China's power outages: Are local governments' energy conservation efforts going overboard?

Amid a widespread power shortage across China, the authorities have implemented power cuts in several regions. But what is the underlying cause for the power crunch, and will the current measures be effective and sustainable? Zaobao correspondent Yang Danxu tells us more.
Electricity transmission towers are pictured in Beijing, China, 28 September 2021. (Tingshu Wang/Reuters)
Electricity transmission towers are pictured in Beijing, China, 28 September 2021. (Tingshu Wang/Reuters)

On 28 September, a friend sent me news on arrangements for power cuts in Beijing, and reminded me to take note of whether my neighbourhood would be affected. Many people have been talking about the recent power shortages all over China — would Beijing also be affected?

Jiemian News reported that China’s State Grid website showed planned power outages in certain areas like Beijing city, Chaoyang, Haidian, Tongzhou, Mentougou, and Fangshan from 28 September to 8 October.

A dependence on coal

In reply to a call by Jiemian on the reason for the power outages, the State Grid customer service replied: “Coal power prices are high, leading to lower production by power plants and a tight demand-supply situation. The State Grid will firmly meet the country’s needs and actively handle the recent power shortage caused by the tight supply of coal power.”

My friend sighed that they initially thought the power crunch was far removed from them, but they finally took it seriously: “Even the capital is rationing power, looks like there is a real power shortage.”

However, in an urgent response on 28 September, the Beijing Electric Power Company said the news on power cut arrangements circulating online was a public announcement on planned maintenance, which is regular work by power companies. The response stressed: “Power supply in the capital is ample and stable, sufficient to meet the power usage needs of the entire city.” In other words, residents of the capital need not worry.

power plant
A general view shows the Wujing Coal-Electricity Power Station in Shanghai on 28 September 2021 (Hector Retamal/AFP)

Going into summer this year, there were rumours of power shortages in major manufacturing sector provinces in eastern China such as Guangdong, Zhejiang, and Jiangsu. Recently, the power-starved northeastern areas cut off residents’ power without warning, putting the spotlight on power shortages. The unexpected power rationing has thrown production in northeast China into chaos. Some people were stuck in lifts; traffic was a mess because traffic lights were not working; a family of three burned coal to keep warm but ended up in hospital for carbon monoxide inhalation because the exhaust fan was not working. Netizens in northeast China lamented: “No matter how loud the slogans are to revitalise the northeast and build the best business environment, they are not as real as a power outage.”

Coal was not available anywhere, and even companies from coal-producing provinces were trying to “grab” coal from elsewhere.

More power needed to fuel production

Looking at various analyses, the current power shortage is the cumulative result of several factors.

As the pandemic continues its global spread, China has been the first to bring it under control and resume production. But behind the nice GDP numbers is enormous demand for electricity and consumption of power resources. Some have analysed that after the pandemic broke out, China’s export-oriented companies received endless overseas orders and scaled up production, triggering a sharp increase in energy consumption. In the major economic province of Guangdong, since May many cities have started the “orderly use of electricity”, with executive orders for factories to stagger usage, avoid peak hours, or go on breaks by rotation. Some factories were asked to operate only on four days, or even two days a week.

China is mainly dependent on coal for its electricity supply, with coal electricity accounting for over 60% of total supply. But since this year, China’s coal supply has tightened, with above-scale industrial coal production seeing a reduction in growth. At the same time, international coal prices and transportation costs were high, and many coal electricity companies said reserves were in a serious crisis. Coal was not available anywhere, and even companies from coal-producing provinces were trying to “grab” coal from elsewhere.

The sun sets behind electricity power pylons in Beijing on 28 September 2021. (Leo Ramirez/AFP)

With Chinese authorities exercising strict controls on electricity prices, after coal prices shot up, generating power became a loss-making business. According to figures from the China Electricity Council, from 16 to 23 September, coal prices were at 1,086 RMB per tonne (about S$228), nearly double year-on-year and 56.26% higher than the beginning of this year. Some industry players told that when coal prices rose above 1,000 RMB per tonne, each kilowatt hour of electricity would mean a loss of 0.1 RMB, at a conservative estimate. Some companies would rather reduce generating electricity than do it at a loss.

Last-minute energy savings?

This round of power rationing has a reason unique to China — some local officials have started to do last-minute work because they have made commitments to energy conservation.

In 2015, China committed to control energy consumption and energy usage per unit GDP, with the aim of energy conservation and reducing pollution and greenhouse gas emissions from the source, and push a shift towards a green, high-quality economy.

Last month, the National Development and Reform Commission assessed the results of the energy control efforts, and found that energy intensity in nine provinces and regions including Guangdong, Jiangsu, and Yunnan actually went up instead of down — these were listed as top-level code red regions. Another ten provinces including Heilongjiang and Liaoning did not meet energy intensity targets, and were listed as level two alerts. The authorities called on all regions to take effective action to ensure hitting the energy control targets for the year. Soon after, some regions “ordered” production halts, to get high-energy industries to stop or limit production.

However, a feverish campaign to conserve energy and reduce emissions and an all-purpose remedy of pulling the plug would not be long-term solutions.

A coal-fired heating complex is seen behind the ground covered by snow in Harbin, Heilongjiang province, China, 15 November 2019. (Muyu Xu//Reuters)

On 26 September, public account Xiakedao (侠客岛) under People’s Daily published a post saying that to improve energy consumption indicators, various regions have resorted to stopping production or restricting residents’ electricity usage by applying the “all-purpose remedy” of pulling the plug . “To put it plainly, it’s like rushing homework before school reopens,” the post said.

It has to be said that the reason for this power shortage is really unique to China, and is a little familiar. Back when China’s economy was still in “GDP only” mode, local officials blindly chased “black GDP” (paying the price in terms of the environment) and “bloodstained GDP” for the sake of political results, and even “pumped” statistics in order to meet rigid economic indicators.

Now that China’s economy is after high-quality progress and low-carbon transformation and China is trying to portray itself as a responsible big country in terms of climate change, energy conservation and carbon reduction is definitely an important task, and officials everywhere are not slackening. However, a feverish campaign to conserve energy and reduce emissions and an all-purpose remedy of pulling the plug would not be long-term solutions.

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