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China is in the midst of a considerable power crisis, as extreme weather, rising power demand, and strict coal use limits hit the country’s power grid three times. It is a problem that could last for months, hampering the country’s economic recovery and influencing global commerce.
Several Chinese provinces have said they are handling a power crisis in recent weeks, including some of the country’s most important drivers of economic growth. Guangdong province has been rationing power for more than a month. The restrictions have forced companies across the province to close a few days a week. Some local authorities warn that the rationalization of power could take until the end of the year. It is not just about Guangdong. At least nine provinces said they face similar problems, including Yunnan, Guangxi, and Zhejiang’s production center.
It is the worst power shortage in China since 2011 when drought and rising coal prices forced 17 provinces to limit their power consumption.
This time, increased demand for post-pandemic goods and severe weather forces coal-fired power plants to limit their production, hampering hydropower. Lack of power could reduce output in almost every sector of the economy, including the construction and manufacturing industries. Such companies used nearly 70% of China’s power last year and were the main drivers of recovery in 2021.
The rationalization of power in Yunnan’s metal-producing province has led to a decline in supplies of certain types of metals, including aluminum and tin.
Experts attribute the scale of the power crisis to several problems, from high power demand to extreme weather. Coal is still involved in generating about 60% of the country’s power. However, the limitations on the use of coal coincided with the desire for power caused by the economic recovery, together with the extreme weather. This causes increased pressure between supply and demand. Extremely hot weather in some areas has led to an increase in power demand as people use more air conditioning.
The shortage of power is likely to continue in the coming months, especially as demand remains high in the hot summer months. China wants to control dirty energy and is trying to increase its use of renewable sources and reduce fossil fuels.
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