Will China fall short on its green targets as extensive measures are being adopted to avert the power crisis that it is undergoing?
While foreign media was still focused on the Evergrande crisis, China was grappling with another massive power shortage. Since March this year, the power crisis began when Inner Mongolia imposed power usage restrictions on a few heavy industries. In May, authorities in Guangdong imposed similar curbs on electricity consumption by power-intensive industries. Later on, local governments in Zhejiang, Jiangsu, and Yunnan provinces also asked factories to halt production during peak power-consumption periods or shut operations entirely for a few days a week. Some factories, including soybean processing plants in Tianjin, were closed until further notice. The power crunch has so far spread to more than 20 provinces, with curbs being put on the power supply to households. Even traffic lights were reportedly switched off in a few cities.
China’s coal-fired power stations, which usually pile up inventory for winter months in advance, on average only have enough coal to keep the plant running for two weeks. More factory owners are turning to diesel generators to keep the production going amidst growing uncertainty. While steel and cement factories had been facing sporadic power cuts, the current power crunch has hit hard the export sector, which has been gaining momentum in the post-pandemic period, especially in the Pearl River Delta manufacturing heartland. Companies are serving force majeure notices for the delay in supply.
While steel and cement factories had been facing sporadic power cuts, the current power crunch has hit hard the export sector, which has been gaining momentum in the post-pandemic period, especially in the Pearl River Delta manufacturing heartland.
China has ordered coal miners to increase output to meet hiked demand. It also allowed shuttered coal mines to restart production. Apart from increasing import of coal, it had to release Australian coal from bonded storage that was banned due to geopolitical spat. Moreover, National Development and Reform Commission is planning to intervene in the skyrocketing coal prices. Soaring coal prices and price caps have forced Chinese power producers to operate at lower margins or even at a loss, thus cutting output. Last week, China announced easing price caps on coal-fired electricity to let power plants negotiate better with the market.
These measures may prove efficient in tackling the crisis at hand. Still, they will hamper Beijing’s long-term lofty goals of achieving peak carbon emissions by 2030 and attaining carbon neutrality by 2060. As China aims to increase the share of non-fossil energy to around 20 percent of its total energy consumption by 2025, up from 15.8 percent in 2020, it has proposed to build mega clean energy bases in its 14th Five-Year Plan. It created ample demand through Rule no. 625 of Renewable Energy law 2016. State Grid Corporation of China has heavily invested in hybrid multi-terminal high voltage direct current (HVDC) transmission lines to bridge the gap between power-rich and power-deprived regions. China is trying to integrate data centres and build smart grids to maintain stability in the power supply.
State Grid Corporation of China has heavily invested in hybrid multi-terminal high voltage direct current (HVDC) transmission lines to bridge the gap between power-rich and power-deprived regions.
Yet, it is unable to utilise the total output. The curtailment rate—an industry term for the electricity capacity that is wasted because not all of the output cannot be delivered to customers—of electricity generated from renewable energy remains high. In addition to increasing transmission line capacity, China should ramp up its new energy storage capacity. In October 2017, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Industry and Information Technology, the National Energy Administration, the Ministry of Housing and Urban-Rural Development issued the “Guiding Opinions on Promoting the Development of Energy Storage Industry and Technology”, which clarified the strategic positioning of energy storage for the first time. This year NDRC unveiled its plans to install more than 30 gigawatts (GW) of new energy storage capacity by 2025. This multi-month energy crisis can provide the impetus to boost the green plans.
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Saranya was a Research Assistant with the Centre forRead More +