The State
Grid Corporation of China has declared that it may have less
electricity to feed the country in 2004. In the first quarter, 24
provincial-level power grids--two more than in 2003--had to be
switched off to prevent breakdown. The country is bound to suffer
the worst power shortages in years in 2004.
“There will be definitely more provinces suffering from power
shortages,” said Anbound analyst Zhang Weibo.
Total electricity consumption is forecast to grow 12 percent
this year. So far, most blackout areas are the developed provinces
in eastern and southern China.
But the analysts don’t believe that it will have any major
impact to the macroeconomic situation, as the nation is calling on
users to limit power consumption during peak periods. “But
occasional blackouts are likely, ” said Zhang. Street lamps, for
example, may be shut off in electricity-thirsty Zhejiang
Province.
The nationwide power shortage may be attributed to lower
investment in new power plants and a shrinking supply of coal for
generation, said Zhou Haiyang, a researcher at the State Power
Economic Research Center.
Since 1998, the state has reduced investment in new power
generation facilities by a wide margin. Only 8.5 million kilowatts
of capacity was added to the country’s power network in 1998. The
number slid to 5.8 million kilowatts in 1999, edging back up to
only 5.9 million kilowatts in 2003 despite the country’s soaring
economic growth in recent years. The investment plunged by 40
percent from the same period in the Seventh Five-year Plan.
“There is a severe shortage of coal supplies. Some power plants
only have reserves for one to three days even though the state
standard requires a week’s worth. And the coal-to-electricity
efficiency is also lower, because of poor-quality coal containing
many impurities,” said Zhou. Analysts estimate that the quality is
so bad, it takes ten tons to generate the same amount of
electricity that five tons used to make.
However, Zhang Weibo believes the main reason for power
shortages is an outdated power grid network that lags far behind
the power generation facilities.
Limited by grid capacity, many power plants did not generate as
much electricity as possible even when two dozen provincial-level
power grids were reporting shortages. In worst-hit Jiangsu
Province, some local power plants could only operate at 60 percent
of capacity.
Such low efficiency normally leads to loss of revenue, but the
power plants still remain high on banks’ lists of preferred
customers. This indicates that the power plants are still recording
high profits.
“That’s why I believe an outdated power grid network should be
blamed for the nationwide power shortages and high electricity
prices,” said Zhang.
For historical reasons, it is the power generation companies
rather than non-profit public service organizations that decide how
and when to invest in power grids. As a result, the antiquated
power grid network is keeping electricity prices high and capacity
utilization rates low while generating fatter profits.
(china.org.cn by Xu Zhiquan, May 2, 2004)