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China’s Power Shortage May Extend to 30 Million KW in Summer

April 29 (Bloomberg) -- China, the world’s fastest-growing major economy, may face a summer power shortage of 30 million kilowatts as supply lags behind demand growth, the China Electricity Council said.

Some regions are facing shortfalls that are “bigger and earlier” than last year, the council said in a report on its website yesterday. Supplies in provinces in the north, east and south will be “tight.”

China’s power use may increase 12 percent to 4.7 billion megawatt-hours this year, while generation capacity may gain 9 percent, the council said. Demand rose 13 percent to 1.1 billion megawatt-hours in the first quarter, according to the council.

“The power shortage is worse compared with the previous couple of years, but has yet to have a material impact on the real economy,” Michael Tong, an analyst at Deutsche Bank AG, said by telephone from Hong Kong. “The country may need to consider speeding up generation capacity expansion to stop power shortages from worsening next year.”

Datang International Power Generation Co., a unit of the nation’s second-largest power producer, gained 9.5 percent in Shanghai trading, the most in a year. Huaneng Power International Inc., the listed unit of the biggest electricity generator, climbed 6.3 percent.

Southern Guangdong province, the nation’s manufacturing hub, may face shortages of as much as 6.5 million kilowatts this summer, Xinhua News Agency said yesterday, citing Li Xiangming, deputy head of the local economic and information commission.

Impact From Inflation

“If the shortage lasts for more than one year, China may need to approve more coal-fired power projects, but before that, they need to raise tariffs more so that independent power producers will be willing to spend on additional capital expenses,” Dave Dai, an analyst at Securities Capital Markets, said in an e-mailed response to questions. “It still depends on where inflation is going over the next few months.”

The consumer price index reached 5.4 percent last month, the fastest pace since 2008 and higher than the full-year target of 4 percent. The government controls electricity prices to limit their impact on inflation.

China’s generation capacity is expected to rise 85 million kilowatts, or 9 percent, to 1.04 billion kilowatts this year, the council said. The increase is less than the council’s forecast at the beginning of the year because of slower expansion at thermal power units, it said. China added 13.79 million kilowatts of capacity in the first quarter, down 15 percent from a year earlier, it said.

Rising Coal Prices

Power plants are also challenged by rising coal prices, according to the council. Coal-fired generators in six provinces in central China, three provinces in northeastern China and Shandong province in the east are having losses because of higher fuel costs, the council said.

“Operational losses may have discouraged power plants from maximizing output,” Deutsche Bank’s Tong said. “And some plants are short of coal stockpiles because of higher prices.”

Spot prices of power-station coal at Qinhuangdao port, a Chinese benchmark, rose above 800 yuan ($123) a metric ton this week, the highest in four months, according to data from the China Coal Transport and Distribution Association.

Coal stockpiles at the nation’s major power plants increased to 53.11 million tons as of mid-April, sufficient for 14 days of use, compared with 13 days at the end of March, the association said.

To contact the reporter on this story: Winnie Zhu in Shanghai at

To contact the editor responsible for this story: Alexander Kwiatkowski at

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