China Struggles with Summer Power Shortage
Facing a power shortfall of 10,000 megawatts this summer
in its southern and eastern provinces this year, China
is moving to quickly approve new electricity generating
projects and to deregulate the electricity market.
The areas experiencing shortages are Hebei, Shanxi, Zhejiang,
Guangdong, northern China and eastern China. Faced with
an energy surplus in 1996 and 1997, the government cut
back new plant construction in 1998-2000. Demand has now
increased in rural areas, and electrical prices have fallen,
leading to a surge in demand.
According to former industry giant, State Power Corp.,
China's current electrical capacity stands at 353,000
megawatts. The shortage is expected to worsen to 15,000
megawatts next year. State Power Corporation, a government
monopoly, was broken up into 11 smaller power generation,
distribution and logistics companies in December of last
year. It was replaced by the State Electricity Regulatory
Commission in March of this year. The commission supervises
industrial operations and issues licenses to environmentally
qualified operators.
The Chinese government has approved the construction
of 13 new large-scale power plants with a total power-generating
capacity of 11.9 million kilowatts. Construction will
not begin until 2005.
The Three Gorges dam project has 26 generators producing
a total of 5.5 kilowatt/hours. Two generators will come
online this year.
In order to rationalize the market, the State Electricity
Regulatory Commission has announced that China's first
regional electricity market will be established in China's
northeastern provinces of Liaoning, Jilin and Heilongjiang.
It will start trials at the end of October, and begin
formal operations in January 2004. Following that, a northeastern
power grid company is expected to be established shortly,
to be followed by the opening of the regional electricity
market.
Two similar electrical markets will be created in southern
and eastern China later this year.
It also plans the establishment of an electricity futures
market in the near future.
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