China has more than enough power plants to meet electricity demand. So why are local governments having to ration power across the country?
- Coal is the main energy source of China, widely used for heating, power generation and steel making.
- Beijing is attempting to balance the country's need for power with President Xi Jinping's push for a carbon-neutral China by 2060. Earlier this year, China has shut down hundreds of coal mines — or reduced production in the functioning ones. China also slapped restrictions on imports of coal from Australia, as political tensions between the two nations escalated.
- Coal supply fell sharply, even as demand surged due to industrial growth. The result - rising coal prices and widespread shortages of power.
Higher Coal Prices Have Forced Power Plants To Operate At A Loss
- Normally, those higher coal prices would have been passed on to energy consumers - but electricity utility rates are capped.
- In some provinces, up to 50% of coal-fired power plants are pretending to be out of order or have run so low on coal that they can't generate.
- Last month, 11 Beijing-based power generation companies penned an open letter petitioning a central policy decision-making body to raise electricity rates.
China Orders Coal Mines To Increase Production
- Authorities in Inner Mongolia, China's second-largest coal-producing province, have asked 72 mines to boost production by a total of 98.4 million metric tons.
- The figure is equivalent to about 30% of China's monthly coal production, according to recent government data.
- The order comes days after China's top economic planning agency asked the country's three biggest coal-producing provinces, including Inner Mongolia, to deliver 145 million metric tons of coal in the fourth quarter.