guangdong and other southern provinces import substantial quantities of expensive fuel oil and diesel to run additional generation capacity to cope with the resulting power gap.

• The lack of a unified national grid system hampers the efficiency of power generation nationwide and heightens the risk of localised shortages.

• Even within these grids transmission capacity is limited. Many towns and enterprises rely on local off-grid generating plants. More importantly, inter-connections between the grids are weak and long distance transmission capacity is small.

• The country's limited internal transport capacity risks being overwhelmed by the need to move record quantities of coal from the coal fields of the north and north-east to power generators in the central, eastern and southern areas.

• The rail system has struggled to deliver adequate quantities of coal to the generators. Ice storms, flooding or droughts which disrupt rail and river deliveries quickly lead to shortages and power outages.

• There are concerns about the quality and reliability of Chinese boilers, turbines and generators exported to India compared with Indian or Western equipment.