May 12 (Bloomberg) -- China, the world's second-biggest energy consuming nation, may increase power-generating capacity by 40 percent in three years as demand of electricity rises.

Capacity may rise to 1,000 gigawatts by the end of 2010, compared with 713 gigawatts in 2007, Zhang Guobao, director of the energy bureau overseen by the main economic planning body, said in a speech in Beijing. A transcript of his address was published in an edition of the State Electricity Regulatory Commission's newsletter dated May 9.

China is adding the equivalent of Japan's power capacity to meet the needs of the world's fastest-growing major economy. The country may increase spending on power plants and grids by at least 9.3 percent this year to about $84 billion, a government official said in February.

Power producers will add at least 90 gigawatts of new capacity this year, Zhang said in his speech at the China Hydro Power Development Forum on May 8. Power-plant capacity may reach 900 gigawatts next year, he said.

China increased power generation by 14.44 percent to 3.26 billion megawatt-hours in 2007, narrowly outpacing the gain in demand, as the nation strains to end years of shortages, the Beijing-based China Electricity Council said in January.

Generating capacity rose 14.36 percent as demand climbed 14.42 percent in 2007, the group said at the time.

The energy bureau falls under the control of the National Development and Reform Commission. Japan had power-production capacity of 248 gigawatts in 2005, according to figures from the U.S. Energy Information Administration.

Only the U.S. consumes more energy than China.

To contact the reporter on this story: Wang Ying in Beijing at ywang30@bloomberg.net

Last Updated: May 12, 2008 00:33 EDT