China appears to be heading for its worst power shortage since 2004, putting pressure on already struggling industries and strained livelihoods due to restricted energy access. The 26 provinces served by the State Grid Corp of China could face a combined power shortage of 30 gigawatts (GW) this summer. Central, southern, southwestern and eastern provinces introduced power use restrictions and rationing in late March, well ahead of the summer peak demand season, fueling concerns that shortages could worsen and spread to other regions.
Jiangsu, Henan, Zhejiang, Guangdong and Hubei provinces are most susceptible to electricity shortages this summer. Jiangsu province alone is expected to face an 11 GW gap between available power supply and expected demand, accounting for 37 percent of the country’s total shortage. Due to power use restrictions and rationing, many factories in the export-oriented eastern provinces have been forced to significantly reduce output, or instead meet their power demands with costly diesel generators.
The recent financial difficulties faced by China’s power companies caused the thermal power supply slump driving these severe shortages. This is particularly true of coal-fired power plants, which provide more than 70 percent of the country’s generation capacity. According to the 2010 Annual Report of the State Electricity Regulation Commission (SERC), the overall deficits for China’s five major thermal power companies (China Datang Corp., China Guodian Corp., China Huadian Group, China Huaneng Group and China Power Investment Corp.) exceeded 60 billion Yuan ($6.23 billion) from 2008 to the end of 2010. In May 2011 alone, these “big five” lost 12.16 billion Yuan ($1.88 billion).