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South China Morning Post

China suffers worst power outages in ten years due to rapid post-coronavirus exports and coal shortages

Businessman Lin Xianxin has finally begun to see his fortunes turn upside down after a coronavirus pandemic disrupted production at his Wenzhou plant earlier this year. The Chinese economy was recovering quickly from the outbreak and at the end of the year, bringing a rush of seasonal orders, Lin ran his factory at full capacity and is well on his way to compensating for his losses from the first quarter. But it all came to a halt on Tuesday last week, when authorities cut off electricity to his business. Find out the latest insights and analyzes of our Global Impact newsletter on big stories originating in China. “We’ve been hit hard,” said Lin, manager of Wenzhou Ming Yu Packaging in the eastern port city. “Turning off the electricity at the busiest time of the year is unreasonable. All orders after Tuesday had to be postponed, and some could even be canceled. “China will open the energy sector to foreign investment because it wants to balance security with a carbon-neutral pledge. Wenzhou, according to Lin, has not seen high electricity standards for years. and this month’s power outage – a total of three – would cost him 50,000 yuan ($ 7,637) a day. For a small factory like Linova, which is still struggling to get back on its feet, the losses are huge – and he’s not the only one who feels China’s provincial process is battling the worst power outages in nearly a decade. With a sharp increase in exports and an appetite for an increase in electricity in the industrial sector, this year’s winter electricity consumption exceeded that of the summer months for the first time in about 10 years. And electricity production cannot keep up with demand. Although power outages have literally left some citizens in the cold, they also point to deeper structural problems for China. In particular, they found that the country’s centrally planned economy is not a perfect convenience for the electricity market, said Yunhe Hou, an associate professor in the Department of Electrical and Electronic Engineering at Hong Kong University. If you limit coal consumption, you must ensure that there are other ways to power electricity, which is still a big problemYunhe HouUnsufficient local Electricity generation, growing demand and local government efforts to limit energy consumption to achieve policy goals explain part of the problem, he said. Other factors include a shortage of domestically produced coal and import restrictions imposed to encourage local producers. China’s ambition to decarbonise its economy by switching to renewable energy from fossil fuels has also exposed it to seasonal influences, Hou said. “45 percent of the electricity produced in Hunan comes from hydroelectric power plants, but now there is less water due to summer floods and high icing in winter,” he said. “In addition, coal stocks from Shanxi and Shaanxi have been reduced this year.” If you limit your coal consumption, you have to make sure that there are other ways to supply electricity, which is still a big problem. “From January to November, China consumed 6.677.2 billion kilowatt-hours (kWh) of electricity, more than the annual totals for 2017 and 2018. This year’s annual consumption is projected to increase by 3 percent from 2019, despite the impact of coronavirus China’s electricity consumption in November alone was 646.7 billion kWh, the highest level in 27 months, and more than a dozen cities in Zhejiang, Hunan, Jiangxi, Shaanxi and Guangdong provinces have imposed electricity restrictions since mid-December. Sunday’s power outages in various areas have been imposed in Shenzhen, China’s technology capital, which has the country’s highest gross domestic product per capita.A source close to the national power system told the South China Morning Post that electricity restrictions will be introduced this week. energy in the eastern province of Jiangsu.Many analysts have linked China’s current woes to a ban on Australia’s coal, but the government denied it was the cause. Beijing has restricted a number of Australian imports, including coal, after Canberra requested an investigation into the origin of the coronavirus, which was first identified in China earlier this year. Targo ships carrying Australian coal worth about $ 500 million are anchored off the Chinese coast and are awaiting permission to unload while a dispute between the two nations Bloomberg reported last month that there were no signs of concessions. The ban could not be ruled out as the cause of the power outage, but that “was not the main reason,” said Hou from the University of Hong Kong. However, “the situation would improve if the import ban is lifted,” he added. Australian coal accounted for about 41 percent of China’s total coking coal imports and about 25 percent of thermal coal imports last year, according to the China Coal Big Data Center, a Shanxi-based research center that focuses on energy issues. China’s imported thermal coal was about 7 per domestic stock in 2019, when it mined or imported about 3.2 billion tons, according to a note from Nanhua Futures. The country consumed 2.9 billion tons of thermal coal last year. Most of the thermal coal imported from Australia is used in central, southern and eastern China, especially in coastal cities, because the costs of its delivery to the north are too high. As a result, Australia’s coal ban has had a greater impact on these cities, said one analyst who asked to remain anonymous because of the sensitivity of the topic. Several sources in the Chinese media told the Post that they were ordered not to link the recent cuts in electricity to the restrictions on Australian coal. The Global Times, a state-run tabloid, said on Saturday that “Australia’s coal import ratio is only 2 percent” and that “it has nothing to do with China’s temporary power shortages.” Disruptions in domestic coal supply have only added to electricity production problem.China has tightened standards this year for reopening mines closed after accidents, a blow to domestic coal production.In the first 11 months of this year in Shanxi, China’s coal mining hub , 13 accidents occurred, killing 26 workers. As a result, the province is expected to shut down all of its small coal mines with an annual capacity of less than 600,000 tons by the end of the year. Coal production in Inner Mongolia, which accounts for a third of China’s coal production, has also been disrupted. . Corruption investigations launched this year to develop mines over the past two decades have harmed production in the autonomous region, which has 523 mines, with a total capacity estimated at 1.3 billion tonnes a year. As demand for coal rose above the available supply, coal prices have risen sharply since October to their highest level since May last year. Coal imports fell 15 percent in November from a year earlier, down about 21 percent from October after restrictions on imports from Australia and Indonesia. has played an important role in balancing domestic coal prices, but insufficient domestic mine production is another reason for rising coal prices, ”said Xue Jing, a retired official from the China Electricity Council. At the same time, some of China’s problems may be the result of its successful recovery from the coronavirus pandemic, especially in coastal and central regions. Chinese factories have benefited from the corona locks of irus elsewhere in the world, with exports in November up 21.1 percent from a year earlier, the largest share of exports ever estimated in U.S. dollars. Although China’s export machine has led to an increase in electricity demand, rigid energy planning and analysts have said the allocation system has not helped. Electricity restrictions in Zhejiang have been imposed so the provincial government can meet energy and coal consumption targets by the end of this year, while shortages in Hunan and Inner Mongolia are the result of insufficient electricity production, according to a report released by SinoLink Securities on Monday. power outages in Zhejiang will be mitigated next month, when the target deadline passes, the situation in Hunan and Inner Mongolia added. of concern, China’s main economic planning agency said last week that it had enough coal stocks for winter heating and that power plants were locked at lower prices for most coal orders, which would prevent energy costs for consumers from rising. If you reject the government’s power outage order, you are creating problems for yourself. Chen Wenbo, China’s state-owned network of electricity corporations, has also pledged to help increase transmission capacity and maximize electricity purchasing needs for the provinces. will channel the “spirit of the Iron Army” to meet the needs – a reference to the Communist Party troops who fought against the Japanese during World War II. He added that its Hunan branch would enter a “state of war” to ensure that the power grid was functioning smoothly. Meanwhile, companies across China have no choice but to deal with new challenges. Chen Wenbo, who runs an electronics factory in Yiwu, a manufacturing hub in eastern China, said he would follow government instructions and would not complain. “If you reject the government’s power outage order, you’re making trouble for yourself,” he said.More from the South China Morning Post: * Sino-Australian relations: Canberra is “very concerned” about reports of a “discriminatory” coal ban * China assures the public into a “balanced” supply of coal in winter while the provinces cut electricity to factories * Sino-Australian relations: what has happened in the last eight months? * Sino-Australian relations: coal, cotton curbs could violate trade rules, lawyers say. * Chinese steelmakers begin ‘redirecting’ Australian coking coal as Canberra seeks clarification on reported ban South China Morning Post download our mobile app. Copyright 2020.