Reuters in Beijing – Updated on Apr 22, 2008
The mainland’s power demand this year could outpace supply by as much as 10 gigawatts (GW), with temporary brownouts hitting parts of the south during the summer, State Electricity Regulatory Commission vice-chairman Wang Yeping said on Tuesday.
Mainland power firms were building new power stations each year but coal-burning generators were struggling with soaring fuel costs, an over-stretched domestic transport system and strong competition for supplies.
Mr Wang told a news conference that fuel stocks at key power plants had slipped to levels that covered 12 days of generation, from 15 days early last month.
At plants in Hebei province bordering Beijing, Anhui province in the east, and the western municipality of Chongqing, stores had collapsed even further, to less than 7 days’ use.
“Since [last month], the country’s thermal coal supply has again shown some tightness. Coal stocks fell again. At some power plants, thermal coal supply is already quite tight,” he said.
Coal prices shot up to record highs during power and coal shortages in early February, when freak winter weather cut off roads, railways and power lines and left some plants with coal to cover just two days of production.
Prices have eased as winter heating demand ebbs and mines resume production. Benchmark spot prices at Qinhuangdao, the mainland’s main coal port, for top-grade coal, were at 640 yuan (HK$713) to 650 yuan per tonne on Tuesday.
This was below 670 yuan to 680 yuan in early February but still 37 per cent higher than a year earlier, according to www.cqcoal.com, a coal market information website operated by a business venture.
Despite these high prices, the central government is reluctant to take one measure analysts say could bolster coal supplies, increase investment in new plants and ensure existing ones run at full steam – raise state set power prices.
Inflation is currently running close to the highest level in more than a decade, and Mr Wang said authorities had to consider many factors, including the impact on inflation, when weighing up whether to increase power prices.
But prices are currently so low they leave an increasing number of plants in the red, and could exacerbate shortages.
And Mr Wang’s forecast may be conservative, as booming Guangdong had warned last month that it alone could face shortfalls of 10GW.
Although Guangdong is expected to face some of the worst problems, other rich coastal provinces are likely to strain to meet demand as well over peak summer months.