China Faces Power 'Squeeze'

China is facing an unusual winter power shortage as policy problems combine with increasing demand.

Power restrictions in summer have become common in China during the past decade due to growing strains from air conditioning and the country's industrial boom.

But official agencies have been warning since September that shortages will continue through winter and into next spring, particularly in southern and central regions that rely more on hydropower supplies.

Persistent drought and low water levels led to a 24.5- percent drop in China's hydropower output in September from a year earlier, the National Bureau of Statistics (NBS) reported. Some power plants have also run short of high-priced coal.

Seventeen provinces have limited power supplies since the start of the year, the State Electricity Regulatory Commission said. Estimates of the power gap have been rising.

Shortages could reach 26 gigawatts (GW) this winter, a commission spokesman told the official Xinhua news agency on Oct. 21. But Reuters estimated the total could reach 35 GW in the winter and spring, nearly matching the summer shorfall.

Although China has been adding new power plants at a breakneck pace for years, it never seems to get ahead.

At the end of 2010, China had 962 GW of installed generating capacity, second only to the United States. Plans called for building another 80 GW in thermal power projects this year, according to thechinabusinessnetwork.com.

'Difficult to keep up'

Mikkal Herberg, research director for energy security at the National Bureau of Asian Research, said China seems unable to build its way out of the shortages.

"It's just difficult to keep up," Herberg said. "This is a chronic ongoing problem for China."

The commission's chief supervisor Tan Rongyao said the situation will be "grim" in Guangdong, Guizhou, Yunnan, and Hunan provinces, as well as in the Guangxi Zhuang Autonomous Region.

Thirteen provincial power grids have rationed power at peak consumption periods, the National Development and Reform Commission (NDRC) said.

Guangxi is facing the longest and worst power shortage in 20 years, a grid official told People's Daily. Officials have curbed supplies to high energy-consuming industries, shut down lighting, and asked to borrow electricity from neighboring provinces.

High coal prices have made power companies reluctant to buy adequate stocks or generate electricity at government-controlled rates.

The irony is that many provinces suffered shortages a year ago when officials cut power to meet the government's five-year energy efficiency targets by the end of 2010.

Now, many of the same provinces are being hit with power problems for different reasons, but the effects on homes and businesses are the same.

"There always seems to be a crisis around power," said Herberg. "That's because of the policy pathology and this really slow effort to try to get electricity prices in line."

Demands for 'convenience, comfort'

Philip Andrew-Speed, a China energy expert at the German Marshall Fund of the United States, said the supply gap is also the result of changes in living standards.

Winter power shortages were rare in China until three or four years ago, said Andrews-Speed.

"That started to change in eastern and southern China when they started installing air conditioning systems that could also provide heating in the new buildings," he said.

"In the past, district and city heating systems were only available north of the Yangtze River," said Andrews-Speed. "As people get richer, they're installing air conditioners that have heating capability, as well."

The societal changes mean that new demands for convenience and comfort will now be competing with industrial production and necessity for the same limited and unprofitable power supplies.

"Particularly, it will be the small businesses which will probably just have to shut up shop for a few weeks," Andrews- Speed said.

In June, the China Electricity Council forecast that power supplies will remain tight for the next two years, Xinhua reported.